High Dividend Yield Stocks?

[chuhanster]

With the stocks being sustainably down, it's a great opportunity to load up on some good dividend paying stocks. I think dividend's are very important espcially given the uncertainity in the markets. I am looking into the banking sector (i.e. royal bank or TD) and the pharmaceutical sector (i.e Biovail with 14% yield) to get good dividend yields in addition to the potential capital gains.

I was wondering what high dividend yield Stocks/ ETF’s other people are watching/ buying both for short term and long term (i.e. RRSPs)?

[lakota]

REI.UN RioCan Real Estate Investment
ALA.UN AltaGas Income Trust
IPL.UN Inter Pipeline Fund SIF.UN Energy Savings Income Fund
FCE.UN Fort Chicago Energy Partners...
CLC.UN CML Healthcare Income Fund
EMA Emera Inc.
MBT Manitoba Telecom Services
TA TransAlta Corporation
TRP TransCanada Corporation
DHF.UN Davis + Henderson Income Fund
EP.UN EPCOR Power, L.P.

[Canadian Finance]

I posted 30 in the SM thread that would fit the bill...

http://canadianmoneyforum.com/showpost.php?p=60&postcount=6

[Financial Highway]

Definitely the banks
Mfc
Rio Can
HSE
...
.... the list can go on and on just do your homework and DD.
Another I really like is Rogers!

[MGL]

Check out Altria (MO). Stable, solid fundamentals, and currently paying a decent yield.

[ethos1]

With the stocks being sustainably down, it's a great opportunity to load up on some good dividend paying stocks. I think dividend's are very important espcially given the uncertainity in the markets. I am looking into the banking sector (i.e. royal bank or TD) and the pharmaceutical sector (i.e Biovail with 14% yield) to get good dividend yields in addition to the potential capital gains.

I was wondering what high dividend yield Stocks/ ETF’s other people are watching/ buying both for short term and long term (i.e. RRSPs)?

Been there done that

Lakota has posted a list which is fine as long as the dividends are not cut and the stock prices do not drop

As an example a lot of CANROY's, specific to the oil trusts have cut their dividends over the past several months.

1. Over the Canadian royalty trusts, I prefer Canadian stocks that have dividends as well as being optionable, such as the Banks, BMO being one of them. This way its possible to get the annualized 20%+ coming from a one-year hold, option ATM and reinvesting the dividends as well as the premiums to buy more stock & repeat.

2. I also like US preferreds, example DUA & DDT which are currently yielding 13% and 22% respectively

The upside with preferreds is the $25 issue price

[Rox]

REI.UN RioCan Real Estate Investment
ALA.UN AltaGas Income Trust
IPL.UN Inter Pipeline Fund SIF.UN Energy Savings Income Fund
FCE.UN Fort Chicago Energy Partners...
CLC.UN CML Healthcare Income Fund
EMA Emera Inc.
MBT Manitoba Telecom Services
TA TransAlta Corporation
TRP TransCanada Corporation
DHF.UN Davis + Henderson Income Fund
EP.UN EPCOR Power, L.P.

It's been more than a year since the above list was posted on this site, I wondered if the above listing is still good,...

Secondly, I think there will soon be selloffs in some of the ".UN" counters in the above list come 2011 because of the reconversion back to normal listed entities. Would it be a better time to buy when that day comes ?

Just a question : where can I look to see a history of the dividend payouts of the above counters ?

[Rox]

Been there done that

1. Over the Canadian royalty trusts, I prefer Canadian stocks that have dividends as well as being optionable, such as the Banks, BMO being one of them. This way its possible to get the annualized 20%+ coming from a one-year hold, option ATM and reinvesting the dividends as well as the premiums to buy more stock & repeat.

The above sounds ineteresting - dividend-pying as well as being optionable. How does the "being optionable" work please ?

Does option ATM mean being able to withdraw the dividend when it is declared instead of going into the DRIP-mode (reinvesting the dividend) ?

