Opinions by Lorne Zeiler | StockChase
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Lorne Zeiler

Portfolio Manager & Wealth Advisor

ON STOCKCHASE SINCE Jul 2016

TriDelta Financial


Opinions by Lorne Zeiler


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2017-04-20

N/A
A Comment -- General Comments From an Expert 

Market. The US markets are overvalued, meaning that return expectations should be lower. Earnings were at roughly 115 last year, and are projected at about 132 this year, so we are looking at 18-18.5 on a multiple basis. Other areas are looking more attractive than the US market. People should be looking at Japan and particularly Europe. Europe has had quite a few months now of positive economic surprises. ETF’s would be a good entry for most investors.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: _N/A

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2017-04-20

N/A
A Comment -- General Comments From an Expert 

A stock or ETF for European exposure? If making an entry into a market where you have never been before, an ETF is a good way to do it. You get good diversification across countries and across sectors. Everyone assumes Canadian ETFs are all cheap and are all going to give diversification. That is not necessarily so. He’s been buying into Europe through a US listed ETF. (See Top Picks.)

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: _N/A

Must be logged in to use chart

2017-04-20

PAST TOP PICK
Apple (AAPL-Q)

(A Top Pick Dec 23/16. Up 23%.) This has been a great buy. Has reduced his holdings, because the catalysts he was looking for hasn’t happened yet. Two of them were related tax reforms, particularly the possible repeat duration of offshore funds. He is also hearing of delays of iPhone 8. He still likes this. Still at a reasonable valuation.

electrical/electronic
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $142.440
Owned: Yes

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2017-04-20

COMMENT
Pure Industrial Real Estatetrust Trust (AAR.UN-T)

A sector that sold off a few years ago, as people were thinking that with less manufacturing there was less industry. Since then we have had a major change in how people shop. There is a lot of online shopping, and this company’s holdings have become hubs for a lot of storage for businesses. One of the leaders in this space, and probably one of the best names in the industrial space.

property mngmnt/investment
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $6.560
Owned: Unknown

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2017-04-20

PAST TOP PICK
AbbVie Inc. (ABBV-N)

(A Top Pick Dec 23/16. Up 4%.) A one trick pony with their drug Humira. Valuation is quite reasonable and is going to be 12-13X projected earnings. A lot of that is based on sales of Humira, a life altering drug, which accounts for over 60% of their revenues. Made 2 very large acquisitions in the past few years, and we are starting to see some of those drugs in the pipeline getting approved.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $63.780
Owned: Yes

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2017-04-20

BUY
Bank of America (BAC-N)

One of the best names in the US. A very diversified base. There is talk of reducing the Frank-Dodd effect which would be helpful to the sector. Also, rising interest rates will be helpful to them. He is expecting a lot more growth on their loan activity. If you are going to have one name in the US, this is the one.

banks
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $23.070
Owned: Yes

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2017-04-20

COMMENT
Brookfield Asset Management (A) (BAM.A-T)

In the last number of years, this has been moving more and more of the business to actually being an advisor or fund manager, versus directly owning the assets. There has been a major shift in the last 5-6 years in the landscape of investments. Of all the money that went into mutual funds in the last 3 years, 8X of all funds put together went into the Vanguard funds. Long-term, he thinks there is going to be more assets moved into the space, more assets that have a target performance around it, and you are going to see earnings increase.

management/diversified
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $49.460
Owned: Unknown

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2017-04-20

HOLD
BCE Inc. (BCE-T)

A great income name and has been a great dividend stock. 4.7% dividend yield, and expects that will get increases of about 5% over the next few years. That is likely to equal what the earnings growth is going to be. They’ve had some good penetration on the wireless business. Has a great deal with Telus (T-T) which allows them to lower the costs of their infrastructure. Trading at a high valuation of over 18X earnings.

telephone utilities
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $61.260
Owned: Yes

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2017-04-20

BUY
Canadian Imperial Bank of Commerce (CM-T)

From a valuation metric, this would look like a certain Buy. It has the cheapest valuation for a bank. Trading at 11.5X earnings. High dividend yield of about 7.5%. In the last 8 quarters, they have beaten on earnings and on revenue. There is the acquisition of the US bank which they had to pay up for. They are going to have to issue equity, which may cause some near-term weakness. Also, it is the least geographical diverse Canadian bank and is the most reliant on the Canadian consumer.

