Investment Q&A

Q: Hi Everyone at 5i! I need your advice. I have a non registered portfolio, half I have invested in Canadian and US growth and income stocks. The other half I would like to invest in something more secure. GICs come to mind, but with low interest rates, inflation and unfavourable taxation, they seem like a loosing proposition. Any low risk suggestions??? Thank you for all that you do!!! Cheers, Tamara

Q: My 20 year old grandson is about to step into the investing world. His plan is long term but his portfolio will be small to start. Can you suggest a starting point? I can teach him all the lessons you have taught me since 2013 but we just need a starting point.

Q: If buying US shares in my TFSA am I better to buy USD then purchase the stock? Or just buy the shares using CAD?

Dealing with about 75K CAD

Q: Hello Peter,

With the uncertainty created by the new variant likely to impact the economy and delay interest rate hikes I am preparing for extreme market reaction in the margin account where I might have to lighten up the portfolio.
I would appreciate if you could grade the sectors and subsectors to reduce first, from the list below.
Industrials, Technology, Digital payments/lending, Faangs, Online Retailers/commerce and in general high growth(&value) companies that have taken a hit over the last week or so.
I apologize if the question has got jumbled up, but would appreciate your rationalized response.
As always, your opinion and suggestions are highly valued.
Regards
Rajiv

Q: Hello Peter,

If one wants to own just one North American stock in the digital payment space, which one would you recommend? And if two, which would be the other one? Would there be enough differentiation or a low correlation to justify having two stocks in a portfolio?
In a similar vein, could you give me your recommendations (excluding GSY) in the lending/credit space?
Thank you in advance.
Regards
Rajiv

Q: For example, I have 200 TD shares at a cost of $50 EA in my cash account with Questrade. I have built this up over the last few years. I have NOT done anything at Tax Time, re: Div Tax Credit, Gross Up, etc. Should I be doing something? Each year I simply filed my Tax return based on what Questrade sent to me & the CRA.

Thank you!

Q: 5i, good morning
My question is on the new 3% surtax on big banks, insurance proposed by the current government, how (if any) would affect to investors holding banks/insurers stocks, or even a simple saving account!
Is it time to move away from Bank/Insurance investments?
Thank you!

Q: Hi Peter,

Maybe we are wrong but it seems that investment sites are approaching the end of the year and 2022 with caution. The topics of correction and reduce risk are common themes mixed in with inflation and interest rates.

If you were a medium risk - just retired person, which 15 stocks and/or ETF's would you hold right now (no bonds)? How much, if any cash would you sit on to buy dips or on corrections.

Cheers,
Debbie and Jerry

Q: Hi Peter & 5i,

Just a comment. I always find your answers to ROC (Return of Capital) perplexing to me. 5i seems to view ROC as almost a completely negative situation and that you are almost always receiving your own money back. That is just not the case. Today's response to a question from Albert regarding the ROC with regards to CAR.UN and REIT'S highlighted this situation even more. I like a stock (CAR.UN) that has went from $30 in 2016 and is $60 in 2021 and that 63.8% of the distribution during those 5 years has been ROC. Multiple great things to like in a non-registered account from a total return basis and a tax scenario.

The technical details for ROC and REIT's can be highlighted in this response from John Heinzl of the Globe and Mail. It is one of the best answers that I've seen.

Please post as Public if you think it can help with the ROC understanding.

This is the question posed to John Heinzl - I have a question about calculating the yields of real estate investment trusts. Many REITs distribute significant amounts of return of capital. It has never made sense to me to include getting my own money back when calculating my yield. Do posted yields need to be adjusted by deducting the ROC to get a more realistic idea of what one is receiving?

Answer - Return of capital doesn’t necessarily mean you are “getting your own money back.” In general, ROC is defined as the portion of a distribution that does not consist of dividends, interest, realized capital gains or other income. In some cases – for example, a high-yielding mutual fund that distributes so much ROC that its net asset value erodes over time – you are indeed getting paid with a portion of your original capital.