Hoping for some guidance,.... thank you.

[HaroldCrump]

Just a question : where can I look to see a history of the dividend payouts of the above counters ?Most finance sites have it.
I use Yahoo.
For example, the following link shows the dividend history of MBT.
http://ca.finance.yahoo.com/q/hp?s=MBT.TO&a=00&b=10&c=1997&d=09&e=31&f=2010&g=v

[scomac]

The above sounds interesting - dividend-paying as well as being optionable. How does the "being optionable" work please ?

Does option ATM mean being able to withdraw the dividend when it is declared instead of going into the DRIP-mode (reinvesting the dividend) ?

Hoping for some guidance,.... thank you.

Being optionable simply means that you can enter into a contract to buy or sell a stock at a predetermined price within a specific time frame into the future.

Options Basics: Introduction (http://www.investopedia.com/university/options/default.asp)

[humble_pie]

rox i beg to differ it means that a shareholder can just walk up to one of those ATM bank machines, punch in the stock symbol plus their investor account number, and the machine will spit out the dividend in cash.

isn't canada great for advanced shareholder services. But you have to be resident here, though. Doesn't work through Interac or other foreign bank ATM networks.

and it only works on hallowe'en. Trick or Treat.

[kcowan]

Today only the ATM will also dispense candy!:)

[Rox]

Dear Harold, Scomac, Humble_Pie and KC, many thanks for all of your advice and the additional gigs too,... lol,...Yeah, am aware I have to be a resident there, meaning a local address there and a local phone number too. No problem at all,...

Interesting,... from what I am hearing, the dividend does not get banked-in to our bank account, but we must use our Investor Account Number to withdraw the dividend directly from the corporation's account, I supposed,....

Happy Halloween, guys,....

[Eclectic12]

Dear Harold, Scomac, Humble_Pie and KC, many thanks for all of your advice and the additional gigs too,... lol,...Yeah, am aware I have to be a resident there, meaning a local address there and a local phone number too. No problem at all,...

Interesting,... from what I am hearing, the dividend does not get banked-in to our bank account, but we must use our Investor Account Number to withdraw the dividend directly from the corporation's account, I supposed,....

Happy Halloween, guys,....

Hmmm ... much different system.

Being a resident with a Canadian broker, the dividend goes into the brokerage account. I can then go online to the broker and transfer it to my linked chequeing account (same group as the broker) and *then* I can go to the ATM and withdraw it. [ Or I can write a cheque.]

Hallowe'en and/or Trick or Treating are optional.

[Rox]

Hmmm ... much different system.

Being a resident with a Canadian broker, the dividend goes into the brokerage account. I can then go online to the broker and transfer it to my linked chequeing account (same group as the broker) and *then* I can go to the ATM and withdraw it. [ Or I can write a cheque.]

Hallowe'en and/or Trick or Treating are optional.

Yeah, above arrangement would be similar as in many parts of the world. As an added note, if you do not intend to physically extract the dividend money from the brokerage account, and you intend to invest it back into the market, then there is no work to be done any further.

The funds sitting inside the "Cash Account" will be earning a very small amount of interest too, probably. This earning is good to have while waiting for a good opportunity to go into the market again.

Having said this, there is no involvement at all with any banking account.

I believed we can also go to the discount brokerage personally to withdraw cash if we wanted to.

[Eclectic12]

Yeah, above arrangement would be similar as in many parts of the world. As an added note, if you do not intend to physically extract the dividend money from the brokerage account, and you intend to invest it back into the market, then there is no work to be done any further.

The funds sitting inside the "Cash Account" will be earning a very small amount of interest too, probably. This earning is good to have while waiting for a good opportunity to go into the market again.

Having said this, there is no involvement at all with any banking account.

I believed we can also go to the discount brokerage personally to withdraw cash if we wanted to.

