Investment Q&A

Q: Hi Peter & 5i: I am wondering about dividend reinvestment plans. Could you comment and maybe mention a couple of examples? Theoretically the company gets the money back that it would otherwise have paid out in dividends (at least to the extent of the DRIP participation rate), which it can then use to grow the business and, all going well, the results can be accretive to all shareholders and the accretion would be pleasantly leveraged for the DRIP participants. But suppose there is no progress being made on the growth front, or worse that the company isn’t really earning the dividend that it would otherwise have had to pay out in cash. Then it seems like all that is happening is a kind of steady dilution and potentially a dangerously growing snowball, because each new share that is issued comes with its own dividend rights stretching forward indefinitely. If the market intervenes by lowering the share price, then the rate at which the DRIP shares get issued increases because the dividends will buy more shares. Does this ever really get out of hand? It seems that there might be a significant difference in the DRIP impact on a company with a 3% yield versus one that slips above 10%. It would be different of course if the company was buying back its own shares opportunistically to offset the DRIP’s effects, but that would seem to negate the benefit of the company keeping the dividend cash in the first place. Are DRIPs generally a negative in the context of a company that might be a relatively higher risk investment? Thanks.

Q: How many stocks are required to own a diversified income portfolio of $125K and what weighting do you give for each stock? When should you sell to bring back the weighting down and what do you do with that profit, buy more stock for more income or buy more shares of the stocks that are down the most in the portfolio? Do you have a future plan to build an income portfolio, if yes, could you indicate a timeline? Thank you, Peter and Team. Your service and magazine are awesome tools.

Q: If Blackberry (BB-T)reports a good Q1 on June 28 and with all the shorts on the stock in the USA, would you expect a jump in the stock price?

Thanks.

Q: Thank you for your answer to my question about holdings in a RDSP. Given that we never know whether the CRA will accept the resubmission of request for DTC, the plan may have to be collapsed. If it that ends up happening (in 12-18 months), what holdings would you recommend, given that security and return are important.
Thanks!

Q: Can you explain why WCP is up .33 today to 10.55 when they just had a private placement of 17M shares (which is more than 10% of the 147M outstanding)at 9.90. Should this have not depressed the stock price?

Q: Are RCI.B, Telus and BCE buy or hold?

Q: Peter,

Do you think NKO could be at least a two bagger from here after the news?

Q: Hi Peter and team, I have a 60/40 US/Cdn portfolio. My US portfolio is really well diversified and growth oriented, but my Cdn portfolio, while diversified, has been a bit heavy with HR.un, REI.un, IPL.un and CPG. I am thinking of rebalancing by bringing in SUM and ESL or CSU. Have these three run up too much? I would also add BAM.a.

In the CDN portfolio I also have CNR, TFI, KBL, CGX, ANS, WFT, TD. As part of the rebalance I also recently added SLF, and HCG.

I rejected BEP.un and DCI as being too similar to to the stocks I propose to reduce. MG worries me after huge run up.

What do you think? Any other additions for me to consider?

Many thanks for your help,

Keith

Q: It is great having a source for individual enquiries on stock moves. Thanks for your expertise! Could you please provide an up-to-date commentary on Norbord. The stock seems to be under pressure, yet it is a good play on the continuing recovery in the U.S. housing market. Any thoughts?

Q: Morning Peter and team , what do you think about buying telus at this price ? It has come off considerably due to sector and downgrades this morning . Or would it best to wait for a bottoming in the stock before stepping in . Cheers Carol .

Q: I have 300 RCI.B shares. Should I sell or hold.

Thanks,
Milan

Q: I have 8.3% of my portfolio in shares of T and BCE, which have dropped incredibly with the Verizon scare. T is now -17%. BCE has dropped like a stone also, but is an old holding and still +12%. Is it time to buy, hold or sell on T and BCE. And is MBT,which has climbed recently, worth looking at?

Q: Hi,
I am looking to add a small cap to my portfolio but I can't figure out why AHF maintains a B- ranking. Do you still feel this company is a addition to a small cap portfolio.
Thanks,
Paul

Q: I currently own AR (Argonaut Gold), BTO (B2 Gold) and SSL (sandstorm Gold), and am considering adding SLW (Silver Wheaton). There is usually a good seasonal trade (i.e. buy) in gold & silver beginning around mid-July. With the price of gold so low, and sentiment seemly continuing to be poor, do think the seasonal trade may still be there? Also, with the price being low do you see any issues with the 4 names mentioned? i.e. ability to finance debt, or closing mines (like Barrick & Kinross), etc... thanks again!

Q: Hi Peter,
Could I have your thoughts on Agrium for the next six months. Do you feel it is a buy around $90.00?
Thanks,
Barry

Q: Any updated opinion on Spyglass? And are you familiar with Ridgeline (RLE)? I hold SGL but with the pullback of RLE, I am looking to add....thx in advance....great service

Q: Hi Peter and team, please comment on Jean Coutu (PJC.A).It has had a good move since you last commented on it. Is it too late to buy? Thanks, Tim.

Q: I was wondering if an index such as XMA ever changes its stock focus? For example would they focus more on agriculture rather than gold. Thank you.

Q: Any specific reason why IPL has been going down steadily the past few days? Thanks.

Q: I'm looking at VUS-Vangard Total US Market to get more US exposure. Is this a wise choice or can you suggest something? Thank you.