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You’ll hardly recognize the version of Inc. shares that trade on Canada’s NEO Exchange.

Only about 30,863 shares changed hands one day earlier this week, and the bid-ask spread late in the day was four cents. On the Nasdaq, home exchange to Amazon (AMZN-Q), volume totalled 1.8 million shares and the bid-ask spread was just one US cent. Which exchange should you use to buy Amazon for your portfolio? There are two good arguments for the NEO-listed version.

Amazon is one of 10 U.S.-listed stocks you can now buy in a currency-hedged version on the NEO exchange as a Canadian Depositary Receipt, or CDR. The availability of CDRs has some investors wondering whether they’re a better choice than the U.S.-listed versions of the same stocks. “I would like to buy Amazon for my RRSP,” a reader wrote recently. “Is it better to buy the stock or the new Canadian depositary receipts?”

Here are two good reasons to consider (AMZN-NE). One, you’ll very likely save money on foreign exchange costs. Changing Canadian dollars into U.S. currency and vice versa is a profit centre for brokers. With CDRs, you get an institutional exchange rate that will cost less.

There’s a low-cost strategy for exchanging money between Canadian and U.S. dollars called Norbert’s Gambit. If you wanted to buy U.S. currency, you’d purchase an interlisted stock in Canadian dollars and then sell it in U.S. dollars. Buying CDRs is a clean, quick, simple alternative to cutting the forex costs involved when Canadians buy U.S. stocks.

The other advantage of CDRs is their accessibility to small investors. AMZN-NEO closed at $20.39 on Tuesday, while AMZN-Q closed at the equivalent of about $4,040 in Canadian dollars.

It’s far easier to fit a stock that trades around $20 a share into a small portfolio than one costing more than $4,000. In a $50,000 portfolio, one AMZN-Q share would have a fairly aggressive weighting of 8 per cent, double what you’d get with a nice, round board lot of 100 AMZN-NEO shares.

The higher bid-ask spread for AMZN-NEO – that’s the difference between what investors are willing to pay as buyers and willing to accept as sellers – will be a turnoff to some investors. But this is an issue that may go away with time. The more investors turn to CDRs, the tighter the spreads will get.

Further reading on CDRs, including information on taxation.

-- Rob Carrick, personal finance columnist

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Stocks to ponder

Mullen Group Ltd. (MTL-T) Year-to-date, the share price of this trucking and logistics services company is up 27 per cent and the average 12-month target price suggests the stock has an additional 20-per-cent upside potential. The stock has near-term tailwinds with rebounding economic activity boosting freight transportation demand. In addition, energy prices are rising to multi-year highs, benefitting the company’s Specialized & Industrial Services segment. Jennifer Dowty looks at the investment case.

The Rundown

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Bond markets show rising risk of Fed, BoE policy errors

The U.S. and U.K. bond markets are sounding the economic alarm bell. Yield curves in both markets are flattening dramatically, indicating that traders are pricing in a growing risk of a central-bank policy error or an increasingly gloomy outlook for long-term growth. Or both. Jamie McGeever of Reuters reports.

Others (for subscribers)

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Ask Globe Investor

Question: I am considering enrolling some of my dividend stocks in dividend reinvestment plans (DRIPs), particularly in cases where the DRIP includes a discount on the price of shares acquired in the plan. Are you aware of any reliable, up-to-date source of information on DRIP discounts?

Answer: You can find a list of DRIPs and their associated discounts, if any, on third-party websites such as and But treat these sites as a starting point for further research, as DRIP discounts come and go and the information may not be current.

Some companies have recently dropped their DRIP discounts. Bank of Montreal and Toronto-Dominion Bank , for instance, both announced 2-per-cent discounts in the spring of 2020 to fortify their balance sheets during the early stages of the pandemic. However, now that both banks have built up strong capital levels, the discounts no longer apply. Some other companies that offered discounts in the past, such as Superior Plus Corp. (SPB-T), have suspended their DRIPs altogether.

The good news is that dozens of other companies still offer DRIP discounts, such as the 2-per-cent discount available from Fortis Inc. (FTS-T), and the 5-per-cent savings offered by Algonquin Power & Utilities Corp. (AQNU-N).

One way to confirm whether a discount is currently in effect is to read the company’s latest dividend announcement, which will often mention the terms of its DRIP program. If you can’t find the information there or elsewhere on the company’s website, contact its investor relations department or transfer agent.

Keep a couple of things in mind if you are considering a DRIP.

First, the surest way to get the discount is to enroll in a traditional DRIP operated by the company’s transfer agent. However, there are usually costs involved in registering shares in your own name, which is a required step in the enrolment process. You’ll need to balance these costs against the savings from the DRIP discount. You can avoid such costs by signing up for your broker’s “synthetic” DRIP program instead, but first ask your broker whether it honours the companies’ DRIP discounts. Not all brokers do.

Second, and perhaps most important, don’t let the DRIP discount tail wag the investment dog. If a stock checks off all of your boxes – its revenue, earnings and dividends are growing, its long-term outlook is favourable and the shares are selling at a reasonable price – consider any DRIP discount to be a bonus. If, on the other hand, a company has an uncertain outlook, don’t let a juicy DRIP discount influence your decision to invest. You may live to regret it.

--John Heinzl

What’s up in the days ahead

Have a heavier allocation to equities in your portfolio than you expected for this point in your life - but still reluctant to buy bonds with their current low yields. Nancy Woods has some advice when it comes to rebalancing in today’s market.

China, FAANGs, Turkey and Christmas fears loom large: world market themes for the week ahead

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Globe Investor Staff

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