Or, if you want it to go back into the original company with minimal cost, most brokerages will re-invest the dividend into more stock without commission (ie. a Divident Re-Invesment Plan or DRIP). Note that usually the brokerage does only full shares and it might forgo the discount that a direct plan with the company might offer but it is easily available.

As for the funds in the "Cash Account" earning interest - your mileage may vary so check with your broker regularly. My brokerage originally paid better than my high-interest account on any balance but in the last while, it's been changed to zero interest until a cash balance of $100K.

[Rox]

That's right, Eclectic,... thank you. One more point to note though : It is not that all corporations will provide the DRIP. So, we have to be very careful if we intend to use the DRIP for our investment planning - we must check if the corp has the DRIP first.

Talking about corp's, you metioned in another thread that Keyera Facilities and Inter Pipeline Fund may not be converting till 2012. Do o have the write-ups for this, are you sure about this ? Why I am keen to know is because we are considering to pour some money into these two counters.

[Eclectic12]

That's right, Eclectic,... thank you. One more point to note though : It is not that all corporations will provide the DRIP. So, we have to be very careful if we intend to use the DRIP for our investment planning - we must check if the corp has the DRIP first.

Talking about corp's, you metioned in another thread that Keyera Facilities and Inter Pipeline Fund may not be converting till 2012. Do o have the write-ups for this, are you sure about this ? Why I am keen to know is because we are considering to pour some money into these two counters.

To get the maximum benefit (i.e. partial shares bought and company discounts), you are correct. The only place to do this is usually by directly registering at least one share with the specific corporation.

However, I'll have to do some checking. For example, www.shareowner.com used to offer it's own Drip for companies that didn't offer a Drip. As well, I don't remember what requirements my broker had.

As for trusts, I lamented that I didn't save the news releases for the ones that I did find a notice saying 2012. I was not referring Keyera Facilities or Inter Pipeline, in particular. If I could remember the names of the ones targeting 2012, it would be easier to show that a few are not in a rush to convert.

Sorry for any confusion.

[Rox]

To get the maximum benefit (i.e. partial shares bought and company discounts), you are correct. The only place to do this is usually by directly registering at least one share with the specific corporation.

However, I'll have to do some checking. For example, www.shareowner.com used to offer it's own Drip for companies that didn't offer a Drip. As well, I don't remember what requirements my broker had.

As for trusts, I lamented that I didn't save the news releases for the ones that I did find a notice saying 2012. I was not referring Keyera Facilities or Inter Pipeline, in particular. If I could remember the names of the ones targeting 2012, it would be easier to show that a few are not in a rush to convert.

Sorry for any confusion.

Eclectic,... thank you for this too,... As to your final paragraph, okay,.. I understood now what you said,... it's two OTHER companies besides Key and IPL,... I think it's Chemtrade, can't remember,... that said they are staying back as a trust,... reasons for this, sorry, don't recall why,...

[humble_pie]

there she goes again with the short-term memory loss.

not a good sign, rox.

[Rox]

To get the maximum benefit (i.e. partial shares bought and company discounts), you are correct. The only place to do this is usually by directly registering at least one share with the specific corporation.

However, I'll have to do some checking. For example, www.shareowner.com used to offer it's own Drip for companies that didn't offer a Drip. As well, I don't remember what requirements my broker had.

As for trusts, I lamented that I didn't save the news releases for the ones that I did find a notice saying 2012. I was not referring Keyera Facilities or Inter Pipeline, in particular. If I could remember the names of the ones targeting 2012, it would be easier to show that a few are not in a rush to convert.

Sorry for any confusion.

Keyera dropped today,... $34.65 over the weekend to $34.05, that's a 1.7% drop,... am searching around the reason,... wouldn't be merely profit-taking by current investors,and certain the charts do not sync to this belief.

Oh, well,.. might post my opinions if I am requested to, otherwise,.. wouldn't want Humble-Pie to contaminate my research.

