Q: Hi 5i, I've held both Fortis and BIP.UN in a registered account for just over five years. I am thinking of selling Fortis and reinvesting the funds into a larger BIP position. When I look at the Fortis return of approximately 7% and dividend yield in comparison with BIP return and yield, BIP appears to win. I like the fact that BIP's business is broader and more global. My current Brookfield family holdings are about 11% of equity holdings so I realize that this move would increase my exposure to Brookfield to about 15%. I know you can't comments on position sizing but would appreciate your thoughts on making such a move. I know Fortis has an exemplary track record in increasing dividends but maybe it's time. Thanks for your service!
5i Research Answer:
As much as we like FTS, we would be OK with this move if an investor wants to focus a bit more on growth. With rates dropping, BIP.UN likely has more upside potential, and as noted is more diversified overall. It is a bit more expensive than FTS, but in a good market we would expect it to outperform. We would be less inclined to do this if taxes applied to a FTS sale, but that is not the case here.