banks
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $112.540
Owned: Unknown

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2017-04-20

COMMENT
Cisco (CSCO-Q)

If you include the cash, this is quite a cheap stock. It is basically trading at about 16-17X earnings and the market cap is about $165 billion. People forget that there is $60 billion plus in cash sitting on the balance sheet. Even if you net out the debt of about $30 billion, you are taking the valuation down to about 13 or 14 times. Not including the debt, it is about 10 times. The growth profile is going to be low. The dividend is about 3% and there is a strong potential that you could see some special dividends, or an acquisition to drive growth. An attractive investment.

electrical/electronic
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $32.830
Owned: Unknown

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2017-04-20

COMMENT
Dividend Growth Split Corp (DGS-T)

Effectively a creation of a preferred share and a capital share. If the stock performed quite well, you are getting a leveraged investment effectively on the preferred share. EG, on a $60 stock, you could have a $30 preferred share and a $30 capital share. If the capital share goes from $60 to $66, you have now gone from $30 to $36 giving you a 10% improvement in terms of return. What people don’t realize is a) the leverage, but b) preferred shares in the structure have to be paid out first. Consequently, the way these are structured is that the dividend coming from the underlying portfolio, simply pays the dividend to the preferred share. If they are paying a dividend on the capital side, that is typically coming from expected price appreciation or option writing. If you are a higher risk investor, it is something you could consider.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $7.910
Owned: Unknown

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2017-04-20

TOP PICK
iShares MSCI Edge Min Vol EAFE (EFAV-N)

There are better opportunities now in Europe and Japan. This gives you a broader exposure across Europe of all the countries, with a little bit less on the UK. Also, there is a better mix in terms of stability in the sectors. In the last 3 years, there has been significant outperformance on this ETF, but last year underperformance. Good dividend yield.

E.T.F.'s
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $66.400
Owned: Yes

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2017-04-20

COMMENT
Enbridge (ENB-T)

Enbridge (ENB-T) or Enbridge Income Fund (ENF-T) for dividend income? This one is the company that is building the pipeline and the energy services, etc. Once that is completed, it is largely sold to the Enbridge Income Fund.

oil/gas pipelines
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $56.430
Owned: Unknown

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2017-04-20

COMMENT
Enbridge Income Fund Holdings (ENF-T)

Enbridge (ENB-T) or Enbridge Income Fund (ENF-T) for dividend income? Enbridge is the company that is building the pipeline and the energy services, etc. Once that is completed, it is largely sold to this fund. Pays about a 6.1% dividend yield. The stock is about 8%-10% off its high, and is a reasonable valuation. They are expecting about $9 billion of additional products in the next 3 years and dividend hikes of about 10% a year in the next 2-3 years.

oil/gas
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $33.690
Owned: Unknown

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2017-04-20

COMMENT
Fortis Inc. (FTS-T)

Which utility stock has the best dividend growth profile? He would suggest you look at this one, which recently made a big acquisition in the US. They are paying about 3.6% now, and are committed to growing the dividend at about 5%-6% per year. Earnings are projected to grow at a similar rate. Trading at a reasonable valuation.

electrical utilities
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $44.240
Owned: Unknown

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2017-04-20

TOP PICK
Johnson & Johnson (JNJ-N)

Recently missed on revenues and the stock sold off a bit. They actually beat on the earnings per share. This company has 3 solid lines of business, pharmaceuticals, consumer products and medical devices. There should be significant earnings growth this year. They did a significant acquisition last year which should be coming into earnings this year. Trading at about 20X earnings. Dividend yield of 2.6%. (Analysts’ price target is $130.)

biotechnology/pharmaceutical
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $121.870
Owned: Yes

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2017-04-20

COMMENT
Manulife Financial (MFC-T)

All the financials had a big, big move, and this was probably one of the greatest recipients of this bump in Canada. In terms of an overall stock, their valuation is reasonable. It looks like they are putting some improvements in place with the John Hancock business, which has been a huge headache. ROE is still lower than its competitors. (See Top Picks.)

insurance
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $23.240
Owned: Unknown

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2017-04-20

DON'T BUY
Sherwin-Williams Co. (SHW-N)

This has had huge growth in both earnings and share price over the last number of years, because it has been tied into both the US consumer and the US housing market. It is a brand most used by contractors. However, it is at a very high premium in terms of valuation at roughly 26X earnings. They are expecting earnings growth of 10%. This is not one he would be buying.

