I hold these names in my RIF, and they have all done well, both of late and over time. ENB now constitutes 21.5% of my RIF investments, SU 15% and KEY 12%, meaning the three of them now sit at 48.5% of my RIF investments. My yield on cost for each is ENB - 6.8%, SU - 4.9% and KEY - 7.3% and I appreciate the income from each.
The balance of my invested RIF holds 32% in CDN banks, 10% in tech ETF's with good yields (HTA and TXF.B) and 10% in a few miscellaneous names.
Understanding that you do not offer advice about specific portfolios, would you consider it wise to offload 1/2 of my ENB, SU and KEY (or some combination thereof) to realize my gains and mitigate the risk of falling energy prices once Hormuz opens.
If so what 3-5 names would you recommend investing in with the proceeds, for diversification, safety, yield and long-term capital appreciation at this time?
Thank you,
Peter
We have to give a bit of a yes and no answer. On the one hand, while ENB and KEY have some sensitivity to oil prices, their fortunes are dicated more by volume and contract pricing than they are by commodity prices. SU, while a large producer, is an integrated energy company, and thus its diverse business mix helps offset the down cycles in oil prices. So, we would not be too worried about their cyclicality and a collapse one the Strait reopens. We also assume there are other investment accounts, so the actual total energy exposure may be less than it seems. BUT.......simple diversification and prudence leads us to a partial 'yes' answer. Despite our comment above, 48.5% is a very large weighting for ANY sector. The TSX is 18% energy. We would be fine reducing the sector. Some suggestions based on the criteria noted: BAM, WSP, NTR, AEM, STN, BN, CCO