Investment Q&A

Q: Hi All at 5i! Hope you are enjoying the summer! I was wondering if you could recommend a book ( or other source) on investing for a total novice. A friend of my son has started on his working career and has accumulated some money. He has no knowledge of investing and would like to start learning about the topic. I recommended 5i to him, and he is considering joining after he has a rudimentary understanding of the world of investing. Hope you can help . Cheers, Tamara

Q: I seem to recall that there was a list of all companies upon which 5I had generated reports -- but for the life of me, I can't find it. (I simply keep landing on the Reports page, where each company has to be called up individually.) Did this list disappear with the new website features -- or am I simply not looking in the right place? Thanks.

Q: Can you explain why Fortis shows a negative free cash flow, and how this relates to its dividend? Is it because they have long term contracts in place, so they are able to predict further cash flows? When I compare it to Canadian Utilites, their free cash flow is positive. I feel like I’m missing something with Fortis.

Q: From time to time I like to refer back to replies to certain miscellaneous questions. It would be nice if 5i had a feature that allowed members to save questions.

Q: I have a friend, age 27, who wants to start investing. What books, magazines, websites, podcasts would you recommend for a beginner? She has 15K in her TFSA and would like to know where to park it for now. There is no plan to withdraw the money in the near future.
Thank you

Q: Due to health problems my Doctor advised that I cease to manage my investments through a bank self managed brokerage account. I will transfer my assets to a advisor associated with Hollis Wealth. Because HW is not a bank I had to sell my holdings and then transfer the cash. The investment will be made this week. Should I invest all the funds or spread it out over a period of time? It wii be a very long time investment.
Thanks for your advise over the past years.

Q: Hello Peter et al.

With all of the latest rhetoric about trade wars between the US and a lot of countries I have lightened my stock portfolio from about 97% to about 75% with the remainder in cash. I have in the last few years worked hard to get the increase in my RRSPs value. I am looking to put the cash into something that provides the following:
1. Quick access if necessary to re-invest again when I feel the time is right.
2. No loss of the capital with what the cash is put into.
3. Maximum rate of return for the above two criteria being met. I know it will not be high.

Is there a Money Market ETF or something similar that meets my three criteria. Because the cash is in my RRSP accounts I can’t take it out without paying tax on it which I do not want to do.


Thanks,

Brendan

Q: I hold AQN in a cash and Tfsa account. I would like to have the dividend kept in US $ as we often need US $. I presume the dividend would still qualify for the dividend tax credit? I would just have to convert it to Canadian in the cash account. The other account wouldn’t matter if I convert it too? I would have to know the Canadian $ value if I took it out?
Thanks for you insight into this.
John

Q: Re Sheldon's Q, Recognia is a feature of Investor's Edge of CIBC

Q: This is a followup question for my question from last week about payout ratios.

I understand your reasons for using cash flow over earnings to calculate payour ratios. Thanks for clarifying. But when I use your posted numbers to calculate it for ENB, I get:

Payout ratio = Dividend / cash flow
= Dividend / (Price / Price to cash flow)
=2.684 / (46.69/9.7)
= 56%

But, in the question I asked previously, you stated 37% was the payou ratio for ENB. It was correct for BCE, however (3.02/(54.57/6.5)=36%). I guess I am not calculating it correctly.

How do you calculate your payour ratios based on cash flow?

Also, since it is such an important number that others don’t use (based on cash flow) could you include it in your company profile?

Thanks again,

Fed

Q: A few years ago my former broker recommended stochta.com which shows free technical charts and more. For charts of Canadian companies add .c to the symbol. I hope this is useful to some members. Thanks for the great service, Frank

Q: With reference to Sheldon's question on Recognia and MACD crossovers, a free resource for positive and negative crossovers can be found here:
http://stockcharts.com/def/servlet/SC.scan

Q: Payout ratios

I am confused about payout ratios. I have read here several times that you prefer to stick with dividend income stocks that have payout ratios below 50%. You have also suggested recently that the following were good solid choices for dividend income stocks. Your website does not include payout ratios, but I suspect your calculation is different from those I have found elsewhere. Below are the payout ratios I found in other places. As you can see, they are mostly above 50%, and some are above 100%!

