Investment Q&A

Q: This question is about diversification and percentage of stocks vs ETFs. In my overall portfolio (combined tfsa, rrsp, and non-registered), I have roughly 37% VFV/ZSP, and the rest fairly equally weighted across ENB, KXS, SHOP, VGH, AQN, BEP.UN/C, BIP.UN/C, BNS, CPX, GDI, NVDA, RY, TEAM, VGG, TRP, BAM.A. I'm in my mid 30s and have a long time frame, but would prefer to position for short term performance as much as possible. So, with some cash to allocate, can you please recommend a couple US and CAN stocks to add to this mix (or recommend just adding to what I hold)? Also, given your recent market update on covid vs sector performance, what would you do with the VFV/ZSP allocation? I am open to moving that allocation to stocks instead of an ETF, and am wondering if I should take that path, and how best to position there given the big tech names/top holdings in the ETFs, vs some holdings across sectors that are currently down. Thanks!

Q: Hi
If you had to put together a shopping list of solid long term dividend payers that you could pick-up if things went on sale again in the coming quarters, what would you buy? I'd want yields north of 7% so it would have to be a good sale. :)
And if you wanted to do it in one swoop with an ETF, would one of these be suitable: XEI or XDIV?
Thank you.

Q: In your opinion which company would provide the best return over the next 5 years if Biden becomes president and the Democrats take over both houses?

Q: The Canadian pipelines had a bit of a dip on Wednesday. Is this share price decline related at all to the hurricane in the US? If so, how will the hurricane impact business for the Canadian pipelines, as a whole?

Thanks.

John

Q: Tax loss versus growth considerations question. Holding ENB for several years and still below water. Have held PPL for a couple of years prior to recent meltdown and recently decided to sell PPL to realize tax loss using TRP as proxy for next several weeks until 30 day period has expired. Looking at your recent answers to questions on these 3 pipeline operators (I only need two, maybe one) and considering TRP focus on a friendlier fossil fuel firmament USA got me to thinking that maybe I should just hang on to TRP despite Keystone and Crooked Joe threats rather than going back to PPL after 30 day period is up... In your view which of the 3 companies have the better growth prospects in USA space given all three are down in this negative fossil fuel energy space? Portfolio is growth/income focused tilted mostly to equities. Retired but do not depend on portfolio income.

Q: I've owned both these for over 11 years now and have been very happy with net returns (dividend compounding + capital). Not overweight at all: 1300 shares of each - added to over the years on weakness. My concern is the hysteria over climate change and governments actions and potential actions that have hurt O & G companies. I believe that both these companies have large investments in utility businesses and plans to expand that part of their business. Q: should I continue to hold them, add to ENB (price low), or leave my positions alone.

Q: Hi, would you consider TRP overall less risk than ENB given it pipes more natural gas than oil and it has less growth projects and therefore execution risk?

Q: How would you rate TRP as an investment if the permit for Keystone is revoked by the US administration? Do you think this is already reflected in the current price? Does TRP have other avenues for growth?

Thanks,
John

Q: Dear 5i team:
Your software indicates our family’s investments are too Canadian-focused. However, I prefer our “home bias”, for three reasons:
(a) most of our assets are non-registered, and the dividend tax credit is especially favourable for Canadian source dividends in a province such as ours (Ontario);
(b) I like supporting the companies that I invest in (e.g., we buy Peller family wines, since we own their shares);
(c) but most important, many of the “Canadian” businesses we own are surprisingly international; among our top 20 equity holdings are:
Alimentation couche-tarde (Circle K is world-wide);
Brookfield Asset Management (globally focused company that invests wherever the opportunities are);
CGI Group (revenues are 84% outside Canada per 2019 annual report);
CP Rail (significant U.S. revenues);
Fortis (65% of earning are in U.S.);
Manulife (growing Asian revenues);
Restaurant Brands International (most of Burger King and Popeye’s restaurants are outside of Canada);
Shopify (not sure, but suspect international revenues are growing faster than Canadian revenues);
TC Energy (dropped “Canada” from its name to reflect its growing U.S. presence);
TD bank (substantial and growing U.S. presence);
Anyways, the above-listed 10 stocks represent about one-third of our overall equity holdings (in absolute $ terms), but I would not consider these companies as being “100% Canadian”. I wonder whether your software could be rejigged to reflect the relative percent earnings (or revenue) contributions, broken down per Canada, U.S., Europe, Asia, and so forth. I suspect our home “bias” is not nearly as substantial as it appears.
Ted

Q: What is your preference; trp vs enb and why?

