Q: Hi Folks,
I have a fairly well diversified and conservative RRSP portfolio but I am a little overweight TD and the financial sector in total. I am thinking selling some TD and buying a 3% position in LIF. I have nothing in the Materials sector. Can I have your opinion on LIF and on whether or not this is a wise trade at this time.
Thanks
I have a fairly well diversified and conservative RRSP portfolio but I am a little overweight TD and the financial sector in total. I am thinking selling some TD and buying a 3% position in LIF. I have nothing in the Materials sector. Can I have your opinion on LIF and on whether or not this is a wise trade at this time.
Thanks
5i Research Answer:
We think LIF is a decent income stock, and priced well. However, it is a fairly cyclical company, and the dividend varies with earnings. The last dividend (95c) may not be sustainable if iron ore prices/volumes decline. It has paid more (and less) in the past. The company is quite small at less than $2B market cap. We think it can be bought as part of a higher risk income basket. We would caution against comparing it to a bank stock, and for material exposure there are much larger and probably safer stocks to choose from, such as NTR, AEM, LUN. But we would still be OK owning a small position. We cannot comment on personal weightings, however.