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Investment Q&A

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

Q: I have an overweight in these 3 insurers, and think it might be wise to fix an underweight in CAD banks, by selling one of these and then adding to my banking exposure. Which one would you sell here (and why) and which Bank(s) would you add? I hold RY, CM, and BNS and was thinking of simply adding to my positions, but can be talked into something else here. Thanks
Read Answer Asked by David on December 13, 2022
Q: I hold the above stocks in my RRSP. I understand that as of January 1, 2023, the IRS will require a 10% withholding tax when Canadian residents sell a limited partnership. Does this only apply to US based partnerships? Would it apply to BIP.un or BEP.un? Does it apply to partnerships held in an RRSP? It appears this could apply even if you sold at a loss. Thanks for your advice.
Read Answer Asked by Ken on December 13, 2022
Q: What would be your preferences in semi-conductor companies?
Thanks Lorraine
Read Answer Asked by Lorraine on December 13, 2022
Q: Dear 5i,
ENGH and OTEX look pretty beat up.
I am considering purchasing a 1 to 2% TFSA position in one or both.
Do you think these are bargain prices? Do you have a preference
if one should purchase today? Can you please provide your reasons
for your preference. I expect to hold for at least 3 years but ideally
forever. thanks
Read Answer Asked by Ian on December 13, 2022
Q: Lots of stuff on this in questions but not crystal clear. In simple form, what happens to bam.a shares? New symbols? What do you suggest doing, if anything?
Read Answer Asked on December 13, 2022
Q: I'm trying to understand the new Brookfield Asset Management Ltd spinout. I have two questions:
(i) It seems to act like a royalty on the asset management business. Am I correct that it does not have to add any additional capital to the business as time goes on?
(ii) On its web-site it claims a 90% payout ratio. However, from the recent Investor Day presentation (page 62), it states that there is 4.9B of distributable earnings for the original company for 2022, which would mean about 1.2B for the new spinout. As I calculate it there are around 450M shares, which means a projected dividend of over $2/annum. However, in the announcement of Dec 6, it stated that the starting dividend is about .28/quarter, or 1.12/annum. What am I missing?
Read Answer Asked by Daniel on December 13, 2022
Q: Just received a letter from my discount broker advising of changes to US withholding tax on distributions and dispositions starting January 1, 2023 that "might" apply to Canadians holding publicly traded partnerships in any account, including RSPs. As a long-term holder of both BIP and BEP, I have significant capital and gains on both. These are held in an RSP, so I have never been concerned about any tax implications. But now . . . ? The Brookfield site advises that they "do not expect" non-US investors to be subject to any withholding tax, and there is also a letter from their tax lawyers with the same claim with a bit more positive wording, but it ends with a disclaimer (hey - we could be wrong!)

I do not want to sell either BIP or BEP, but it would annoy me more if I ended up losing the withholding tax on distributions and (particularly) dispositions. Not sure how the IRS can withhold tax on a Canadian selling a non-US based company, but obviously there is a way, as the letter came from my Canadian big-bank brokerage which also has a significant presence in the US. Also assume that with the stocks being in an RSP, there would be no means of recovery through tax credits.

I would appreciate any comments you have on this matter. If the stocks should be sold, it would have to be done this year. Would this problem also apply to BIPC and BEPC, if I just did a switch?

Thank-you, Grant
Read Answer Asked by grant on December 13, 2022
Q: AQN's dividend is now 10%. There is a lot of talk that AQN will cut its dividend to be in-line with its peers. That would be around a 50% dividend cut. [In the past you have said many times that the first dividend cut is never the last.]

I have seen it mentioned here and elsewhere that during the financial crisis Manulife Financial cut its dividend, and it appears investors from that time have never forgotten that, or forgiven them for it. By the way what was the dividend cut they made? Was it only 1 cut, or was it several cuts?

Do you think that if AQN cuts its dividend, the stock will languish for a very long time as investors (like me) will not forget, and will never forgive?

Has AQN ever cut its dividend before? If yes, what were the cuts and when?

Are there other high profile examples of dividend cuts (excluding energy stocks in 2020) where the company has been penalized for doing that for a very long time?
Read Answer Asked by Paul on December 13, 2022
Q: Hello Peter,
This question is relating to your holdings in your Income Model Portfolio. Are all the income declared from these investments qualify for dividends tax credits? Or are they treated as normal income like interest income from GICs and would be subject to our normal tax rate?

If it is taxed at our marginal rate, would you recommend holding these investments in a RRSP account?
Many thanks,
Roger
Read Answer Asked by Roger on December 13, 2022
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