Investment Q&A

Q: Non-registered account with goal of primarily dividend income has done quite well, with all of the noted holdings nicely in positive territory. In hind sight MG and SYZ would have been in a registered account. SYZ is up 63%, MG 24%.
Overall account yield is currently 3.8%. Would prefer it closer to 5%
Need some help with this "good problem". Take capital gain now and move into yieldier positions, or let running stocks run and deal with bigger gain in future?
If I move out of some of the growthier stocks, which div payers minimum 3% yield to move into?
Overall portfolio diversification is pretty decent, and diversification within this account does not have to be perfect - dividend security within this account is more important.

Thanks,
Jim

Q: Interesting to see one of the preferred shares ETF gaining 'interest' (pun intended) over the past year.
What is your outlook for preferred shares generally and would you step into this area?

Q: Hi!

I used to own these ETFs for my fixed income exposure. I went to 0% fixed income during the downturn last year, instead using the proceeds to buy stocks that were crushed. I'd like to slowly start to build a position again in my RRSP. Am I too early? It seems like rates have started to rise and where they go is anyone's guess, but if bonds have an inverse relationship to rising rates, aren't I setting myself up to lose money? Does a laddered approach negate that somewhat? Maybe its best to start with CBO since its Corporate credit and laddered? How would you rank these in general and in order of which I should accumulate first. I realize XHY is riskier than the others.

Thanks,
Jason

Q: Hi guys
I have a small portion (under 2%) of my portfolio in preferred shares (CPD and PPL.PR.M ). I bought these for a safe steady eady type of return but as you know investing in Preferred shares the last few years has felt like a roller coaster. For example PPL.PR.M is still $1 below where I bought it about 5 years ago, and has dropped to as low as $14. So I am wondering why not sell my preferred holdings and just buy more of a nice dividend stock like BCE where I am actually getting 6.2% yield - more than I am getting from my preferred? I know I am further down the chain if the company defaulted but I also get more upside. Your thoughts on selling my preferred holdings and buying some nice safe dividend stocks instead?

Thanks

Stuart

Q: I have about 5% of my portfolio in CPD ETF. So far it's been a nice, steady-eddie performer with a good dividend. In fact, it's been moving steadily upward for the last year now. But when I look back on its history it has been anything but a good performer. It was almost $20 in 2007 and is now just over $13. Why was this such a lousy investment for so long and what has reversed so strongly in just the last year? I don't see any point in its history when it went up so fast except in 2009. More importantly, is this likely to continue for a while or do you think it will revert to its previous behaviour?

Q: How do you like Preferred's these days? I've recently replaced some of my bond ETF's with ZPR. I understand they carry equity/credit risk but do you see pref's as offering better protection against rising rates? Thanks.

Q: Preferred shares fit into the income part of a portfolio and also can be a fixed income substitute if one can tolerate the extra volatility (especially now given bond yields and potential for rising interest rates). In the past 5i has suggested CPD over DIVS for etf exposure citing the fee differential. Two questions (1) what is your medium term outlook for Canadian preferred shares and (2) given complexity of different preferred share issues and an inefficient market, is there an advantage to the active approach? (Please explain why or why not - thanks).

Q: For the fixed income portion of the portfolio, do you have any recommendations / suggestions (ETF, private fund, mutual fund, specific bonds). Realistically, hoping for a return between 3 and 6%. I am ok to take some risk. Looking for a decent risk/reward investment. Long term hold.

Q: Do you know how preferred shares performed at the time of high inflation in the 1980's? If we see high inflation in the years ahead, can you estimate the impact it might have on etfs like CPD?

Q: Good morning,
I am a retired investor with a 50/50 asset mix and an equity focus on solid dividend payers with some growth prospects. As a bond matures in my RRIF, reinvestment opportunities in fixed income are unattractive. With projections saying low rates will continue for some time, I'm wondering if it would be a good time to buy a rate reset preferred stock ETF for income, and as a hedge against future rate increases. I would appreciate your thoughts, and if you support it, which ETF would you suggest?
Thank you.
Edward

Q: You continue to hold XHY and CPD in the income portfolio. My understanding when purchasing these was that they would perform well in a low interest rate environment. That has not been the case. I am about breakeven on them over the past 3 years with dividends included. What is the investment thesis for holding them now that interest rates are already so low. Is it time to move on?

Q: Wondering what the future holds in the way of capital appreciation for CPD? What will increase the value of CPD, like sentiment or change in economic cycle or something else?....Thanks....Tom

Q: Good day,
I hold BEP.UN;BEPC;BBU;CCL.B;ENB;EMA;H;FTS;CTC; and BAM in a non registered account and thanks to you I have done very well following your Q & A and portfolios. I am down 43% in SU; down 23% in CPD; down 16% in IPL and 6% in POW. Would you add to the winners? Add to the temporary losers or ADD new ones. After today, am tempted to add to SU for sure. Have RRIF and TFSA with pretty balanced sectors. Overall, Overweight in Utilities, Financials and okay with that. Many thanks, Paul

Q: Hello 5i,

I am looking to create a sector diversified portfolio, that will provide dividend income
each month throughout the year? Preferably yields over 4%, reits, and etfs are acceptable. Even better would be payouts at the beginning of each month?

Thanks for your help
Stephen

Q: I am always looking for the contrarian angle
Preferred shares are being talked about.
Can I purchase an etf? Or do I need to purchase individual shares?
A couple choices would be appreciated.

Q: For a balanced portfolio with the next 3-5 years in mind, what are your suggested weightings in preferreds, utilities and high yield bonds. Given low interest rates preferreds in particular seem like a place investors will go to seek higher yields with some opportunity for growth.

Q: Hi Team,

I'm considering reducing my fixed income portfolio allocation in favour of adding some Preferred shares/ ETFs And some Utility stocks. What investments would you make to accomplish this portfolio change?

Q: Hello Peter, I am intrigued after reading that a Canadian can earn about $50,000 per year of dividend income without paying any income tax. I know about your income portfolio of course, but with a view to maximizing just Canadian eligible dividend income, what would you think of the following portfolio of 14 stocks. Equal weighted, the stocks would yield 5.3%. (Disregard lack of market diversification; this can be achieved in one’s registered accounts.) Also, if one wanted to pare down the list to 10, which 4 would you delete?
BCE, CM, ENB, FTS, CNQ, AQN, CPD, FSZ, MG, KBL, POW, ALA, BIPC and NTR. Thanks!

Q: Good morning 5i. I am considering "parking" about 10% of my portfolio in "cash equivalents". Are CVD and CPD your preferences in this case as I see they pay out roughly 5% which seems a reasonable risk/reward scenario? Are there other options or recommendations that you might consider? Thank you in advance.

Q: Trying to make some 'secure' income of 5% or more. I've heard that Split Corp preferred shares may be a more stable route to go. Any advice in this regard? Could you also recommend a few Split Corp, or regular preferred shares, that meet that criteria of being 'super safe' but yield at least 5%?
Could you also please recommend any websites that cover the preferred space well.
Thank you very much.

PS: I asked a similar question a couple days ago but I don't think it was received.