[humble_pie]

rox here's what i find grotesque about your presence in this forum.

it's the way you keep on begging us - canadian taxpayers all of us - to help you while you rob us and cheat us.

out of every $100 in canadian investment income, you are supposed to be paying $25 in non-resident tax. This is money that your broker should be sending directly to the receiver general of canada. Would be sending directly to the receiver general of canada if you had honestly opened a law-abiding account as a resident of southeast asia.

instead, you are paying nothing. So those NR tax amounts are going missing from the national treasury, and it's our tax dollars that are being assessed to take their place.

rox you are using this forum to broadcast to the whole world how you are bypassing the 25% canadian non-resident tax that applies to you, a foreign national living in malaysia. You are broadcasting how easy it is to rapidly acquire an illegal canada-based resident investment account, which can only be issued to a party with lawful landed immigrant status, a valid canadian address and a social insurance number. You have admitted that you do not possess these items. In fact, other than a prurient interest in the toronto stock exchange, you have no connection with canada whatsoever.

what is even worse is that you have boasted here that you and other persons whom you claim to represent intend to "move on" with their gray-markekt IDs to claim canadian old age benefits. This is appalling.

the small number of forum members who bother to answer your questions are acting out of typical canadian kindness and generosity. Perhaps they have not yet realized that they are aiding and abetting a party under a cloud of suspicion for identity theft, tax evasion and possible money laundering. Perhaps they do not yet realize that the missing taxpayer monies from all the roxes of the world are, in fact, monies that they are going to have to pay themselves, at some point in time.

[Four Pillars]

rox here's what i find grotesque about your presence in this forum.

it's the way you keep on begging us - canadian taxpayers all of us - to help you while you rob us and cheat us.

out of every $100 in canadian investment income, you are supposed to be paying $25 in non-resident tax. This is money that your broker should be sending directly to the receiver general of canada. Would be sending directly to the receiver general of canada if you had honestly opened a law-abiding account as a resident of southeast asia.

instead, you are paying nothing. So those NR tax amounts are going missing from the national treasury, and it's our tax dollars that are being assessed to take their place.

rox you are using this forum to broadcast to the whole world how you are bypassing the 25% canadian non-resident tax that applies to you, a foreign national living in malaysia. You are broadcasting how easy it is to rapidly acquire an illegal canada-based resident investment account, which can only be issued to a party with lawful landed immigrant status, a valid canadian address and a social insurance number. You have admitted that you do not possess these items. In fact, other than a prurient interest in the toronto stock exchange, you have no connection with canada whatsoever.

what is even worse is that you have boasted here that you and other persons whom you claim to represent intend to "move on" with their gray-markekt IDs to claim canadian old age benefits. This is appalling.

the small number of forum members who bother to answer your questions are acting out of typical canadian kindness and generosity. Perhaps they have not yet realized that they are aiding and abetting a party under a cloud of suspicion for identity theft, tax evasion and possible money laundering. Perhaps they do not yet realize that the missing taxpayer monies from all the roxes of the world are, in fact, monies that they are going to have to pay themselves, at some point in time.

HP - aren't you making a few assumptions here? How do you know she has a trading account here? How do you know she's making any money? How do you know she is evading taxes?

[humble_pie]

in the well-known Stockholm Syndrome, the victim identifies with his predator to such an extent that reality is completely denied, while the righteousness of the aggressor is fanatically upheld at all times.

in her numerous messages to this forum rox herself describes in precise detail:

- her location;
- her foreign nationality;
- her dismay over the 25% canadian withholding tax that applies to any canadian investments she holds;
- her refusal to pay this NR tax;
- her intention to bypass - ie evade - this NR tax;
- her claimed but false location in the US;
- her search for canadian dividend tax credits as beneficial by-products of certain canadian investments once she obtains a canadian resident account;
- her refusal of initial offers of a non-resident account from certain canadian brokerages;
- her eventual selection of a brokerage from which she somehow obtained a canada-based resident account despite being resident in southeast asia;
- her intention to "move on" to gain canadian old age security benefits;
- her inclusion of other persons offshore whom she represents, who will also move to take advantage of canada once she opens the breach;
- her funding of this new brokerage account by wire transfer from the US;
- and her purchases and planned purchases of several canadian stocks.