misc consumer products
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $324.020
Owned: No

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2017-04-20

TOP PICK
Sun Life Financial Inc (SLF-T)

Compared to the other insurers, their valuation is more reasonable at 7.6X earnings. Recently they’ve provided their medium-term outlook, looking at 8%-10% earnings growth per year. Very stable name. Dividend yield of 3.6%. (Analysts’ price target is $54.)

insurance
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $47.800
Owned: Yes

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2017-04-20

HOLD
Toronto Dominion (TD-T)

Why are the banks consolidating or flat? In 2015, the earnings of the banks were fantastic. They were beating the estimates and they were increasing, but people were concerned and there was a decline in the bank shares of about 10%-15%. Last year, there was a massive run up. They were giving returns generally of about 30%, so a pause is in order. This is a great, long term hold.

banks
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $66.040
Owned: Unknown

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2017-04-20

PARTIAL BUY
Teva Pharmaceutical (TEVA-N)

A cheap, but troubled stock. It is the leading generics pharmaceutical provider globally. They overextended themselves a while ago, in trying to get into specialty Pharma areas, which has been a bit of a problem. Expected to generate a little over $5 in earnings next year, a 6X earnings multiple. The Pharma sector as a whole tends to be 3X, so this is very, very cheap. The dividend is over 4%. The negative is that the management team is in flux. Also, the Department of Justice now has an inquiry into price fixing potential by the generic providers. The balance sheet is incredibly levered at 4.8X EBITDA. This is worth taking a half position and then growing that out. If things start to normalize and they get the earnings they are projecting, it should really start seeing 20%, 30%, 40% growth from here.

biotechnology/pharmaceutical
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $30.760
Owned: Unknown

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2017-04-20

PAST TOP PICK
TransCanada Corp (TRP-T)

(A Top Pick Dec 23/16. Up 4%.) He thought there might be some uptick if the Keystone pipeline was approved and the integration of the Columbian pipeline. A great name to continue to hold. They are projecting dividend growth of over 10% over the next 3 years. They have $23-$24 billion of projects coming on in Mexico, the US and Canada.

oil/gas pipelines
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $63.560
Owned: Yes

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2017-04-20

COMMENT
Verizon Communications (VZ-N)

Even though the street does not like this, it is a name you might want to look at. Trading at 13X earnings. They were basically only $.01 under earnings, but missed quite a bit on the revenue side. He thinks that is going to change.

telephone utilities
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $48.410
Owned: Unknown

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2016-12-23

N/A
A Comment -- General Comments From an Expert 

Market.Donald Trump made a lot of promises, and you have to position for both extremes. He expects that he is going to try to get through the agenda items which are easier, those agenda items that the Republicans have been pushing for, and ones that will be popular with both investors and the general populace. Thinks he will do the repatriation of capital. There are hundreds of billions of dollars sitting in offshore accounts, not coming back to the US because of very high tax rates. Thinks he will offer the possibility of a 5% tax rate. If this happens, expectations are that there will be $500-$800 billion back into the US, and likely going into a lot of friendly shareholder type share buybacks, dividend increases, special dividends and, as Trump hopes, spur the economy on. Another that is also likely, but to a lesser extent, is the corporate tax rate. Expects it is going to come down, and a 20%-25% rate is likely to happen. Hopes that the protectionist Trump does not come into play. There could be some problems on infrastructure spending, as he doesn’t think the party will be supportive of an increased deficit. Europe is very attractively valued, but you also need to be in the stronger US market as well.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: _N/A

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2016-12-23

N/A
A Comment -- General Comments From an Expert 

Investments to generate income?Bonds are considered to be conservative, but you are getting a very low yield for potentially significant risk, particularly if they are longer duration. He would recommend preferred shares, particularly if they are taxable accounts. The rate you are seeing on most of them is 5%-6%. You need to spend the time to find the right manager who has the expertise and the track record.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: _N/A

Must be logged in to use chart

2016-12-23

TOP PICK
Apple (AAPL-Q)

