Investment Q&A

Q: Recent news of mass closures by Caribbean customers of their Royal Bank accounts due to sudden imposition of service fees suggests to me that Royal Bank either doesn’t know or doesn’t care what its customers want. It sounds like an idea generated by greedy head-office bean counters with no knowledge of what is going on in the field. If retail banking is all about service, then once the reputation for customer service is lost, won’t the business inevitably suffer ? In your opinion is this event a “tipping point” for the Royal Bank, presaging a similar abandonment by Canadian customers ? Or will Canadian retail customers simply shrug and carry on with business as usual ?

Q: 9:53 AM 6/29/2016

Hello Peter:

Today you made this distinction between "Safe" and "Secure" dividends in your answer to Grant asking about Superior Plus : "We would consider the dividend 'secure'. 'Safe' is a different category completely".

1. I am looking to concentrate on companies whose dividends you consider to be in the "safe" category, and which yield over 3.5% as these should/must be at least the main core of any pensioner's holdings for reliable income. This can be confusing to sort out since I presume that you will not consider all banks, utilities, telcos, REITS, Pipelines, etc. qualify as "safe".

2. So if you could sort out a short list of the few that qualify for the "Safe Dividend" category it would be most appreciated. I do understand that disasters do occasionally happen, and any company no matter how safe can get into trouble.

2. This brings up the problem of portfolio concentration caused by owning only a few names or sectors. Is it better or "ok" to just own a portfolio of only "Safe" dividend stocks, or are we advised to dilute the quality of our portfolios and own some less safe dividend stocks to supposedly "diversify" risk? This harks back to the people whose portfolio consists of only the big five Canadian Banks and who have done brilliantly for the past 50 years!

Your considered opinion on this issue will be most appreciated........ Paul K.

Q: Your opinion on Royal Bank at the present time .
Thank you.
P

Q: I hold RY and TD volume is 3 times higher today. All other banks volume is higher too. Price has not move up so much. Is everyone selling or buying more.

Q: I was thinking that there would be some negative news regarding oil and gas loan losses and also consumer loans. With this as a backdrop I was wondering if you think the banks will see another sell off next week during their earnings release ? I see no real catalyst to drive them higher. Would appreciate you thoughts. Thinking about the last quarter and the money that could have been made by selling and coming back after the hit the banks took.

Q: hi.. Just sold 150 shares of this bank and would like to know of 2 stocks you would recommend as replacement no oil as overweight! thanx in advance Cliff

Q: For money that will be needed in 5 years I am considering investing in some of the new recently issued bank pref shares.

TD.PF.G ,RY.PR.Q, BNS.PR.E

Assuming the shares are all called in 2021 at $25 the current yields would come out to be approximately 4.5%. This would be equivalent to approximately 7.7% on an interest rate.(depending on income levels ) If the banks issued a 5 year GIC at 7.7% the lineup would be long.

With this in mind, is the only realistic risk based on the possibility of interest rates rising?

Also, any thoughts how much these would get hit if interest rates rose , say a full 1%.

Great service & many thanks.

Paul

Q: Good Morning
I hold 4 Canadian banks CM, TD, RY and BNS in an unregistered account. The bank stocks comprise just under 20% of my portfolio and each has approximately a 50% capital gain. My only other financial stock is a 2.5% position in PWF. Capital gains in my account this year will likely be taxed at 15%. I am considering selling one of the bank stocks (perhaps CM) and investing the proceeds in SLF. I have chosen SLF for it's relatively low valuation and secure dividend.
Is reducing the allocation to Canadian banks appropriate, or does the tax which has to be paid cancel the benefit?
Which bank would you sell?
Is SLF a suitable alternative or is there another company that you would prefer. I already have full positions in CNR and BAM.A.
Thanks
David

Q: We have 2 Rrsp accounts. The first one contains mostly 5i recommendations with a focus on dividend income and some growth. We would like to structure the second account to be more conservative and withdraw the dividend income. We like the Canadian banks ie RY and BNS as the dividend is safe and pays well and even when there is a sell off in the banks (including 2009) they eventually bounce back thus preserving capital but in the meantime one just collects the dividend. i know you would say that we should diversify so my question to you is what other stocks would you suggest that pay a 4percent dividend and have the security of the banks over the mid to long term or until Interest rates increase to make GICs/bonds an option.
Thank you.
M

Q: Recently read an article in Globeinvestor entitled "It's time to check out the dazzling yields of Canada's big bank preferred shares" a recent offering from them pays a dividend of 5.5% and after 5 years is reset to 4.8% over the 5 year Canadian bond rate. My question is what would the symbol be or how could I purchase this,I trade online and that's the vehicle I would like to purchase them through,appreciate your answer ..thanks

Q: RBC and a number of the other banks have recently issued preferred shares(series BM ?) where the dividend rate will reset every five years at a rate equal to 4.80 per cent over the 5-year Government of Canada bond yield. Do you think these are a good buy for income and safety? If yes are they available now and what is the symbol of the Royal Bank version ? Thanks Ken

Q: I have a full position in the major banks and a half position in NA. I sold NA this morning after it dropped $1100, and all the other banks are down big time as well. What hit the fan?

Q: Because I am primarily a dividend investor , I don't really have a "sell discipline" for bluechip stocks and simply ride the ups and downs while dripping dividends. This has been painful for pipelines and REITS and banks etc, some of which are down substantially. Some would say it's wiser to sell at breakdown points such as 200 day average, or sell a portion when the stock is up 50%. I have only sold rarely for re-balancing and so have taken some lumps lately. Any words of re-assurance would be appreciated.
Thanks

Q: Canadian banks have all dropped in value YTD by up to 6%. I understand that this is due in part to concerns about energy-related loan losses as well as high consumer debt levels. What is your call on what will cause the declining trend to stop, and when that might be ? From a technical point of view, where is the support level for RY ?

Q: A couple banks have recently issued rate-reset preferreds at very favorable terms, 5%+ and a floor at reset. Why would tap the equity market when the cost of debt is so much more favorable to raise capital?

Q: Can you comment on the recent issue of Royal Bank reset preferred
shares Series BK? Are they a suitable investment in the current
climate or are they in the same boat as other reset prefs? Thanks.
Joe

Q: Royal's latest preferred offering seem to be surprisingly good one, is it?? 5.5%yield and 4.53% reset. Is it a good buy? How will future interest increase effect the price? Is it trading, has a trading symbol?
Many thanks for your help. J.A. P, Burlington

Q: Which Canadian bank is your favorite, being the one that will offer the most growth and capital appreciation over the next 5 years? TD, RY, BNS, BMO, or CM?

Q: Just wondering about your take on the Canadian Banks going to the yearend. I bought them in the spring for a long term hold and am down about 10%. I know short term trades are mugs game but am considering them for some early tax loss selling and buying back later on in the fall, after 3Q earnings and the election. Doesn't seem to be much catalyst for them to go higher and with all the uncertainty I wonder if they'll drop some more.

Q: 1:10 PM 26/08/2015
Hello Peter
I am interested in buying one or two of RY, CM, TD, SLF, GWO, MFC. Would you comment on the robustness of their balance sheets and provide some numbers on their Debt/Equity and Debt/Cash Flow ratios, Dividend growth rates, and possible "Black Swan Events". I look at various financial website sources and the numbers for these companies are all over the shop.
Thank you. Paul K.