in addition, rox's rants when reasonably questioned as to how she had gotten around the law tell the story all by themselves. This is a forum where legitimate posters share their knowledge in rational discourse. They do not explode with hysterics when asked how to do something.

not surprisingly, now that she has been outed, rox appears to have fled away, taking with her - presumably to another message forum - all the expert advice offered by kindhearted and overly-trusting canadians here on cmf.

Stockholm Syndrome. The nicest people suffer from it.

[kcowan]

Wow I guess I should pay attention to some of these errant posters. I had no idea what she was up to. Nice catch HP.

[ddkay]

Nice catch, indeed, but now I don't know whether or not to continue this thread that has gone so far off topic, in fear that my advice may do more harm than good.

[Belguy]

"A real-life example of the effectiveness of investing in dividend-payers is the quarter-century track record of the PH&N Dividend Income Fund. It's annualized return over the 25 years ended Oct. 31 is 11.1 per cent, the highest of any industry-diversified equity fund."

"A new exchange-traded fund specializing in dividend paying preferred shares, but with a two-country mandate, is the iShares S&P/TSX North American Preferred Stock Index Fund (CAD-Hedged). It began trading on Nov. 22 under the symbol XPF. It's neutral country weighting is a 50-50 mix of Canadian and U.S. holdings. Though U.S. and other foreign dividends aren't eligible for Canadian dividend tax credits, iShares sponsor BlackRock Asset Management Ltd. notes that yields on U.S. preferreds are generally higher than those of Canadian preferreds. This should help offset the reduced tax efficiency."

http://ca.ishares.com/product_info/fund/overview/XPF.htm

http://us.ishares.com/product_info/fund/overview/PFF.htm (49% of above portfolio)

Source: Rudy Luukko, Toronto Star/Morningstar

Any thoughts??

[HaroldCrump]

I don't want the US prefs. ETF.
Once interest rates rise, there will be capital loss.
I don't think the yield would justify the almost-certain risk of rising interest rates.
Even with regular, Canadian prefs, the only way to make money is if you can either get in on the IPO or pick some off the market at a discount and the terms of the issue are favorable, i.e. cumulative, interest rate resets, and hard redemption dates.
Callable perpetuals are risky to pick up at premium because the company will recall the issue exactly when it is favorable for them and thus unfavorable for the investor.

If you really want US interest rate exposure, just pick up the high yield bond ETF - at least the returns appear worthwhile vis-a-vis the risks.

[Cal]

in the well-known Stockholm Syndrome, the victim identifies with his predator to such an extent that reality is completely denied, while the righteousness of the aggressor is fanatically upheld at all times.

in her numerous messages to this forum rox herself describes in precise detail:

- her location;
- her foreign nationality;
- her dismay over the 25% canadian withholding tax that applies to any canadian investments she holds;
- her refusal to pay this NR tax;
- her intention to bypass - ie evade - this NR tax;
- her claimed but false location in the US;
- her search for canadian dividend tax credits as beneficial by-products of certain canadian investments once she obtains a canadian resident account;
- her refusal of initial offers of a non-resident account from certain canadian brokerages;
- her eventual selection of a brokerage from which she somehow obtained a canada-based resident account despite being resident in southeast asia;
- her intention to "move on" to gain canadian old age security benefits;
- her inclusion of other persons offshore whom she represents, who will also move to take advantage of canada once she opens the breach;
- her funding of this new brokerage account by wire transfer from the US;
- and her purchases and planned purchases of several canadian stocks.

in addition, rox's rants when reasonably questioned as to how she had gotten around the law tell the story all by themselves. This is a forum where legitimate posters share their knowledge in rational discourse. They do not explode with hysterics when asked how to do something.

not surprisingly, now that she has been outed, rox appears to have fled away, taking with her - presumably to another message forum - all the expert advice offered by kindhearted and overly-trusting canadians here on cmf.

