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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I have visited the Pimco website but am still unable to get a clear understanding of the holdings of the Pimco High Income Fund ( PHK:US). In your opinion, in general, would this fund be suitable for a retired senior? The income is high but does it come at a price to risk?
Thank you for considering my question.
Read Answer Asked by Gail on January 23, 2018
Q: I've held Stantec for about 4 years. I'm up about 5% plus the rather low dividend payout. I've held on because not losing money is important, and I appreciate the portfolio diversification it provides. However, I'm feeling increasingly impatient and have been contemplating switching it for Brookfield Asset Management. Is it worth sticking with Stantec? Also, is Brookfield tax efficient in a cash account? I know some of the Brookfield companies have complicated structures.

Thanks for all your help!
Read Answer Asked by Bill on January 23, 2018
Q: I am retired living off dividend income. I currently own a 1/2 position and just read your summary on hot.un: "Minimal earnings growth is expected in 2018, as most cash flow is paid out as distributions. We would consider it OK as a mid cap income stock."

I was considering filling out my position for income, but based on your lukewarm response, I will hold off. Can you recommend a couple stocks that you are more positive about for a midcap income stock (other than SIS)?
Thanks
Read Answer Asked by Curtis on January 23, 2018
Q: My husband and I hold a very small amount of Chartwell and Telus in our RRSP account. We are approximately 5 - 10 years away from retirement and have a good mix of stocks amongst all the sectors holding only about 15% in fixed income amongst our RRSP and TFSA's combined. Most of our 30 some dividend/growth stocks are ones you've recommended and we tend to be buy and hold investors. My question is when we have a couple of bonds coming due this spring (4%) would you buy more bonds or would you add to Chartwell and Telus? What do you think of Chartwell's high P/E ratio being over 100? We are still contributing to our accounts on a regular basis and could put future contributions towards fixed income if you think we're short in that area.
Read Answer Asked by Lisa on January 23, 2018
Q: Hello 5i. Just wondered if you had seen the article on this topic in the Globe & Mail over the weekend. What it suggests is that dividends from US-listed ETFs held in an RRSP account are not subject to US taxes. However, the article states that this is not the case for dividends paid by Canadian-listed ETFs that invest in US stocks. In this case, dividends ARE subject to US withholding taxes, even if the ETF is held in an RRSP account. The article goes on to say that these taxes cannot be recovered. (Same situation would apply to mutual funds.)

Assuming the article got this, I'm not sure that all ETF investors are aware of this nuance.
Read Answer Asked by Thomas on January 23, 2018
Q: I am currently using 1 year term GIC's for my fixed income portion of my portfolio. I don't need income and looking to maximize my long term total return (i.e. 10 years or more) with low volatility and relatively low risk of loss compared to equities. Can you please provide me with a few alternatives? I am thinking ETF's might be the way to go but I am open to your suggestions. Thanks for your wisdom.
Read Answer Asked by Rino on January 22, 2018
Q: i currently hold hr.un and drg.un in my portfolio for a total reit exposure of 12%, split almost evenly between the two. I am thinking of reducing the above two and adding bpy.un for a total of three reits totalling 12% of my portfolio. Would i gain much more global exposure than what i currently have and would it increase my exposure negatively.

Thanks, David
Read Answer Asked by david on January 22, 2018
Q: I hold ALA common shares at a small loss (bought just under $30), and am surprised that it has not been able to get back up near the $31 receipt issue price. I am considering selling ALA and buying back the same number of shares as ALA.r, at a slightly lower price. Is it correct that if the deal does not go through, the receipts are cancelled at $31 per receipt, and if the deal does go through, the receipts become ALA shares on a 1 for 1 basis?

My thinking is that if the deal fails, then I have a capital gain on the receipts (including claiming the current loss on ALA), and if the deal goes through, I am essentially in the same position, whatever the share price. I guess the downside is that if the deal fails and the market really likes that, ALA common shares could go above $31. Am I thinking straight here, and do you have any comment on this plan or the potential market reaction to the deal failing.
Thank-you
Read Answer Asked by grant on January 22, 2018
Q: Medical Facilities Corp says it has an agreement with Kansas-based NueHealth LLC to form a joint venture and acquire seven ambulatory surgical centers from Meridian Surgical Partners of Brentwood, Tenn. The joint venture, will be majority-owned by Medical Facilities. Medical Facilities says its portion of the $46.5-million (U.S.) total purchase price will be funded by cash and a draw on its credit facility.
What do your overview of this purchase by DR and using their cash and credit facility? How soon is it accretive to cash flow, is the dividend safe and does it mitigate some of the concerns in the past regarding competition moving into the areas where they currently have operations?
Thanks
Gordon
Read Answer Asked by Gordon on January 22, 2018
Q: The Constellation Software debentures, CSU.DB, seem like such a great investment, I wonder what the hidden downsides might be. They pay 6.5% plus CPI inflation – currently about 2% - which is a very high rate compared to ETFs like CLF, CBO, CPD and XHY and also compared to other blue chip corporate bonds in Canada. Moreover the inflation protection is an increasingly attractive feature. There is of course the risk of losing principal if CSU goes broke, but it is a great company with lots of sticky revenue and this seems highly unlikely, at least for the foreseeable future. The price of these debentures has been bid up, but the yield to maturity is still quite high. Are there other reasons not to give CSU.DB a large weight in one’s fixed income allocation?
Read Answer Asked by Philip on January 22, 2018
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