He sees catalysts in this. They have what is called a “refresh” or “repurchase” program with the iPhone. The iPhone 8 is going to be hitting right at that point and grabbing market share, and you are going to have people switching devices. That will bring a new revenue source for them. People have been concerned about declining iPhone sales, and he thinks they will increase in 2017. Repatriation would be massive for this company. They have over $150 billion sitting offshore. The expectation is that if it actually does happen, they are probably going to bring about $100 billion back, which could go into special dividends, dividend increases and share buybacks. Also, they have been significantly increasing the revenue for services. Dividend yield of 1.97%. (Analysts’ price target is $131.65.)

electrical/electronic
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $116.520
Owned: Yes

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2016-12-23

TOP PICK
AbbVie Inc. (ABBV-N)

Thinks healthcare has been an un-forgotten asset class. As a result, there are a lot of companies with compelling valuations. This is trading at about 13.5X earnings. The majority of that comes from the auto immune therapy product, Humira, that really changes people’s lives. This will contribute about $17 billion to total earnings next year. They are seeing huge growth for emerging markets. It has come off patent, but this is an infusion medication with numerous patents around it. They’ve got a good pipeline, because they have made a number of acquisitions. They are expecting earnings growth of about 30% over the next 4 years. Dividend yield of 4.11%. (Analysts’ price target is $71.94.)

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $62.340
Owned: Yes

Must be logged in to use chart

2016-12-23

COMMENT
Brookfield Asset Management (A) (BAM.A-T)

This has been executing really well. It is one where a lot of pension fund endowments are focused. They are looking at things that are going to be able to pay them very consistent returns on long-term assets. They’ve done a great job in building up real estate in their infrastructure group. He expects there will be dividend growth, but they have been redeploying funds back into more mandates.

management/diversified
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $44.620
Owned: Unknown

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2016-12-23

COMMENT
BCE Inc. (BCE-T)

The government has just declared the Internet as a basic service, which will take from the bottom line, but doesn’t think it will be that huge. The rally this year really hasn’t come into play for the telecom companies. At this price level, it is a very attractive entry point. Don’t expect huge growth from this. It is trading at about 18X. There will be some earnings growth. Increasing interest rates help them on their pension liabilities.

telephone utilities
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $58.260
Owned: Yes

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2016-12-23

PARTIAL SELL
Chorus Aviation Inc (CHR-T)

Industrials have had a good year. This also had the benefit of low oil prices. Taking some profits makes sense. If you have nothing in the US, you should be looking at some of those names, for both currency and greater growth prospects.

Transportation & Environmental Services
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $7.230
Owned: Unknown

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2016-12-23

COMMENT
Canadian Imperial Bank of Commerce (CM-T)

CIBC or another Canadian bank?Canadian banks have had a fantastic year. The 6 have basically been responsible for half, if not more, of the total gains on the TSX this year. As a group, they have returned roughly 30% this year. The issue with the banks is that they are now trading above their historical multiples, particularly because in the last few months, they’ve had a big increase along with the US financials, on expectations that net interest margins are going to expand. If there is further deterioration on Canadian fundamentals, this is the most domestically focused bank. Royal (RY-T) is probably a better name to go with.

banks
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $110.860
Owned: Unknown

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2016-12-23

COMMENT
Canadian National R.R. (CNR-T)

Canadian National (CNR-T) or Canadian Pacific (CP-T)?In his view, this one is the better choice. It is the best quality management, lowest cost operator and the company that puts the most money into their fleet. Trading at a slight premium to Canadian Pacific.

Transportation
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $91.520
Owned: Yes

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2016-12-23

COMMENT
Canadian Pacific Rail (CP-T)

Canadian National (CNR-T) or Canadian Pacific (CP-T)?In his view, Canadian National is the better choice. It is the best quality management, lowest cost operator and the company that puts the most money into their fleet.

Transportation
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $193.870
Owned: No

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2016-12-23

PAST TOP PICK
Computer Program & Systems (CPSI-Q)

(A Top Pick July 29/16. Down 39.82%.) Had been looking at this, and it had a great sales pipeline. He was looking at it to realize on some of that pipeline. It did not meet expectations so he exited at about $28 in August.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $23.350
Owned: No

Must be logged in to use chart

2016-12-23

COMMENT
Cisco (CSCO-Q)

A name that he likes. The industry leader. It is huge. Trading at a very reasonable valuation of about 13.5-14 times earnings. Earnings growth has been at the lower end, 2%-5% a year. Roughly 30% of the market cap is sitting in cash. If you X that out, you are looking at a 10X valuation, and he doesn’t think the market has put much on that. If repatriation for US companies happens, you are going to see some dividend increases and increased share buyback.