But with REITs, it’s not that simple. ROC typically arises when a REIT’s distributions exceed its taxable income. This isn’t necessarily a problem, however, because income is affected by accounting items, such as depreciation, that don’t reduce cash available for distributions. In other words, when you receive ROC, you are getting cash generated by the business, not some sleight-of-hand trick by the REIT.

For investors, ROC has one big advantage: It is not taxed immediately. Rather, ROC is subtracted from the investor’s adjusted cost base, which gives rise to a larger capital gain – or smaller capital loss – when the units are eventually sold. For REITs that distribute large amounts of ROC, it can significantly reduce the tax burden in non-registered accounts.

Interested in a particular REIT? Most REIT websites provide a detailed annual breakdown of the tax characteristics of their distributions. In addition to distributing ROC, REITs typically pay out capital gains (50 per cent of which is taxable), other income (which is fully taxable) and in some cases, dividends (which benefit from the dividend tax credit).

One final note: When assessing their operating performance, many REITs focus on real estate cash-flow measures, such as funds from operations (FFO) and the more stringent adjusted funds from operations (AFFO). These measures are also useful for determining a REIT’s payout ratio and assessing the sustainability of its distributions.

Q: It's almost mid November, is it possible to name some stocks that will probably have some tax loss selling and because of this may become attractive at the lower price?

thanks,

Paul

Q: Just a question about "Sell on news stocks", I find it quite confusing that so many stocks nosedive with exceptional earnings reports and your response is it looks like investors are selling on news?? Wouldn't it make sense to dump the stock the day before earnings came out after a big run up and buy back in later??? Thanks.

Q: hello:
This is a question about a private company.
About 10 years ago, we invested into a company called "Redev". Over the years we've collected a small amount of dividends. Recently, I've been interested in selling some shares to raise cash but haven't been able to contact the company. I've left voice mails and email messages.
Do you know this company at all? Is there some other way to go about contacting them (eg. a public entity like OSFI or ???). We're very disturbed that there is no communication. Can you help on this one?
thanks
Paul

Q: Where do I find information from Analysts? To quote a recent question: Analysts are estimating ATD.B's 2022 YE results for earnings growth to be flat, 2023 EPS to grow 5%, then EPS to grow at 8.5% for the next 5 subsequent years.

Where does a person find this information about Analyst projections? Is there some kind of website?

Thanks

Q: If the democrats get these two bills passed this week what will it mean for the market.

Q: Hi 5i,
I wonder if the market is (and will continue) reacting quite negatively to the new federal cabinet, out of a belief that economic growth, national self sufficiency and real prosperity for Canadians is not currently high on the list of government priorities. Nothing can hinder economic health like obstructionist government policy and I sure see lots of that in Canada these days. I'm feeling like I should concentrate hard on moving as much as I can into US and international names.
Would you say I'm overreacting to what the next 18 months to 2 years (the usual life span of a minority government) might bring to Canadian business? Are there sectors that are likely to thrive during that period, other than maybe the banks, do you think?
Thanks for any insight you can offer.
Peter

Q: When is is tax like loss selling generally finished? I’m looking to buy a stock that has declined for the better part of this year and has good prospects for next year.

Q: Could you provide the names of some companies that have declared their first dividend over the past several months. Canadian or U.S., any size market cap. Thanks.

Q: Your article today state the the 3 best sectors to benefit from current supply constraints are Raw materials,Industrials & Financials.Please provide a few best names from each of the 3 sectors to invest today.Txs for u usual great services & views

Q: Hi 5i Team - Are there any Canadian companies in the semi-conductor space that would be of interest to you, including start-up companies, suppliers of materials, and any potential companies on the horizon. I sold my shares in Photon Control some time ago and am looking for some kind of replacement on the Canadian side. If the U.S. is the only way to go in this field could you please suggest a couple of top picks. l already have Nvidia. Thanks.

Q: What are your thoughts on the upcoming Q4 IPO and valuation?