Investment Q&A

Q: Hello All,

Is it possible to rank my list of utility companies sorting via most financially vulnerable therefore most likely to underperform because of the increased cost of financing. i.e worst to best please.

Is that a blunt but reasonable filter?

Could it be that the "worst" companies have been so badly beaten up that they may be worth adding to for the long haul?


Many thanks

Q: I have both BEP.UN and BEPC in an unregistered margin account and for simplicity sake would to only hold one of them. Is there any particular advantage of one over the other in an unregistered account? Thanks.

Q: Lots of discussion on holding BEP.UN in a RRSP or a RRIF, but what about a TFSA?
Thanks for your answer….JC

Q: Over the past two years with the downturn of the market, I am down significantly with majority of these holdings in various accounts. I have a long-term 10+ year outlook, so looking to see if you feel any of these can be sold off given the outlook, management of the company? If so, what are your recommendations for a growth investor in either CAD/US stock options?

Thanks!!

Q: I have held BEP preferred shares in an RSP for quite awhile and done well with them, but have concern over the potential new US tax implications. Despite the company assurances, I think I would sleep better just being out of BEP. After the dividend this month, my plan is to sell the shares. I am looking at ZPR, which has a somewhat similar yield, and would be much easier to trade. What do you think of ZPR and its dividend sustainability? Recognizing that preferreds have not done too well overall, would you prefer to move into something else?

As an aside, apparently the US attack on limited partnerships includes those held in an RSP. Isn't there a tax treaty that prevents this?

Thank-you, Grant

Q: I am thinking of buying brookfield renewables in my TFSA. Which version is better to buy? Or do you have a better suggestion for the a company in the renewable space?

Q: My question is, is BEP.UN worth holding at this present time. I am underwater on the stock in a non-registered account, but it does pay an attractive dividend in US dollars. What is the reason that it is dropping in price? In your opinion do you think there will eventually be a price turn around. Thanks … Cal

Q: My question in general is how reasonable is the current valuation for BEP.UN ?

I believe the historic high yield is somewhere around 7%, so we're a long way off from that. I think we're close to 4.9% (?)

P/C seems pretty reasonable now relative to the past, but P/BV is still high compared to the 1.1 low.

How about price/FFO ? I can never find this. What is it currently? I think the low was about 4.6 in the past.

Thanks as always for answering the above, and Merry Christmas to your AWESOME team at 5i.

Q: Dear 5i,
If I understand correctly, BEPC-TO and BEP.UN-TO are identical companies.
In a perfect world they should trade at the same price and thus offer the same dividend yield. If this is the case, does it matter which one a person should purchase in their registered accounts like a RRSP? (ie would there be any witholding taxes with either one?)

thanks

Q: Hi Peter, Ryan, and 5i Team,

Sorry for yet another Brookfield question! In my RRIF, I hold these three Brookfield entities: BEP.UN, BN, and BAM.

As a retired investor who likes dividends, and is underweight in utilities (due to recently selling AQN) and is overweight in financials, would you endorse selling BN and BAM, and using the proceeds to buy more BEP.UN? Or is there a flaw in my thinking?

Thanks as always for your timely advice, and happy holidays to everyone at 5i.

Q: Do I have this straight ? As a ( Canadian ) holder of these two non American ( Bermuda )stocks, effective January 1/23, when I sell them, I will be subject to a 10% withholding tax and will be required to file a US tax return ?

WOW !

Q: What are your recommendation's for my RIFF off 125,00.00 age 83 income or balanced portfolio

Q: In Investment (non-registered) accounts these 5 stocks are all 'under-water'. I am considering selling for 'tax loss' purposes and would appreciate your thoughts. Is this a useful approach? Are there any that merit re-purchase following 30 days 'waiting period'?

