Last week, Andrew asked for a review of the three dividend paying stocks he is holding. Andrew is 65 and wants to derive income and growth to fund his retirement. Many investors are in the same situation. They need to manage their assets during a period of extremely low interest rates. The current environment has forced many seniors into taking on higher risk to achieve their retirement goals. (To see the last two postings pertaining to Andrew's question, see Pembina Pipeline and Keyera .)
Inter Pipeline Fund will be the focus of this analysis.
The three-year chart is an outstanding example of a stock that has had a great run but like Pembina Pipeline Corp. has started to flatten out. Andrew has 25 per cent of his portfolio in IPL.UN. The same amount as he has invested in PPL.
The six-month chart illustrates the resistance at $16.25 that the units have struggled with since May. There is support at $15.50 that was tested during the August sell off but investors quickly entered to buy at the lower levels.
The MACD signaled the up move in October, 2011 from $15.75, which provided the momentum to break above resistance at $16.25. IPL.UN offers a 5.9 per cent dividend, which is very attractive.
IPL.UN is another great example of a well researched stock that is meeting the declared investment criteria of growth and income.
From a portfolio management approach, Andrew’s portfolio is perhaps too concentrated in one sector of the economy. If you are going to have all your eggs in one basket, you have to watch it like a hawk!
As to Andrew’s query about investing in the Canadian banking sector, the simple answer is yes. Last week, I attended the monthly meeting of the Oakville Chapter of the Canadian Society of Technical Analyst. Don Vialoux, a well known and respected analyst from techtalk.com, mentioned that the Canadian banking sector will soon enter its period of seasonal strength. The period runs from late October until January. (Read his recent Globe and Mail article on the topic here).
If you are looking for a good entry point on the banks, start conducting your due diligence to see if the risk profile meets your investment criteria.
Make it a profitable day and happy capitalism!
Have your own question for Lou? Send it in to firstname.lastname@example.org.
Visit his website