Q: I have owned TRP and ENB for years (10+) and have done well with both stocks. They have now become less than 1/2 weight positions at around 4% of my total portfolio. I was thinking of adding to them but I've been asking myself if I really want to add to positions when it's becoming just as difficult to repair pipelines as it is to build them. The dividends are nice but they haven't offset the decline in the respective stock prices so on a total return basis both companies are still negative for the year. I was thinking of switching out of TRP and ENB into VZ where I can get a similar dividend yield in a utility sector name but remove some of the industry noise associated with pipelines. Thoughts? Thanks

Q: Hi
I hold stocks of Starbucks, Parkland, Parklawn, TC Energy.
I would like to get your outlook on these companies going forward in this volatile market. Do you see them as having good fundamentals and re-bounding back in 2021?
With the US election taking place in Nov 2020 and if Biden is elected, how will this affect overall market and will we see the stock market on the downside again?

Thanks
Kristelle

Q: I am curious why the above energy infracstructure supposibly defensive due to their yields have been weak this week.
They took a hit today despite falling yields in cnd and
u.s. bond yields and a slight rise in wti and natural gas prices.

Q: Hi,
Which of the two pipeline company with a good balance sheet and a growth opportunity?

Thank you

Q: Hi,
TC Energy has already been hurt by Joe Biden’s promise to close Keystone XL. Unfortunately, we have held the stock For 20 years in a DRIP and I fear that the share price is at its greatest peril.
This was such an enormous cost for the company, I think survival becomes an issue , but certainly loss of value for years to come. What is your advice ?

Q: Retired, dividend income investor. I have (or had) a full position in TRP up until the Biden announcement. Would you consider adding now to top up the position or would you wait or would you just leave it as is? I like TRP now, but I'd really like it if it hit the $54-55 level. Asset allocation is not an issue.

A secondary question...with the current approvals in place, wouldn't there be a massive lawsuit if the rug got pulled out of the project if Biden followed through with his threat?

Thanks...Steve

Q: I hold full positions in ENB and TRP, which I deem as utilities based on their function as transportation of energy products rather than exploration/development. I have been looking at AQN for a while now, and I am debating on selling one of ENB or TRP to start a position. ENB has taken a fair hit in the last couple of months, but it pays a strong dividend, and as far as I am aware, is still committed to increasing its dividend over the next couple of years. TRP is a solid company and steady performer, which is why I am somewhat reticent to make a switch. AQN could potentially offer more growth, but ENB and TRP are known commodities. The dividend yields between AQN and TRP are quite similar, with the yield of ENB being much higher, but if AQN is poised for greater growth, which, of course, is a big "if", I would be willing to forego a higher yield for greater growth. Would AQN act as a better holding than either ENB or TRP?

Q: President elect Biden recently said he would stop , the Keystone XL pipeline for good ! What is this going to do to the stock price of TRP ?

Q: What is your preference ENB vs TRP and why?

Q: Hi Peter: When I sit back and take a look at the big picture and review how my portfolio performed during COVID-19 (so far), I try to see what lessons I can learn, then turn to how to apply those lessons to make my portfolio stronger.

I am a retired, dividend-income investor. I am a huge believer in asset allocation and have designed a portfolio, in my opinion, to be reasonably well diversified, although heavy to Canada. It WAS roughly 70% equities (including 32% foreign content) and 30% fixed income (roughly 15% insured annuities, 15% Fisgard Capital...both averaging in the 5-6% pre-tax range and minor cash). My equities are mostly blue chip, dividend payers, as you can see above. The 3 mutual funds are a very minor part of my portfolio, especially Eric's Energy Fund (<2%). I also receive a company pension and CPP-OAS which, when included, drops my equities to roughly 32%.

I use various metrics to monitor my portfolio, such as P/E, P/BV, P/CF, P/S, Beta, ROE, Div growth, Payout%, technical indicators like 200 mda. I am normally a buy-and-hold investor who trims/adds around a core position.

Periodically I measure how "at risk" my portfolio is relative to the overall market. I do this by prorating my portfolio using Beta. Based on equities only, I averaged 0.68 and for my entire portfolio I averaged 0.44. So, one would think that if the overall market (TSX) was to drop 30%, then I would have thought my portfolio would drop 44% to 68% of that, being in the range of 13% (overall) to 20% (equities only).

In actual fact, my entire portfolio dropped 27% from peak to trough vs the expected 13%...over double! I understand that EVERYTHING was sold off...almost no exceptions. So what do we learn from this and what changes should we consider? Do we accept that "sxxt happens" once in a while...you can't predict every event, accept it and move on? Should we consider increasing the cash component as a buffer? Or...is there something else to be learned here?

Thanks for you help...much appreciated...Steve