Stockholm Syndrome. The nicest people suffer from it.

I hadn't pieced all that together.

So...hypothetically...say you did report the threads to Revenue Canada...what exactly would or could they do?

[Eclectic12]

I hadn't pieced all that together.

So...hypothetically...say you did report the threads to Revenue Canada...what exactly would or could they do?

Assuming everthing posted is true and not a prank, I'm not 100% sure but some options could be:

Find out where the financial instituation (likely brokerage) procedures break down so that a foreign resident can open an account.

Put in new rules in the computers to pick off likely candidates for an audit.

Consult with the RCMP and have them trace the IP addresses as far as they can.

I'm not an expert though.

[kcowan]

Find out where the financial instituation (likely brokerage) procedures break down so that a foreign resident can open an account...I believe this is the approach that they use today. Just got to make it work...

[humble_pie]

no regulatory authority in canada has the manpower to chase after a nano-dot of a statistic like rox. She's just a foreign national living in malaysia.

we can be 99 % sure she wound up at a canadian discount brokerage with a fake ID, but the brokerages will all deny that they have any lacunae or gaps that can be breached.

on 21 november rox told this forum that she had acquired a canada-based resident account:

" Harold,... yes, I have,.. I use the Internet to wire the funds over from The US. It's actually very convenient, I don't even need to walk to the bank."

http://www.canadianmoneyforum.com/showthread.php?t=4781&page=2

the probability is that rox acquired a fake ID in the offshore black market. Quite possibly the brokerage would have no way of knowing it was fake.

the pressure of would-be immigrants upon our country - indeed upon all prosperous 1st world countries - is close to unbearable. And it's growing.

what is astonishing is that rox performed nightly in this forum. Oily. Unctuous. Wheedling. Repulsive. And. You. Guys. Helped. Her. Every. Time.

why didn't it occur to any of you that there was something terribly wrong. Like, canada has non-resident tax rules. There is no way around them. Rox was an offshore foreign national. Subject to NR tax which she stated was 25% for her country of residence. What rox wanted was tax-free canadian income that was tax-advantaged to boot.

And. You. Guys. Helped. Her. Every. Time.

nobody said Boo, not even when she boasted that she intended to ultimately move on to claim canadian seniors' benefits.

ok i went after rox, and so did one other poster out of this entire forum. What is surprising is that the rest of you lay down like doormats.

[Riff Raff]

And. You. Guys. Helped. Her. Every. Time.

nobody said Boo, not even when she boasted that she intended to ultimately move on to claim canadian seniors' benefits.

ok i went after rox, and so did one other poster out of this entire forum. What is surprising is that the rest of you lay down like doormats.

get off your high horse.

perhaps others simply didn't put 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 and 1 together.

perhaps others simply have better things to do than stalk people on forums.

[Eclectic12]

[ ... ]
the probability is that rox acquired a fake ID in the offshore black market. Quite possibly the brokerage would have no way of knowing it was fake.

[ ... ]
what is astonishing is that rox performed nightly in this forum. Oily. Unctuous. Wheedling. Repulsive. And. You. Guys. Helped. Her. Every. Time.

why didn't it occur to any of you that there was something terribly wrong.
[ . . . ]

And. You. Guys. Helped. Her. Every. Time.

nobody said Boo, not even when she boasted that she intended to ultimately move on to claim canadian seniors' benefits.

ok i went after rox, and so did one other poster out of this entire forum. What is surprising is that the rest of you lay down like doormats.

Hmmm ... if it's a fake id, I can think of a couple of ways it would raise red flags beyond the brokerage.

