dividend tax credit
BMO S&P/TSX Laddered Preferred Share Index ETF, $14.48, symbol ZPR on Toronto (Units outstanding: 70.1 million; Market cap: $1.0 billion; www.etfs.bmo.com), holds Canadian floating-rate preferred shares. Issuers include Bank of Montreal, Enbridge, BCE, TransCanada and Canadian Utilities. The ETF’s MER is 0.45%. It currently yields 4.3%. Note that the dividends you receive from this fund do benefit from the Canadian dividend tax credit. Floating-rate preferred shares pay dividends that fluctuate with changes in interest rates. The dividend rate may range from 50% to 100% of (usually) the prime bank rate. As interest rates rise, so do floating-preferred dividend yields....
Flaherty & Crumrine Investment Grade Fixed Income Fund, $12.36, symbol FFI.UN on Toronto (Units outstanding: 9.1 million; Market cap: $112.5 million; www.bromptongroup.com), mainly holds preferred shares of U.S. companies. Firms in the banking, insurance, utilities and financial services industries make up a combined 87.7% of the fund’s portfolio. Corporate bonds comprise 6.9%, and the remaining 5.4% is cash. The fund’s MER is 1.0%. The fund is hedged against movements of the U.S. dollar against the Canadian dollar. Its value rises and falls solely with the stocks in its portfolio, so it would not give you U.S. dollar exposure. However, hedging costs money, and we feel these outlays are wasted. They can cut the fund’s volatility from one year to the next, but they won’t add to its performance. In addition, we see U.S. dollar exposure as a plus—a valuable form of diversification....
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice on a wide range of topics. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away....
Picking stocks whose share prices will rise is not the only goal that successful investors set for themselves. You also add a great deal of value to your portfolio when you select stocks that are prepared to distribute their profits to the shareholders. A company can share the wealth in two main ways—it can buy back its own shares, or it can pay dividends. Both pay off for investors, which is why a number of the best stocks we recommend have a history of doing both....
From time to time, investors ask us questions to which there is not a simple yes-or-no answer. One of these is whether buying stocks “on margin” is a good idea. That is, should investors borrow money from their brokers to buy securities?
This strategy is reasonable in some circumstances, but it carries more than the usual amount of risk.
The main cost involved with buying on margin is the interest on the money you borrow. Plus, when you sell a security that you’ve bought on margin, you must first pay back the loan from your broker.
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This strategy is reasonable in some circumstances, but it carries more than the usual amount of risk.
The main cost involved with buying on margin is the interest on the money you borrow. Plus, when you sell a security that you’ve bought on margin, you must first pay back the loan from your broker.
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This is a good time for me to say “Thanks!” to all my Inner Circle members. It’s a pleasure to receive the many compliments and expressions of gratitude you send with your questions. That’s especially true when I recognize a member’s name from decades ago, whether from the early days after the 1994 startup of The Successful Investor, or from the two previous decades that I spent at The Investment Reporter. It’s also great to see that our Successful Investor philosophy and practice seem to strike a chord with many younger investors. I wish you all a great year-end holiday and a healthy, happy and prosperous New Year. +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++...
Dividends don’t always get the respect they deserve, especially from beginning investors. A dividend stock’s yearly 2% or 3% or 5% yield barely seems worth mentioning alongside yearly capital gains of 10%, 20% or 30% or more. Yet dividends are far more reliable than capital gains. A stock that pays a dividend of $1 this year will probably do the same next year. It may even rise to $1.05....
Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. This past week, one Inner Circle member asked about dividend stocks—specifically, about a pipeline firm that is one of Canada’s remaining income funds. The company has just made a major overseas acquisition and Pat assesses the potential risk and rewards. ...
Inter Pipeline Fund, $19.82, symbol IPL.UN on Toronto (Units outstanding: 267.2 million; Market cap: $5.3 billion; www.interpipelinefund.com), transports, stores, markets and processes oil and natural gas. The fund has four divisions:
- The oil sands division’s pipelines transport 35% of Canadian oil sands production.
- The conventional business’s pipelines handle 15% of western Canadian conventional crude oil.
- NGL Extraction converts 40% of Alberta’s exported natural gas into natural gas liquids, like ethane, propane and butane.
- The storage division operates terminals in the U.K., Germany and Ireland under the Simon Storage banner, and in Denmark under the Inter Terminals brand.