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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: As follow-up and in addition to your reply to Maggie's question
this morning about the BUY/SELL/HOLD question in todays market.
Here is an extract from a column in the Globe & Mail by John Heinzl and it gives a startling example of the effect of re-investing dividends and by coincidence uses Royal Bank (RY) as an example:

"Consider two investors, whom we’ll call Harry and Sally."

"On Dec. 31, 1993, each invests $10,000 in shares of Royal Bank of Canada. They hold their shares for the next 20 years, the only difference being that Harry spends his dividends while Sally reinvests the quarterly payments in additional shares of Royal Bank."

"Now, it’s obvious that Sally will come out ahead. After all, she’s not spending her dividends like Harry is. But the magnitude of the difference may surprise you."

"At the end of 20 years – on Dec. 31, 2013 – Harry’s $10,000 investment will have grown to $98,923, according to Bloomberg calculations. That sounds impressive, until you compare it to Sally’s investment. It will be worth $193,301 – nearly twice as much as Harry’s. On an annualized basis, their returns work out to 12.1 per cent and 15.9 per cent, respectively."

Thought other member might be interested in this tremendous example of the power of compunding dividend re-investing.

Thanks 5i,
Scot
Read Answer Asked by Scot on May 23, 2014
Q: Peter
I was given some wonderful information on Teva Pharma on a recent trip Could you comment on this stock as I am thinking about taking a small position
Thanks for your great service Paul
Read Answer Asked by Paul on May 23, 2014
Q: Could you tell me why ET is in your income portfolio?
Is there still a change of a take over?
Also if you had a choice which 3 stocks would you put in a tsfa?
Read Answer Asked by Josh on May 23, 2014
Q: gwr what do you think of this company for income and growth and comparied to hwo which do you prefer. thanks
Read Answer Asked by don on May 23, 2014
Q: Good afternoon...I am looking at adding to my portfolio with available cash...based on your current portfolios and stock prices can you advise what are the top 6 you would currently buy based on current price and future growth/dividends...

Thanks again
Read Answer Asked by Matthew on May 23, 2014
Q: Peter what do you think of buying CQE right now?
Read Answer Asked by Martina on May 23, 2014
Q: Hello again 5i,
Another question regarding my intention to sell stocks in my RRSP and buy fixed income. I have wondered, since I already have the stocks, whether I wouldn<t be better to simply put a stop loss on the security and let it ride, rather than selling it outright. That way I would still have the income from the stock and would be protected in case of a downturn. If the stop was triggered, then I could buy fixed income. What are your thoughts on this stragegy? Am I missing something?
thanks
Read Answer Asked by joseph on May 23, 2014
Q: Hi guys

Of the oil and gas companies how would you rank DEE?
Do you see it as a possible take out candidate?
Thanks
Hersh
Read Answer Asked by Hersh on May 23, 2014
Q: I am looking at Long Run (LRE) as as high-yield play. Could you comment on its recent dividend policy, sustainability and payout ratio going forward. Also, I note that some of the senior management comes from Penn West. Are these the same people that mismanaged Penn West for so long? Note that my objective with this investment would be income over growth.

Thank-you
Read Answer Asked by grant on May 23, 2014
Q: Peter, thank you for all the sound advice you offer to us. we keep hearing that what goes up must go down. I remember back in 2004 people saying bank stocks were a no brainer as they kept going up although we were starting to see some segments of the economy ie car indusdry showing signs of weakness. However the stock market continued in a positive trend for another few years. Should we be concerned at this junture or continue to have faieth in the capital markets? Would you consider this to be a hold period and buy on weakness or sell on strength so you have cash for a future downturn. I realize you do not have a crystal ball and no one can time the market but there are trends I am sure you have seen.thank you again for the service you offer.
m
Read Answer Asked by Maggie on May 23, 2014
Q: good evening,
just wondering your thoughts on XDV growth over the next 6 months?Thanks!
Read Answer Asked by Patricia on May 23, 2014
Q: Good morning 5i!
Pembina’s (PPL) rise has resulted in it being 14.7% of my portfolio (retired, for dividend income), with the dividend now being less than 4%. I own 14 stocks, and am also in the oil/gas/energy world with a full position in ENF and a minor holding (.8%)in the more speculative/risky ABM.
I am considering trimming to a position of 10% or slightly less and biting the capital gain bullet. These funds I would invest in Crombie (CRR.UN). The increased dividend (CRR.UN pays a distribution of 6.67%, AFFO payout of about 89%) has about a 3 or 4 year payback on the extra taxes for 2014. I own other reits (about .75 positions in each of CAR.UN, HLP.UN, and MRG.UN) but nothing in the retail sector.
Crombie had a 90% ROC last year, and over the previous few years an average ROC of 62-65%, so I realize it will result in more taxes on an ongoing basis. I see no easy way for estimating the future ROC, and the net tax effect. I have every intention of holding CRR.UN indefinitely.
I would appreciate your comments on the advisability of this “rebalancing”.
Thanks!
Read Answer Asked by Paul on May 23, 2014
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