Q: Hello Peter, Apologize as i know you have addressed this but i am still confused. I would appreciate it if you can answer each of my concerns to clarify.
1. I hold both bep.un and bip.un in RRSP and TFSA. Will there be withholding tax as of Jan 2023 in both cases and if so, is the 10 percent tax on dividends and capital gains only ? If this is the case, I am assuming the brokerage would use the ACB to calculate the gains.
2. Would it better to sell both of these and redirect monies into BN and BAM
3. If i decide i don't want to deal with the tax , can i simply exchange both for bipc and bepc and if so, am I not losing as the prices of bipc and bepc are much higher and dividends are lower yield wise
4. Lastly if there is withholding tax on tfsa and rrsp, how do we recover it..
5. Could the tax just be on tfsa and not rrsp as rrsp is normally exempt from any withholding of dividends etc
Sincere thanks and happy holiday season..

Q: 11:23 AM 12/13/2022
It seems that the Brookfields are nothing but trouble from a taxable perspective and the new withholding tax may make it worse. The brokers will naturally take the withholding tax and it will be a fight to try to claim it back.

My question however is about the exchangeability of BEP.UN and BIP.UN into BEPC and BIPC. Can these exchanges still be made?

If I get my broker to do the exchanges does this become a taxable capital gains event? If so it is prohibitive for us as we have huge capital gains in both BEP.UN and BIP.UN which would prohibit the exchange.

Any suggestions on what to do?

Thank you......... Paul W. K.

Q: Will these be subject to proposed tax if held in tfsa?

Q: I read your response to whether US withholding tax applies to the Brookfield partnerships. In your answer you also used the word “accounts.” What do you mean by this word?

Q: I hold the above stocks in my RRSP. I understand that as of January 1, 2023, the IRS will require a 10% withholding tax when Canadian residents sell a limited partnership. Does this only apply to US based partnerships? Would it apply to BIP.un or BEP.un? Does it apply to partnerships held in an RRSP? It appears this could apply even if you sold at a loss. Thanks for your advice.

Q: Just received a letter from my discount broker advising of changes to US withholding tax on distributions and dispositions starting January 1, 2023 that "might" apply to Canadians holding publicly traded partnerships in any account, including RSPs. As a long-term holder of both BIP and BEP, I have significant capital and gains on both. These are held in an RSP, so I have never been concerned about any tax implications. But now . . . ? The Brookfield site advises that they "do not expect" non-US investors to be subject to any withholding tax, and there is also a letter from their tax lawyers with the same claim with a bit more positive wording, but it ends with a disclaimer (hey - we could be wrong!)

I do not want to sell either BIP or BEP, but it would annoy me more if I ended up losing the withholding tax on distributions and (particularly) dispositions. Not sure how the IRS can withhold tax on a Canadian selling a non-US based company, but obviously there is a way, as the letter came from my Canadian big-bank brokerage which also has a significant presence in the US. Also assume that with the stocks being in an RSP, there would be no means of recovery through tax credits.

I would appreciate any comments you have on this matter. If the stocks should be sold, it would have to be done this year. Would this problem also apply to BIPC and BEPC, if I just did a switch?

Thank-you, Grant

Q: Hello, I know your are not tax expert, but I risk myself asking because I am sure other members will receive a similar letter from their online broker. This is about the new US regulation code 1446. The letter I received today says:

Changes to the U.S. Taxation of Publicly Traded Partnerships.

New US regulations taking effect on January 1, 2023, will result in new withholding taxes for sales of publicly traded partnerships by non-US account holders.

Once these rules take effect in 2023, when a non-US national sells an interest in a publicly traded partnership, 10% of the gross proceeds of the sale will be withheld. The withholding taxes will be remitted to the US Treasury, and the non-US national will be responsible for filing a US income tax return and claiming any potential refund of the amount withheld.

Not all publicly traded partnerships will be subject to withholding. However, at this point it is difficult to say which publicly traded partnerships will and will not fall within the scope of the new rules...

I did phone my online broker to know more. I was told that I have two companies in my account affected by this: BEP.UN-CA and BIP.UN-CA. Even if they are held in a RRSP, these will be subjected to the new tax if I sell after January 1, 2023. I argued that these are Canadian companies, but they replied that because they are limited partnership and trade on both the Canadian and US markets the new 1446 regulation will apply.

According to what you know of Brookfield, is that true that this new tax will apply on both BIP.UN-CA and BEP.UN-CA starting from January 1, 2023? Thank you,