electrical/electronic
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $30.530
Owned: Yes

Must be logged in to use chart

2016-12-23

COMMENT
DH Corporation (DH-T (Dead))

Sold his holdings in May, when there was a bad quarter of earnings. The company did a number of acquisitions; however the acquisitions weren’t bringing the revenue in fast enough, and hence they were over levered on all of them. Q4 basically missed on all factors, and the stock fell off a cliff. They’ve been able to renegotiate their debt covenants, so that is all clean. Also, reduced distributions. The last move, from $17 to about $18, was based on the potential of an acquisition. If it does not happen, he expects the stock will decline. However, if it does happen, you could see about 20% from where we are today.

other services
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $21.990
Owned: No

Must be logged in to use chart

2016-12-23

COMMENT
Firm Capital Mortgage Investment (FC-T)

He prefers the private space, because they are just getting the trend on how much you are receiving from the mortgages. You are getting a lot more ability, and pricewise it is about the same. Firm Capital is a well-run company.

Financial Services
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $14.030
Owned: No

Must be logged in to use chart

2016-12-23

COMMENT
Johnson & Johnson (JNJ-N)

One of the names you want to hold in the pharmaceutical healthcare area for the long term. The pharmaceutical healthcare field has had good earnings growth, and are expecting significant earnings growth next year, especially on the pharmacy side. These kinds of names were really hurt in 2016, because there was fear that if Clinton came in, they are going to start regulating prices along with additional regulations on the pharmaceutical industry. This trades at a premium to the group at about 20-21 times earnings. They have a great platform with a pipeline of about 10 medications that should be coming on market in the next 5 years. They are great at cost cutting. Also there is a potential acquisition they are looking at.

biotechnology/pharmaceutical
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $115.960
Owned: Unknown

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2016-12-23

PAST TOP PICK
LyondellBasell Industries (LYB-N)

(A Top Pick July 29/16. Up 19%.) This was great value. Basically industrial, focused on the chemical side. Producing plastics is its main business. Stable oil prices really helped out. Trading at about a 30% discount to its peers, which is warranted, because earnings are likely to be lacklustre in the next little while. You are still getting a 4%+ dividend. There is still room left on the stock.

INDUSTRIAL PRODUCTS
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $87.700
Owned: Yes

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2016-12-23

BUY
Manulife Financial (MFC-T)

5-year hold?You are not going to have concerns about this company. They are growing their asset management business significantly. If you are a dividend investor, you want to be in some names that are interest sensitive, and the lifecos are interest sensitive names. Prefers Sun Life (SLF-T) whose footprint into India has been very successful, and they are now moving into China. However, both are great companies.

insurance
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $24.430
Owned: No

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2016-12-23

COMMENT
Sherwin-Williams Co. (SHW-N)

The biggest paint and wallcovering company in the US. The stock has moved significantly, much more so than earnings. This is one where you want to wait for the price to come down or for earnings to go up.

misc consumer products
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $272.300
Owned: Unknown

Must be logged in to use chart

2016-12-23

PARTIAL BUY
Teva Pharmaceutical (TEVA-N)

This is one where the valuation is very compelling. It’s at a 52-week low, and in this environment, you would think a generic company would do very, very well. At this level it is definitely worth dipping into it. They are expecting 15%-20% growth in emerging markets, and this company will be able to participate.

biotechnology/pharmaceutical
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $36.820
Owned: No

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2016-12-23

TOP PICK
TransCanada Corp (TRP-T)

Great management team. Reasonable valuation to the peer group. There is going to be a lot of pipeline that he is expecting to come online in the next number of years. There is about $25 billion of infrastructure that has been spent, and will be coming online, probably within the next 2 years. There is another $45 billion that is likely coming on in the next 5 years from there. A huge amount of growth in that space. The company has said that they are likely to increase dividends at a 10% clip over the next 5 years. We are also likely going to see Keystone approved. Dividend yield of 3.64%. (Analysts’ price target is $68.31.)

oil/gas pipelines
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $62.130
Owned: Yes

Must be logged in to use chart

2016-12-23

PAST TOP PICK
BMO S&P/TSX Laddered Preferred (ZPR-T)

(A Top Pick July 29/16. Up 8.13%.) Has a lot of clients that are really focused on how they are going to get the income they need. Every 5 years, these preferred shares get reset, and they benefit when interest rates are going up.