Could you please comment on your calculation of payout ratios, that have these below 50%, or why the high ratio is acceptable presently?

Thanks again.

PWF 72%
BCE 97%
CU 116%
TRP 78%
ENB 182%
TRI 169%
QSR 79%
AQN 130%
T 82%

Q: Hi All, I have a 30 yr old son who is very bullish on cryptocurrency. He is quite excited about a new product, similar to "acorn" which I believe operates as a trading platform in the form of a downloadable app., and allows trade, buy, sell crypto with ease. I think I know your answer, but what do you think of investing in this idea? Is there an existing platform?
2nd question - What can you tell me about Clovyr? Does it trade on the TSX or DOW?
Thank you! The 5i team has helped me invest wisely over the years, and sleep well at night. I appreciate your research and members questions.

Q: With reference to Sheldon's question on Recognia and MACD crossovers, I have been a subscriber to Vector Vest for a number of years. They provide both fundamental and technical information which I have used very successfully. They offer trial subscriptions for ~ $10.00 USD.

Q: Recognia provides a service of Technical Alerts to at least iTrade and T D Waterhouse, and perhaps others. This past weekend they have changed their platform for technical alerts drastically, leaving me to seek out another platform that issues technical alerts.
I use the MACD indicator in my alerts amongst 200+ stocks that I have researched and screened on a fundamental basis. Due to the number of stocks I follow it is essential that I have a technical alert service that alerts me when the MACD crosses either positively or negatively, indicating a buy or a sell. They used to email me a list of any of the stocks on my watchlist when it did a cross over after the close.
Now that Recognia no longer provides the service I am looking for, can you suggest one (I am willing to pay),

Thanks in advance


Sheldon

Q: In reference to Donald’s question about the Td GIC linked to banks and utilities:
I agree generally with the reply provided by 5i. However, in your response you talk about “going to cash” and I think this may be confusing. The product offered is a GIC and is insured. The principal is protected so there isn’t an issue with “going to cash” in a bad market. You will get your money back at the end of the term. It is essentially a cash investment all along, although one is locked in for the term.
What motivated me to write this was the deceptive way, in my opinion, TD is offering this product. It says the MINIMUM return is 2% and states quite clearly that this is an annual return on the main webpage describing the GIC. However, if you read through the prospectus (so dry and complicated it will give you a migraine) or click on the tiny footnote you will see that the 2% is actually a 3 year compounded return of 0.66% per annum. The 2% is a total return. If the market goes down or sideways, you will get a whopping $20 per $1,000 invested over 3 years.
I am a long time TD client and shareholder but I am disturbed by what I feel are decptive practices and the “pushing” of products on Canadians. This is approaching Wells Fargo behaviour, IMHO. It can’t end well for anyone. Sorry to take up your Q&A time with this but I feel the investment community needs to speak out about this.
Good luck fellow investors!
John

Q: TD is offering Market Growth GIC’s and suggesting “earning up to 18.8%” on Canadian banks and utilities. Guaranteeing the principal.

For a retired income focused investor would this be a meaningful part of the fixed income part of a portfolio?

Too good to be true?

Thanks for your help.

Q: I'm a young investor (early 30s) and have previously had all of my portfolio in equities. I'm concerned about risk and want to put about a quarter of the portfolio into safer, fixed income type investments. I'm struggling to understand the benefits of investing in GICs (currently with rates of 2.8-3.5%) vs Bond ETFs (like VAB or ZAG). Can you help explain the difference and benefits between Bond ETFs and investing in a direct GIC? Can you recommend the better choice for me; GICs or Bond ETFs?

Q: Seems likely we’re headed for a bit more inflation. Assuming this thesis plays out, which sectors do you think should benefit and which sectors should be avoided? Are there specific companies that could benefit greatly and which companies could be badly hurt?