Investment Q&A

Q: EVV has a daunting monthly-pay dividend that seems, at first glance, to be too-good-to-be-true. However, the dividend is comfortably less than the cash flow number. Is the dividend sustainable and can the security's price be expected to be reasonably positive in this environment?

Q: Where to park $ for 1 to 2 years looking for liquidity interest and safety. Recommendation? Thanx

Q: With the up coming US election in November and the pressure on the fed to cut rates. What are your thoughts on where the TLT will be in the latter part of this year and would that likely be the high for the TLT for the next 12 months?

Thanks.

Q: If interest rates are poised to come down, do you see an opportunity for some short to medium term gains with bonds? If so, would the sweet spot be with short, medium, or long term bonds? Are there any bond ETFs that you could suggest?

Q: I understand this is a new ETF issued by TD Asset Management. There is a little information on its website. I am interested in it as a short term cash management option. I could not determine the yield. If you look at the current holdings, it states over 90% is invested in other than Canada. In its top 10 it holds a number of Trusts and when you look into these they represent a range of money market investment options including car loans, credit card debt, etc. Though it states the risk is low, its holdings would seem to suggest otherwise. Firstly, can you compare TCSH yield with that of GICs or HISAs. Further, do you have an opinion of this ETF as a place to park money. If you prefer other like ETFs would you also state how you would rank them. Thank you.

Q: HSAV returned around 5% in the last year, if interest rates going forward do the inverse of last year, is it safe to assume the return of HSAV will also?

Q: I have some US cash I want to park but do not want to be tied into a term deposit. I have read recently about cash management etfs. Can you recommend these and if yes then which ones? What yield would one expect? David

Q: Some time back, you mentioned a cash ETF that does not ay a distribution until the position is sold. Do you have the ticker for this one? Would they payments eventually be taxed as capital gains or interest income

Q: Good morning,

I have a fairly large amount of money to invest for a short period of time ( 1 month ).

Can you please suggest a money market fund ( ETF ) with interest that pays daily?


Regards

S.Gilbert

Q: Sir: some people are suggesting that seeking high income vehicles yielding north of 8% might be a better way to go. The following have been mentioned: 1. Preferred Stock closed end funds 2. CEF connect 3. High yield bond closed end funds 4. Senior loan closed end funds. Do you agree? and how does one find a winner in each of the categories? In a recession, this makes sense to me..

Q: Hello 5i,
I would like to buy HSAV.ca for a 1 year hold but I’m concerned about the erosion of the .62% premium and
price in a declining rate environment. I appreciate your thoughts. Would you still consider it a buy. It seems to be the only tax efficient HSIA available in Canada so perhaps it will always maintain its demand. Thank you.
Brad

Q: What’s your opinion on these new fixed income products?

Thanks and have a great day.

Q: Hello, I’ve watched this fund destroying wealth since 1995 ish. If the 30 plus years of declining rates were the result of poor performance do you think it’s possible something has changed and this could be a slow mover up in the future. Thankyou

Q: Thank you for the Money Saver's email " Avoiding The Yield Trap " on covered call ETF's. Garth’s question and your answer from February 25, sparked more questions. Also read all the Q&A on HBND.

My understanding HBND is 50% covered call on Treasury ETFs (eg: TLT, VGLT, VGIT, etc.) with target yield of 10%. Dividend growth is reliant on interest rate rising. You answered on Oct 6, 2023: “…But if rates stagnate or decline….the yield on this ETF may come under pressure, but its unit price can see capital appreciation”. Expectation is interest rate may go down this year.

Is it better to invest in HBND or dividend grower in the long term? So, I created a spreadsheet to determine the breakeven period where a dividend grower will match the annual dividend paid by HBND if dividend yield stays around 10%. I choose four random dividend growers FTS, SLF, TD, T with average historical annual dividend growth of 5%, 9%, 6% and 7% respectively. Starting point: Annual dividend payment as of January 2, 2024, no DRIP and no additional stock purchases.

If HBND dividend yield target yield remains around 10%, the number of years, when the annual dividend grower payment would exceed HBND annual dividend payment for FTS in 18 years, SLF in 13 years, TD in 16 years and T in 8 years.

Based on these results, if a person requires dividend income is the next 10-12 years, than HBND is a possible income source. However, if the dividend income is not required for more than 10-12 years, a viable option is to purchase a dividend grower since the annual dividend amount should exceed HBND and continue to grow.

Note: This is a simplistic point of view since HBND target of yield may drop with interest rate expected to drop later this year, a dividend grower rate may drop, no drawdown in capital for more than 10 years or black swan events. This exercise is focus on dividend not capital appreciation. This exercise could be applied to other income stocks (eg: XHY, HPYT),

Is this logic flawed? What other points should I consider? Is there a role for HBND or other high yielders in wealth accumulation portfolio vs wealth decumulation phase? Inflation in the last couple of years has reinforced (for me) to consider dividend growth to be able to fund retirement income for hopefully a few decades.

Thank you for your thoughts.

Q: Hi Peter & Team,

If I understand bonds correctly, we are in a period right now where we could see them do quite well over the next number of years. Do you agree or disagree with this statement?

If you said agree.... Some of the best performing in the past have been Municipal bonds. Could you please share your thoughts on Municipal bonds specifically regarding risk? If you think they would be a good to hold in a long term portfolio? And do you have any Municipal bonds you could recommend that might do well by us?

If you said we disagree with my statement in paragraph one... could you please explain why?

Thanks for all you do

gm

Q: Could you please recommend two 100% safe and liquid holdings, one Canadian and the other American. Could you advise the current interest rate they each pay?

Q: What do you think of senior loan funds in general, and this one in particular. Seems like a safe and diversified way to earn steady income. Any other information sources on this asset class? What would be your best pick?

Q: In the last couple of days there has been a few references on BNN to some regulatory changes that will have the effect of reducing the rates paid on HISAs at banks, etc. Can you pls explain exactly what is happening and how much effect there will be from this? Last, are there reasonable alternatives (ie secure with good rates) available if the rates go down in any significant way? Thanks for your excellent service

Q: Hey Peter & Team,

Apologies if I missed the answer when I searched, but I found it difficult to find my answer when I looked for a U$ dollar equivalent to "CASH." What would you suggest 3 - 6 months hold??? OR is there a U$ ETF representing GICs?

Thanks for all you do

gm

Q: I have part of my portolio in a self-managed account and another part in wealthsimple's roboadvisor. My fee only Financial planner said that he does not like the bonds in the roboadvisor which has an equal amount of ZFL (long bond) and WSGB (average duration of 5 years). It is not possible to change the percentage of ZFL to WSGB in a roboadvisor. Although I have really appreciated the service from the roboadvisor (I can have phone calls with a wealthsimple advisor) and love their platform, I am considering moving out of the roboadvisor because it is impossible to change the distribution of long to short bonds. In my self-directed account I hold ZAG - an aggregate bond. My question is: how does an equal distribution of ZFL and WSGB compare to an aggregate bond such as ZAG? Am I exposing myself to much longer duration in the roboadvisor compared to the self-directed account?