E.T.F.'s
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $10.580
Owned: Yes

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2016-07-29

N/A
A Comment -- General Comments From an Expert 

Markets. People are thinking the equity market is more attractive than the alternatives of fixed income and dividend paying stocks, and have been putting money in. It is interesting that the markets most hit, particularly in Europe, have actually been some of the better performers this month. Feels the Fed has turned less dovish, and are hoping to raise rates, and he anticipates one hike before year-end. He’s been looking at some of the stocks that have been beaten down. There are some high dividend payers that may not have met expectations, or are seeing some declines in earnings, and those have been punished quite a bit. He is also looking at some, where growth is coming but not visible in the next 3-6 months.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: _N/A

Must be logged in to use chart

2016-07-29

N/A
A Comment -- General Comments From an Expert 

Sell before ex dividend date or after? The finance theory is basically that the market actually prices in the dividend when people are pricing out the stock. He back tested and found it made no difference at all on the earnings.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: _N/A

Must be logged in to use chart

2016-07-29

N/A
A Comment -- General Comments From an Expert 

A reasonable high this year for the TSX? That would be a question of what we see happening with gold prices, which has been a huge contributor to the overall returns to the TSX. Gold prices have not moved nearly as much as the stocks, many of them have doubled. Energy has gone up, but oil prices have come down by about 20%, yet energy stocks are generally holding in pretty well, having fallen off by about 7%. It wouldn’t surprise him to see another 3% from here.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: _N/A

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2016-07-29

N/A
A Comment -- General Comments From an Expert 

How much do interest rates have to increase before high dividend payers, like REITs and utilities, get hit with selling? If you got one move by the Fed, it could easily lead to a 5%-10% selloff.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: _N/A

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2016-07-29

COMMENT
A Comment -- General Comments From an Expert 

Canadian financials? Last year, even though earnings were pretty good, everyone was worried about where growth was going to come from and what was going to happen to the overextended consumer. The banks fell about 10%. This year has been the exact opposite. The banks have had a pretty good run. Banks, from a long term perspective, are a great hold, and are basically trading in line with their historical average of about 12-14 times earnings. You get a great dividend, between 3.5% and 4.9%. It wouldn’t surprise him that if there is an issue with rates going up, banks could be hurt. Lifecos haven’t done nearly as well as banks, and are now trading below BV. You get a higher dividend than what you typically get from banks, and picking them up at a lower multiple. Also, they have a larger business tied to the wealth management space, so there is less concern with interest rates.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: Unknown

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2016-07-29

COMMENT
A Comment -- General Comments From an Expert 

Business development companies (BDCs)? A very broad category which goes all the way from private equity to private debt. The amount of leverage they can have can get up to a level of 200% or more, or more recently at 25%-50%. His firm has been looking a lot at private markets and private debt space. It is a great opportunity. Regulations have made it very difficult for the banks to lend to certain areas, so they are very slow in acting. He has been able to find a lot of alternative strategies paying in the 6%-7% range. Two of the better names are Apollo (AINV-N) giving a 14% distribution and BDC (?). You really have to look at the individual names, because the characteristics of that sector are weighted.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: Unknown

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2016-07-29

COMMENT
A Comment -- General Comments From an Expert 

REITs or energy for dividends of 4%-6%? If you are looking to try to generate income, REITs are probably a better play, because the energy sector is going to be more of a reflection of what is happening with the energy price, giving you a lot more volatility than what you would see in the REIT sector.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: Unknown

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2016-07-29

COMMENT
A Comment -- General Comments From an Expert 

Which bank pays the best dividend for the next 3-5 years in a TFSA? The National (NA-T) pays the highest at 4.9%. He likes this in that it hasn’t moved as much as Bank of Nova Scotia (BNS-T). If ranking in terms of quality, Toronto Dominion (TD-T), Bank of Montréal (BMO-T). In terms of more compelling valuations and upside, you have Bank of Nova Scotia (BNS-T), CIBC (CM-T) and National (NA-T). His one caution with CIBC is that they made a major acquisition in the US, so will likely do an equity raise. If you can wait for that equity raise to happen, this would probably be a little cheaper.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $0.020
Owned: Unknown

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2016-07-29

COMMENT
AbbVie Inc. (ABBV-N)

