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I inherited some shares but don’t have a broker. Now what?

I inherited 200 shares of Great-West Lifeco that I'd like to sell, but I don't have a brokerage account. What are my options?

According to Great-West Lifeco's transfer agent, Computershare Canada, if you received an "ownership statement" – a document that indicates you are the owner of the shares – you can mail it to Computershare and ask the company to sell the shares on your behalf. There is a $35 fee for the service, a representative told me.

You'll have to choose the "sale" option on the ownership form, and sign and date it. Call Computershare and they will walk you through the process.

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However, if you received the share certificates instead of an ownership statement, you'll need to find a broker to sell the shares for you, the rep told me.

According to a full-service broker I spoke to, you'll need to open an account in order to sell even a couple of hundred shares. Securities regulations require this, he said. You'll also have to pay a commission on the transaction, which on a full-service account can easily cost upwards of $100.

A cheaper option, this broker said, is to open a discount brokerage account and deposit the shares. You could then sell the shares for a commission of about $25 or $30 – a fraction of what a full-service broker would charge.

Yet another option is to sign the share certificate over to someone – a friend or relative, for example – who already has a brokerage account. On the back of the certificate there should be a power of attorney transfer form, which you would fill out to authorize the transfer.

"Then you take the certificate to your bank and get the proper signature guarantee and mail the certificate off to the transfer agent," explained Robert Gibb, a Victoria-based investor who, as a dividend reinvestment plan expert, has extensive experience with the share exchange process.

"The transfer agent would then issue a brand new share certificate with the new owner's name on it. That person would then take the shares and deposit and sell them through his discount brokerage account."

However, transferring the shares could take up to six weeks, he said. So it might be easier – and faster – for the person who inherited the shares to open up his or her own discount brokerage account instead.

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"Another thing they might want to check out is, whichever discount broker they go to, find out if there is a deposit fee for the certificates. You want to be clear on that because some charge for deposits," Mr. Gibb said.

Why is Enbridge's price-to-earnings ratio on Globeinvestor.com listed as 48.5, but the forward P/E is just 21.2?

The P/E of 48.5 is calculated by dividing Enbridge's current share price of $39.31 (at the time of writing) by its actual earnings of 81 cents a share over the previous four quarters. During this period results were depressed by two quarters in which Enbridge earned just 1 cent a share, reflecting "unrealized non-cash mark-to-market" losses on hedging programs. (I have not included Enbridge's third-quarter results, which were announced this week.)

On an "adjusted" basis – after stripping out such unusual items – Enbridge earned $1.55 a share over the previous 12 months, for a P/E of 25.4. For 2013, analysts expected Enbridge to earn, on average, $1.85 a share, which works out to a P/E of 21.2.

Enbridge's P/E seems high. What P/E would signal a "buy" or does it always trade at a premium?

According to Bloomberg data, over the past eight years Enbridge's forward P/E has averaged 19.4, so based on that number alone the stock is expensive. That said, Enbridge has a long history of dividend growth and is projecting double-digit earnings and dividend increases over the next five years as it brings more projects online. I don't know what P/E would signal a buy, but I do know that investors will typically pay up for a company with such a predictable earnings and dividend growth profile.

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For what it's worth, analysts still like the stock at these levels, with 14 "buys", one "hold" and two "sells". (Disclosure: I own the stock). Make sure to do your own research before purchasing any security.

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About the Author
Investment Reporter and Columnist

John Heinzl has been writing about business and investing since 1990. A native of Hamilton, he earned a master's degree from the University of Western Ontario's Graduate School of Journalism and completed the Canadian Securities Course with honours. More

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