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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: Hi 5i,
Just a comment in relation to BIP.UN’s buy-out of ECI. I have held both of the securities for a number of years. ECI shareholders who have not previously held BIP.UN should take a careful look at it to determine if it is appropriate for their needs. ECI pays a fully eligible Canadian dividend on a monthly basis at a higher yield, relative to the recent past price range of ECI. It may be that the takeover premium makes BIP’s yield higher but only by dramatically lowering ECI’s. In contrast, BIP pays a quarterly distribution that is not an eligible dividend, is broken into three categories for tax purposes, and is paid in $US. Depending on one’s brokerage account set-up, some people may find that they are paying a currency transaction fee on each BIP distribution. It is important to be sure that BIP is really the kind of vehicle one wants to own. I hold BIP in an RSP account and it works well for me in that context but I would probably not want to have it in another kind of account. In regard to tendering to the cash and shares offer, people may want to consider how many BIP shares they would expect to end up with. If one’s ECI holding is relatively modest in the first place and one is likely to receive only 25% or less of the value in shares, a person could end up with a BIP holding that 5i would advise selling as “too small to have a meaningful impact on the portfolio.” If that is the case, it may be better to go for all cash (or sell it all at once in the meantime) and avoid paying a transaction fee later on an unnecessary tag end.
Cheers!
Read Answer Asked by Lance on August 01, 2018
Q: you have had multiple questions on this stock, i own 10,000 shares, for me a small position and the stock keeps getting creamed, divvy near15% monthly, all my 30 years of investing experience tells me something is wrong, but 5i says nothings wrong, even has it in its portfolio, the company says nothings wrong, but the markets saying everythings wrong. please comment. dave
Read Answer Asked by david on August 01, 2018
Q: Always nice to have a problem such as where to put the new money received from a 53% premium takeout of ECI. Thanks 5i!
Thinking of getting into CAE or PBH. Any preference? Looking for a bit more growth with some dividend over a 4-5 year period.
Thanks
Sal
Read Answer Asked by Sal on August 01, 2018
Q: Hello,

Currently a very happy ECI shareholder. Some questions on the transaction.
1. Based on $29 eci share and current bip.un price, if you accept the rollover there would be a bump up in yield as well, correct?
2. Do we know how the distributions from the rollover security would be taxed?
3. Which option (cash or rollover) would you prefer?

Appreciate your service. Regards.

Robert
Read Answer Asked by Robert on August 01, 2018
Q: I just heard about the takeover. As a buy-and-hold, longterm dividend investor, I was very happy owning ECI, but wouldn't mind owning BIP.UN, either.

What should I do with my ECI shares? Will they get 'converted' into BIP.UN shares? If I were to sell my ECI shares and buy another consumer stock, which would you recommend? Either similar dividend as ECI or can accept slightly lower yield if stronger dividend growth is anticipated (maybe CTC.A?). This is for extremely long-term hold (hopefully forever), please do not include any suggestions from your Balanced and Income Portfolios.

Thank you.
Read Answer Asked by Walter on August 01, 2018
Q: I'd like to echo Adam. I owned ECI prior to today and was thinking of adding to the position. After a BNN guest panned it on Monday I was instead thinking I should perhaps cut and sell. After your quick reassurance yesterday I added to the position. This is the value of this site; letting people who are not experts in business finance and don't have the time to monitor the finances of every company they invest in ask a simple question of those who are and do.
Read Answer Asked by John on August 01, 2018
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