Its main product is Humira which works on the immune system. Basically for rheumatoid arthritis, IBD, any of the diseases that act on the immune system. Accounts for close to 60% of their revenue. They just had a great quarter. Saw 17% increase in sales for Humira. Has a fantastic pipeline and very aggressive growth targets. Trades at a pretty reasonable valuation considering it is a growth company. They anticipate double digit growth in each of the next 4 years, and to get revenues up to $37 billion a year. If successful and are able to get their operating margins where they say, by 2020, based on current valuations of 14.5X earnings, you will be paying about 8X.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $66.230
Owned: Yes

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2016-07-29

HOLD
Canadian National R.R. (CNR-T)

Trading at fair value, but doesn’t expect a lot of upside in the near term. He really likes that even though they have had declining revenues by about 11%, they are the leaders in their industry, the most cost-effective player and have been able to raise prices. In spite of the revenue decline, they are only down about 2.5% in terms of earnings. A cautionary note for the near term is that transport stocks tend to move with the market, and often tend to lead the market. If we see a 5%-10% pullback, this is good to follow. Trading at 18X forward earnings, a level that it has been trading at for the last 3-4 years. Doesn’t expect a lot of earnings growth in the near term. 16X forward earnings would be a great entry point. Dividend yield of 1.8%.

Transportation
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $82.770
Owned: Yes

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2016-07-29

TOP PICK
Computer Program & Systems (CPSI-Q)

Provides end to end solutions for patient care for small, rural hospitals, acute care facilities and financial planning and accounting software. They made an acquisition and lost some clients as a result, and the stock came down significantly. They see some great synergies, and are actually ahead of schedule. There are a lot of positives going on with the company. It has a great pipeline. They figure about 150% growth in terms of sales. There is a new compliance regulation coming out, which a lot of smaller players will not be able to comply with. Trading at about 11X forward earnings. Dividend yield of 6.46%.

Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $39.640
Owned: Yes

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2016-07-29

HOLD
DH Corporation (DH-T (Dead))

Have done a major restructuring, and did a major acquisition. While a solid company, you are likely not going to see the visibility, i.e., an increase in earnings related to the acquisition, for at least 12 months. He just sold his holdings. Thinks the 4% dividend yield is safe. Below $30 would not be a bad entry point.

other services
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $32.250
Owned: No

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2016-07-29

BUY
Enbridge Income Fund Holdings (ENF-T)

When Enbridge (ENB-T) has a mature project, they push it over to this, and then it becomes an income vehicle. Pays a very high dividend. In terms of visibility, they put more projects on so it is trading at a very reasonable multiple. They can easily pay the dividend, which is close to 6% now. They expect 10% plus increases per year going into 2019. If you take the current price and go into 2019, that is going to be a yield of close to 8%. A solid underlying company, but there will be some volatility.

oil/gas
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $32.500
Owned: Yes

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2016-07-29

COMMENT
Johnson & Johnson (JNJ-N)

Trades at a higher multiple, because it is a better quality company. Very well-managed. There are 3 income streams 1) pharmaceuticals, 2) devices and 3) the consumer. This is basically international. The dividend is likely to grow, but slowly. This is a name that will hold up if we get market declines. He wouldn’t expect significant growth.

biotechnology/pharmaceutical
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $125.230
Owned: Unknown

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2016-07-29

TOP PICK
LyondellBasell Industries (LYB-N)

Basically a manufacturer, designer and technology company around plastics and polymers. They also have a refining division. Valuation is really cheap. The company did quite well, particularly when there was a disparity between oil and gas. Trading at about 7X forward earnings. He anticipates earnings to be on a declining scale in 2016, but likely to stabilize in 2017. Dividend yield of 4.52%.

INDUSTRIAL PRODUCTS
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $75.260
Owned: Yes

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2016-07-29

TOP PICK
BMO S&P/TSX Laddered Preferred (ZPR-T)

Rate reset preferreds started coming out in 2008. They declare a dividend which has a formula attached to it. Every 5 years that rate gets reset based on a formula, a 5-year Government bond and some kind of spread. Sold off a lot last year, because the yield curve flattened significantly and there was a fear the rate resets were going to be a lot lower. However, what has tended to happen, is that you are now getting yields of about 5.5%. Actually one of the few securities that if interest rates go up, you are going to benefit from it. He could see about 5%-10% growth, plus reset rates going higher if rates do increase.

E.T.F.'s
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial

Price: $9.960
Owned: Yes

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