skip to content
  1. Home
  2. >
  3. Investment Q&A
You can view 3 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

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

Q: Withdrew $75000 plus in calander year 2021. Assuming I can contribute $75000 plus $6000 in 2022 .
The contribution will be stocks from my unregistered account. My choices to contribute are, AQN,BCE,EIF and SLF plus cash for which will purchase additional shares of BCE and SLF.
Am I correct on contribution? Any comments on my choices for contribution. Looking for some income plus enough growth to mitigate rising interest rates and inflation.

Read Answer Asked by Roy on January 07, 2022

Q: Hi Peter and 5i,
Thank you for all the valuable advice and insight over the years. It is much appreciated.
I’ve been slowly buying a few convertible debentures as a small part of my fixed income portfolio. Mainly interested in the enhanced coupon rate the convertible debentures pay with the potential of the conversion into common shares.
I just have a few questions to ensure that I am understanding all the terms associated with the convertible debentures. Most of the issues seem to have relatively all the same terms regarding Conversion, Maturity Date Structure and Share Payment Option on Redemption or Maturity.
I’ll use the November 16th issue from EIF as an example.
Maturity Date – January 15, 2029
Coupon Rate – 5.25%
Conversion - The Debentures will be convertible at the holder’s option into fully-paid common shares of the Company (“Shares”) at any time prior to the earlier of 5:00pm (ET) on January 15, 2029 and the business day immediately preceding the date fixed for redemption at a conversion price of $60.00 per Share (the “Conversion Price”), representing a 30% premium, being a ratio of 16.6667 Shares per $1,000 principal amount of Debentures.
Redemption Scenarios:
1. The debentures will not be redeemable by the Co. at any time on or before January 12, 2025.
2. After January 15, 2025 and prior to January 15, 2027, the debentures will be redeemable by the company on not more than 60 days and not less then 30 days prior notice at a price payable equal to $1,000 per debenture plus accrued and unpaid interest, provided that the Current Market Price (CMP is defined as the volume weighted average trading price of the shares on the TSX for the 20 consecutive trading days ending 5 trading days prior to the applicable date) of the shares on the date on which the notice of redemption is given exceeds 125% of the Conversion price.
3. On or after January 15, 2027, and prior to the Maturity date, the debentures will be redeemable by the company on not more than 60 days and not less than 30 days prior notice at par value plus accrued and unpaid interest.
Share Payment Option on Redemption or Maturity – Payment will be satisfied by delivering for each $1,000 due, that number of freely tradeable shares obtained by dividing $1,000 by 95% of the Current Market Price (CMP)
Questions:
1. Do you see any downsides to have a % of fixed income portion of a portfolio in convertible debentures?
2. Redemption Scenario #2. This seems like the critical 2 years.
a. Am I understanding it correctly in that the Company can only redeem during these two years if the price of the common stock is above $75 (Conversion Price $60 x 1.25)?
b. If the company gives a Notice of Redemption during this period, you better take it (provided my understanding of a. was correct). It seems they would really want to pay in shares versus cash.
c. Do the discount brokerages (in this case iTRADE) normally notify you of a Notice of Redemption?
3. Redemption Scenario #3. If you get a Notice of Redemption in the last two years, does the holder have the option to convert into common shares (say the shares were trading at $80) before the redemption date.
4. Is there a general rule as to when you should convert?
5. Is it common for companies to use the Share Payment Option on redemption or maturity?
6. Have I missed anything that you would suggest to watch for?
Thank you so much for helping me understand my small adventure into convertible debentures.

Read Answer Asked by Dennis on November 18, 2021

Q: These three stocks along with cash , are equally held and is my entire TFSA. This represents only 2.5 % of my combined non registered account and RRSP ( RIF next year).
My feeling ( and performance )on the stocks are :

AC: ( Even )Covid rebound extent still in question, high oil prices a drag
EIF: ( Up ) solid dividend, owned long time with good results
EGLX: ( Up ) , most volatile, doing the right things in a growing sector

Am willing to take a fair degree of risk. Your opinion on the portfolio is appreciated. How would you adjust and what are some of your recommended stocks ? Thanks. Derek

Read Answer Asked by Derek on November 17, 2021

Q: I plan to sell (dump) SNC and replace it with EIF in the Industrials sector, STN is a long term hold that I intend to keep, RRSP portfolio so safety and long term growth are key, dividend is nice. In terms of timing, would you hold off for now due to near term positive prospects for SNC or just proceed? Also, do you have a better suggestion than EIF that would be complementary to STN? Thank you.

Read Answer Asked by Barbara on November 12, 2021

Q: Looking at the concern over rising interest rates I took EIF as an example of the effect,
EIF has a dividend of approximately 5%, the equivalent interest rate would be in vicinity of 6%.
So if my calculations are right interest rates have a long way to go to have a material effect,
In this case also we have some growth and the possibility of acquisitions.
So should I be concerned about the effect of rising interest rates on EIF?

Roy

Read Answer Asked by Roy on November 08, 2021

Q: I am looking for monthly income. So far I am considering ZEB, KEY, PPL, and either HHL-B or HHL-T. Your opinion on those, and any suggestions you have, please.

Read Answer Asked by James on October 29, 2021

Q: Hi We are a retired couple using our rrifs for income. We have been waiting for the right time to put our 10% cash to work. Please advise in order which of these selections to top up is best now or wait or don't buy at all.

Read Answer Asked by Peter on October 20, 2021

Q: The yield on CDZ is 3.0%, if I buy equal amounts of the top ten stocks, the average yield is 5.48%. What accounts for the 1.48% difference in yield and is the risk proportionally higher buying the individual stocks than buying the EFT

Read Answer Asked by Ron on October 20, 2021

Q: I have a non-registered account which is invested in roughly equal weights of 13 Canadian blue chip dividend payers (NTR, RY, BNS, TCL.A, T, BCE, SLF, QSR, ENB, FTS, LNF, BEPC, AQN) and CPD. I am in the process of re-organizing it a bit and have some additional cash to invest.

I have tinkered with SYZ, FSZ and LIF in this account and none of these quite fit the profile I'm going for (steady eddies thru next economic cycle, decent and reliable dividend).

Over the last year or so, I have been tweaking this account to get it to the point where it will be very low (or no) maintenance. Game plan is to drip for another few years, then start to take the dividend in cash to live off. Capital preservation and dividend reliability are obviously key.

Looking for some guidance on choosing 2 or 3 additional holdings from the following list:
EIF (nice div, needed industrial exposure)
AW.UN or ZRE (are these OK in an open account?)
CVD or XHY (some fixed income to smooth out any upcoming lumps) or other fixed income idea.

Do CPD, CVD, XHY make sense now with tapering about to begin in the US?
All comments about this strategy and my stock selections are most welcome.

Several questions here - please take several credits


Thanks in advance,

Jim



Read Answer Asked by Jim on September 15, 2021

Q: Apparently I am not overly observant because I just realized my WSP has gone from the income stock I first purchased to a growth stock. As a result of the share price going up four-fold while the dividend remained the same I am now sitting on a big capital gain and an outsized position with a relatively low yield. In your income portfolio it sticks out for the same reason, contributing a huge “since inception” return but low yield. I would like to at least reduce it and put the funds to work in another industrial with higher yield but can’t land on anything. I want to like MAL but of course it is much smaller cap. Any suggestions? What would you replace it with in the Income Portfolio if you were so inclined?

Read Answer Asked by Stephen R. on September 09, 2021