Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.
Algonquin Power’s new share offering raises issues for investors
Algonquin Power & Utilities expected to close an offering this past week that would see the renewable energy producer and distributor sell an additional 23 million shares priced at US$13.50, David Berman writes. The offering price marks a 4-per-cent discount to the stock’s recent record high of US$14.06 in New York. No doubt, the new offering raises a couple of issues for investors who have bet on Algonquin’s growth-oriented approach to wind, solar and hydroelectric generating facilities in Canada and the United States.
One issue: dilution. Since the new offering will raise the number of outstanding shares by 4.7 per cent, existing shareholders will see their slice of ownership shrink a little. Another issue: Algonquin may be signalling that the valuation on its stock is a bit stretched.
Why Boyd Group Income Fund’s conversion will trigger a hefty tax hit for some
Boyd Group Income Fund has indicated that it plans to convert from an income trust to a corporation and exchange its units on a one-for-one basis for new common shares. If you hold Boyd Group units in a non-registered account, you could be facing a hefty capital gains tax hit when the conversion takes place, John Heinzl writes. That’s because the exchange of units for common shares of the new company, to be called Boyd Group Services, will be treated for tax purposes as if you had sold the units.
Assuming the transaction is approved at a special meeting on Dec. 2, the conversion to a corporation would be effective on Jan. 1. The silver lining here is that, based on the information provided by the company, the transaction will fall in the 2020 tax year, said Dorothy Kelt of TaxTips.ca. That means investors who exchange their units for new shares won’t have to report their capital gains, if any, until they file their 2020 tax returns in 2021.
More from John Heinzl: Johnson & Johnson, SIR Royalty Income Fund and more investing stars and dogs of the week
The top 10 year-end tax tips for investors
Year-end tax planning can save investors significant dollars, Tim Cestnick writes, and he shares his top 10 ideas here. They include observing investment deadlines. If you hope to sell an investment at a loss in 2019 to offset it against capital gains, the settlement date – not the trade date – is what matters. To ensure that your transaction settles in 2019, place any trades on or before Dec. 24.
Another tip is to trigger losses before year-end. Have you realized capital gains this year, or in one of the three previous years? If so, consider selling investments that have dropped in value so that you can apply those losses against the capital gains. Losses must be applied to the current year first, then can be carried back up to three years or forward indefinitely.
Gordon Pape weighs in on using DRIPs as an investment strategy, plus answers other readers’ questions
A reader asks Gordon Pape to weigh in on DRIPs as an investment strategy. He responds: DRIP is short for dividend reinvestment plan. Many companies offer them to allow people to reinvest their dividends in new shares. No commissions are charged and, in some cases, companies offer a small discount from the market price. DRIPs are an excellent option if you don’t need the cash flow from dividends and if you want to build your position in a company over time. I’m not a big fan of buying partial shares as it complicates the calculation of adjusted cost base. He answers more reader questions here.
Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up here.
How the federal election could impact the Canadian stock market
Can voters affect stock prices in Canada? Investors are about to find out, David Berman writes. The different approaches of the major parties on a number of key issues during the campaign could have a profound impact on certain sectors – particularly energy, but also telecommunications and financial stocks.
The past four years under the Liberal government offers some guidelines on what is at stake in Monday’s election. Over all, the S&P/TSX Composite Index has risen 19.4 per cent (not including dividends) since the Liberals were elected with a majority in 2015. While that may sound good, the performance has lagged the 47.4-per-cent gain in the S&P 500 – where profits have been pumped up by U.S. corporate tax cuts.
The Canadian energy sector is a clear laggard. It has tumbled 12 per cent since the October, 2015, election, the victim of weak crude oil prices, but also what some critics see as a fumbling government policy response to pipeline construction and concerns over climate change.
What investors need to know for the week ahead
It’s a busy week ahead for corporate earnings, as companies releasing their latest financial results include Canadian National Railway, Canadian Pacific Railway, Rogers Communications, Tesla, eBay, Canfor, Kimberly-Clark, Procter & Gamble, 3M, Altria, Amazon, Comcast, Verizon, Expedia, Husky Energy, Twitter, Shaw Communications, Ford, Restaurant Brands International, Lockheed Martin, UPS, Halliburton, Newcrest Mining, West Fraser Timber and Domtar.
Economic data on tap include: Canadian retail sales for August and U.S. existing home sales for September (Tuesday); Canada’s wholesale trade for August (Wednesday); and U.S. new home sales and durable goods orders for September (Thursday).