Q: I have full position of both Telus and BCE, both at substantial losses in a margin account. Should I leave them be, reduce, or get out? I do not have much in the way of capital gains this year. If reducing these stocks is a good idea, what would you replace them with in today's very expensive market, not worrying about sector, more about regaining the losses? Could GSY be a replacement or would you consider this much more high risk? Thank you!
5i Research Answer:
We think GSY will ultimately be fine, but we would certainly consider it higher risk due to its much smaller size and business focus. We think BCE and T are 'OK' for income and could do better with lower interest rates ahead. That being said, we would be fine with a tax loss sale (losses can be carried forward forever, or back three years). We would be fine slowly buying them back over time. But if sector allocation is not an issue, some dividend alternatives that could do better are: EIF, SLF, BNS, ENB