I can't speak for anyone else - but in my case, your posts were the first that mentioned anything could be amiss. It may surprise you but I don't read every post and in some cases, have missed sections of a thread.

[kcowan]

I had Rox on ignore. It is easy to see the signs. Someone grinding an ax.

[gleninagh]

WARNING!!
Keep away from these funds ... current returns not in keeping with current publications.. dividends not being paid out as scheduled .. too many red flags

[warp]

I don't want the US prefs. ETF.
Once interest rates rise, there will be capital loss.
I don't think the yield would justify the almost-certain risk of rising interest rates.
Even with regular, Canadian prefs, the only way to make money is if you can either get in on the IPO or pick some off the market at a discount and the terms of the issue are favorable, i.e. cumulative, interest rate resets, and hard redemption dates.
Callable perpetuals are risky to pick up at premium because the company will recall the issue exactly when it is favorable for them and thus unfavorable for the investor.

If you really want US interest rate exposure, just pick up the high yield bond ETF - at least the returns appear worthwhile vis-a-vis the risks.


Some very good and valid points there HAROLD, thanks.

I purchased JNK , ( US junk bond etf), in several of our accounts about 6 months ago.

I am taking the currency risk,,,as I bought it in $US, but feel the US dollar will have to recover at some point.

In the meantime I am happy to collect my appxr 9.5 %, every month.

One funny thing about it though......the distributions are ALL interest, which should have zero US withholding taxes, as per our tax treaty. I also hold some US corporate bonds directly, and there is no withholding on the interest payments.
However, because the ETF is considered a "fund", your brokerage is forced to withhold 15% US taxes on your distributions. You can use the US taxes as a tax credit, and recover it at tax time if you have canadian taxes to pay, but its just another hassle.


By the way...if one had the balls to buy JNK in late 2008, early 2009, you could have tied up a yield of over 16% +...and had a great capital gain now as well. Unfortunately, even though I thought about it at the time,,,my nerves were lacking.

[kcowan]

One funny thing about it though......the distributions are ALL interest, which should have zero US withholding taxes, as per our tax treaty. I also hold some US corporate bonds directly, and there is no withholding on the interest payments.

However, because the ETF is considered a "fund", your brokerage is forced to withhold 15% US taxes on your distributions. You can use the US taxes as a tax credit, and recover it at tax time if you have canadian taxes to pay, but its just another hassle...Is that not an advantage as long as you pay Canadian Taxes?

Is not an ETF just an exchange traded fund? So how could your brokerage avoid treating it that way. It seems that your US bonds are the exception, unless they are held in an RRSP.

[warp]

There is no "exception"

Interest payments between US and Canada, and the other way around, by our TAX TREATY are to have zero taxes withheld.

As JNK pays ONLY interest it would reason that these payments would also have zero taxes withheld.

But that is not the case....as our two governments, in their wisdom , have decided that ETF's are "funds"....even if they pay out only interest.

US dividends always have 15% taxes withheld...( except in registered accounts,,,but NOT in a TFSA, which is not yet acknowledged as a "registered account" in the tax treaty, so any foreign taxes withheld in a TFSA are lost forever.)

Also there is no "advantage", for a candian here.....in fact there could be a distinct disadvantage if your US taxes withheld are higher than the canadian taxes otherwise payable. Then you would have to go to the US IRS and file a return, ( from what I understand) , to recover any US taxes you cannot use up here to offset canadian taxes.

Is this all confusing enough??

[ledtim]

I recently looked into buying junk-bond etfs.

Note that Canadian etfs holding US bonds directly are not charged withholding taxes (rather than you holding a US bond etf or holding a canadian ETF holding a US ETF).

That means CHB, which happens to track the same index as JNK except currency-hedged and using a swap structure that makes all the returns ROC, are charged no withholding taxes, which ironically makes it the best junk bond ETF for a Canadian investor to hold in their TFSA despite the structure specifically being designed to be used in non-registered account.

