Investment Q&A

Q: I'm trying to understand the new Brookfield Asset Management Ltd spinout. I have two questions:
(i) It seems to act like a royalty on the asset management business. Am I correct that it does not have to add any additional capital to the business as time goes on?
(ii) On its web-site it claims a 90% payout ratio. However, from the recent Investor Day presentation (page 62), it states that there is 4.9B of distributable earnings for the original company for 2022, which would mean about 1.2B for the new spinout. As I calculate it there are around 450M shares, which means a projected dividend of over $2/annum. However, in the announcement of Dec 6, it stated that the starting dividend is about .28/quarter, or 1.12/annum. What am I missing?

Q: Besides earnings on Thurs any thing on your radar popping this today?

Thx

Q: Can you please give me your thoughts on Constellation's deal in acquiring WideOrbit through the Lumine group. Do you think that this will be a positive for CSU shareholders? How will it affect current CSU shareholders and will there be a special dividend? Any information that you have would be appreciated. Thank You.

Q: Your take please on the latest Constellation spin out and prospects for the new company moving forward. Any thoughts on CSU getting taken out or going private? Thank you

Q: Want to start a new position. Which do you prefer, QSR.CA or PBH.CA? What would be a good entry point for your choice? Thank you

Q: Just received a letter from my discount broker advising of changes to US withholding tax on distributions and dispositions starting January 1, 2023 that "might" apply to Canadians holding publicly traded partnerships in any account, including RSPs. As a long-term holder of both BIP and BEP, I have significant capital and gains on both. These are held in an RSP, so I have never been concerned about any tax implications. But now . . . ? The Brookfield site advises that they "do not expect" non-US investors to be subject to any withholding tax, and there is also a letter from their tax lawyers with the same claim with a bit more positive wording, but it ends with a disclaimer (hey - we could be wrong!)

I do not want to sell either BIP or BEP, but it would annoy me more if I ended up losing the withholding tax on distributions and (particularly) dispositions. Not sure how the IRS can withhold tax on a Canadian selling a non-US based company, but obviously there is a way, as the letter came from my Canadian big-bank brokerage which also has a significant presence in the US. Also assume that with the stocks being in an RSP, there would be no means of recovery through tax credits.

I would appreciate any comments you have on this matter. If the stocks should be sold, it would have to be done this year. Would this problem also apply to BIPC and BEPC, if I just did a switch?

Thank-you, Grant

Q: AQN's dividend is now 10%. There is a lot of talk that AQN will cut its dividend to be in-line with its peers. That would be around a 50% dividend cut. [In the past you have said many times that the first dividend cut is never the last.]

I have seen it mentioned here and elsewhere that during the financial crisis Manulife Financial cut its dividend, and it appears investors from that time have never forgotten that, or forgiven them for it. By the way what was the dividend cut they made? Was it only 1 cut, or was it several cuts?

Do you think that if AQN cuts its dividend, the stock will languish for a very long time as investors (like me) will not forget, and will never forgive?

Has AQN ever cut its dividend before? If yes, what were the cuts and when?

Are there other high profile examples of dividend cuts (excluding energy stocks in 2020) where the company has been penalized for doing that for a very long time?

Q: Hello Peter,
This question is relating to your holdings in your Income Model Portfolio. Are all the income declared from these investments qualify for dividends tax credits? Or are they treated as normal income like interest income from GICs and would be subject to our normal tax rate?

If it is taxed at our marginal rate, would you recommend holding these investments in a RRSP account?
Many thanks,
Roger

Q: Hi Peter and Staff

I know you cannot believe everything you read or hear. I hear a commentator say last week that the company had floating debt that had risen to 21%. Is this true? I know rates have gone up by some 4% by that would still mean they were paying rather ridiculous floating rates for a public company?

IF not true perhaps you could shed some light on what they are inflicted with as far as floating rate debt and terms?

Thanks for all you do
Dennis

Q: Further to your response to Tom on Dec. 5th, could you recommend several ETFs that would be quality choices to represent emerging markets, healthcare and tech that would result in less overall volatility than purchasing individual stocks? Thanks.

Q: i am interested in buying a intorenewable energy . is it better to by an ETF ( need a name ) or a company. what companies would you recommend ?

Q: Hello, 5i - The auto industry seems to be recovering somewhat. Do you have insight into this? Thanks

Q: Hi Peter and 5i,
Sorry if this has been asked before. I also can't find anything in the previous questions either.
Would you be able to provide us how the Adjusted Cost Base of the previous BAM.A shares should be divided up between BN and BAM?
Thanks so much.

Q: With the split of BAM.A into BAM and BN now complete, I am considering whether to sell the BAM spinoff shares and redeploy the cash into BN, or sell BN and buy more BAM, or use some cash and add to both. What do you think of the long term outlook for each company? Is BAM going to be mainly a dividend payor, or there some growth there too? I know you like BN for long term growth.

Q: With oil companies increasing their cap spending will this benefit esn, and or are there other service companies that you like?

Thanks
Auftar

Q: Hello, I know your are not tax expert, but I risk myself asking because I am sure other members will receive a similar letter from their online broker. This is about the new US regulation code 1446. The letter I received today says:

Changes to the U.S. Taxation of Publicly Traded Partnerships.

New US regulations taking effect on January 1, 2023, will result in new withholding taxes for sales of publicly traded partnerships by non-US account holders.

Once these rules take effect in 2023, when a non-US national sells an interest in a publicly traded partnership, 10% of the gross proceeds of the sale will be withheld. The withholding taxes will be remitted to the US Treasury, and the non-US national will be responsible for filing a US income tax return and claiming any potential refund of the amount withheld.

Not all publicly traded partnerships will be subject to withholding. However, at this point it is difficult to say which publicly traded partnerships will and will not fall within the scope of the new rules...

I did phone my online broker to know more. I was told that I have two companies in my account affected by this: BEP.UN-CA and BIP.UN-CA. Even if they are held in a RRSP, these will be subjected to the new tax if I sell after January 1, 2023. I argued that these are Canadian companies, but they replied that because they are limited partnership and trade on both the Canadian and US markets the new 1446 regulation will apply.

According to what you know of Brookfield, is that true that this new tax will apply on both BIP.UN-CA and BEP.UN-CA starting from January 1, 2023? Thank you,

Q: FYI - I just received a notice from TD of "Potential changes coming to publicly traded partrneships from January 1, 2003" stating that a 10% US withholding tax may be levied on dispositions of and distributions from all Publicly Traded US and CND Partneships held by non US persons in ANY account type including RRSPs, TFSA, RIFs, RESPs........it then goes on to say that BIP, BEP and BBU do not expect non-US investors to be subject to US withholding tax.

Q: Hi, After market close, BMO announced a secondary offering of 11.8 mln shares to public and 14.8 mln shares to CPP, Caisse, OMER etc, by private placement, concurrently, at a price of $118.60. Does it seem like a good deal to buy/add these shares, at this price, despite dilution ? Thanks

Q: With the new BAM configuration will the new yield rise significantly, or stay the same for an equal amount of investment?

Q: with 2 activist investors this seems very interesting
what is your opinion.
dave