Investment Q&A

Q: NPI is at all time highs given the announcement today of a 'strategic' review'. I am not really sure what that means as I would have thought management would always be looking for future growth opportunities and to enhance shareholder value. Given the pop in NPI I am thinking of selling my position and replacing it with BEP.UN for no other reason than 1) the higher yield 2) NPI may be fully valued and I don't see what could possibly come from a review other than perhaps the sale of the company which certainly does not sound like a possibility in the news release.

Thanks in advance

Q: Hi,
Im looking to pick up some utility sector. Which of these would you recommend for long term continual investment. Dividends will also be reinvested through DRIP if available.

Thanks

Q: I have shares of AQN and I am in the profit zone, But because of the higher dividend I am looking to switch to BEP.UN
Your Thaughts, thanks

Q: Can you give me the EV/EBITDA ratios for these two companies?
Thanks a lot.

Q: Good Morning: Could I please get your opinion on the merits, risks and investibility of a couple of Brookfield Renewable preferreds (both perpetuals): namely, brf.pr.e and prf.pr.f. Many thanks, Don

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: You rate this as an "A"; but, when I check my info provided by CIBC Investors Edge: debt/Equity is 2.8X, ROE is basically 0, P.R. is crazy high and P.E. equally so. They have issued a lot of common and preferred shares as well and must have a heck of a lot of non-cash write-offs which distort a lot of the metrics, I guess? What is the story on a pure cash basis then?

Q: With a time horizon of 10+ years, i'm looking to start a smith-maneuver portfolio to write off some mortgage interest. Could you please recommend 5-10 top picks that would be suitable for this strategy? Or would you recommend possibly an etf like CPD for something like this.

Thanks!

ps, i tried searching for previous questions in the q&a regarding this topic but couldn't find any, do you know which section they would be filed under?

Q: Hi 5i,
Are you able to provide any more detail on the rumour that Brookfield Renewable Energy Partners (BEP.UN) might be interested in Transalta Renewables (RNW)? At the current share price, is there sufficient value for them to pay enough of a premium to have a chance at a successful bid and still stay within an earnings-accretive price range? Thanks!

Q: Could you please tell me whet the dividend payout ratio is for these two company's?

Thanks.

Q: I manage the investment accounts for a family member who currently has a very small pension, CPP and OAS with the OAS Supplement. Her Supplement is reduced by 50 cents for every dollar of investment income she makes so she is effectively in a 50% tax bracket. Her capital comes from the recent sale of her house and the money must be available for an assisted living facility in a few years. My problem has been finding stocks to preserve capital and minimize the 50% tax bite which impacts what she has to live on currently. I have used AV.UN which has no impact on her income now and TMC which does but provides a high income. I think capital gains would be better than dividends which are grossed up. Any suggestions for appropriate investments for a 6 figure account?

Q: I'm wondering your thoughts on the large $800M+ offering today. Was debt an issue for them, causing concern for the market, or do you think they are eyeing a large aquisition? Overall, do you see this as a net positive right now?

Q: From what I read on this company,
P/E Ratio 3828.00
Earnings/Share $ 0.01
Dividend/Share $ 1.78
I do not understand why you recommend it a favourite holding.
Could you explain? I read your company report (2015).Do you still agree with an A quote?
Thank you.

Q: This question is about portfolio construction and geographical equity allocation. I am attempting to diversify my equity holdings across Canadian, U.S., International, and Emerging Markets.

How do I treat a company that has global operations, such as BEP.un?

BEP.un receives 25% of its revenue from Canada, 50% from the U.S., 5% from developed International markets, and 25% from Emerging Markets.

Should BEP.un "count" as a 100% Canadian holding because it trades on the TSX, or should I proportion my holding in BEP.un across the 4 geographical regions according to their respective revenue percentages? (Or is there an even better way to approach this?)

Thanks again for this great website and service!

Q: hello 5i:
could you please comment (generally) on the new preferred shares being offered by BEP.UN. Can I purchase these through my online broker ie BMO Investorline or Scotia iTrade? How would these preferreds compare to others being offered at the moment? The reset, pegged to Canadian Treasuries seems like good protection for the investor: is it? Would these be acceptable as the fixed income portion of a diversified portfolio for someone who is (becoming) more risk averse? Held in a TFSA, is the interest taxable or not?
thanks
Paul L

Q: I know that BEP.UN pay their cash distribution in US$ are there any other companies that are in your portfolios that pay in US$ or is BEP.UN the only company.

Thanks

Q: Can you give me an idea which one of these 3 stocks you would prefer for an entry in the renewable energy area. RNW has a higher dividend but BLX seems to have a more consistent return. Your view would be appreciated. Tnx

Q: I read the response on the dividend tax credit. Just to clarify if you have BEP.UN in an RRSP account none of this matters. Correct?

Q: To clarify an answer to an earlier question re: tax treatment of the distribution. You mentioned that distributions are not eligible for the dividend tax credit - which is not entirely correct. I have held a large position in BEP.UN for a few years. In 2015 58% of the distribution were eligible for the dividend tax credit. Another 28% of the distribution was a return of capital and only 14% of the distribution will be subject to the full tax rate. In 2014 29% of the distribution was taxed at the full rate. This of course will change from year to year. For historical taxation - have a look at their website which has a good breakdown of the tax treatment of all distributions. Hope this is helpful.

Q: Followup to recent Q. on BEP.UN. Distributions can be taken in US or C$, default is US, so if held in a C$ account broker will convert at their exchange rate. To receive in C$ you must instruct broker you want this option, I estimate it's worth at least 1% of the distributions received, not much, but better in my pocket than broker's.

The above comment was posted and I am confused by it. What exactly would I tell my discount broker? Would it be better to get the distribution in US$? Would I need to move my shares to the US listing in order to get the distribution in $US or can I just request to be paid in $US even though the stock holding is on the TSX? Would this be a good way to increase US$ over time?

Thanks
Dolores