It would be nice if there was a Canadian junk bond etf that held bonds directly that wasn't swap based to put in your TFSA (which would cause it to have lower MER and no counterparty risk), but I don't believe there is one. ZHY also tracks the same index but actually has a higher MER, and seems to be underperforming more than the withholding tax from JNK comprising 20% of its holdings would suggest.

[HaroldCrump]

I also hold some US corporate bonds directly, and there is no withholding on the interest payments.May I ask how you get direct access to US bonds?
Is this through an online brokerage or through a full-service broker?
Scotia iTrade has been advertising direct access to US bonds, esp. since the recent change to their bond pricing structure.
However, I'm not finding any US issues showing up in my searches.
Maybe I'm using the wrong filters or setting my YTM target too high :rolleyes:

By the way...if one had the balls to buy JNK in late 2008, early 2009, you could have tied up a yield of over 16% +...and had a great capital gain now as well. Unfortunately, even though I thought about it at the time,,,my nerves were lacking.That was the best time to buy direct bonds.
I managed to buy some investment grade Canadian bonds at very nice yields.
Feb - Mar 2009 was perfect timing for RRSP season - too bad there's a cap on RRSP contributions.

[warp]

May I ask how you get direct access to US bonds?
Is this through an online brokerage or through a full-service broker?
Scotia iTrade has been advertising direct access to US bonds, esp. since the recent change to their bond pricing structure.
However, I'm not finding any US issues showing up in my searches.
Maybe I'm using the wrong filters or setting my YTM target too high :rolleyes:
That was the best time to buy direct bonds.
I managed to buy some investment grade Canadian bonds at very nice yields.
Feb - Mar 2009 was perfect timing for RRSP season - too bad there's a cap on RRSP contributions.

HAROLD:

I bought my US bonds through my discount broker.....a few years ago.

There is so much less choice now,,,and the yields are not even worth considering, as far as I am concerned.
I do believe investors buying just about any bonds right now will see a pretty big capital loss in the years ahead. The argument about just holding your bonds to maturity is fine, except that the yields are historically low...so unless Im wrong.....you will lose either way. For that reason I am not buying any bonds or bond funds/etfs right now.

Like you I was lucky enough to buy a lot of individual investment grade canadian corporate bonds a few years ago too. The timing was as much luck as anything else. I got them at good prices and at good yields. I had great bond ladders up to 5 years set up in our accounts.

However, as I have posted on here before.....many of these bonds have been redeemed early by the corporations who issued them, because they can borrow at much lower rates now.
That leaves guys like me in a "cash rich" situation..........and with cash earning very little, this is not fun.
My solution is to be patient and buy good yielding solid dividend stocks when they reach a reasonable price.
Obviously this hasnt happened much this year as stock prices have held up.
That has been great for the equities I already owned....but hurts because this cash is sitting waiting to be put to work!

Any suggestions for me?

[kcowan]

....but hurts because this cash is sitting waiting to be put to work!

Any suggestions for me?Patience!

Also nibble at Convertible Debentures as they come up for IPO - about 6% with an inflation hedge.

[HaroldCrump]

Also nibble at Convertible Debentures as they come up for IPO - about 6% with an inflation hedge.I always struggle with the conversion prices.
I find them over-valuated more often than not.
Of course it is in the issuer's interest to set the highest possible conversion price that the market will tolerate.
How do you evaluate/judge the conversion price for something that is at least 5 years out?

[kcowan]

How do you evaluate/judge the conversion price for something that is at least 5 years out?I expect them to set it at a 25% premium over the average trading range for the previous 6 months. If it is bigger than that then I expect the yield to be higher (e.g. 6.5%).

[dogcom]

Any thoughts on PBH or Premium Brand Holding Corporation. It is a Richmond BC company which in my hometown so I can maybe pay them a visit.