Stocks - The Best Buys 2

[bizaro86]

Originally Posted by rain_e

Anyone have any junior lithium plays?

I've been in Millennial Lithium as a merger arb. They've had 2 topping bids so far, so its worked out well. Trades at a slight premium to the last bid - so only makes sense to buy now if you think another raise is coming.

[CaptainYooh]

Bought Labrador Iron Ore today (LIF.TO). P/E 6.7. 24% dividend. As long as they don't go down too much in the next 12 months, I should get my money back in a year.

[Dan02]

Originally Posted by CaptainYooh

Bought Labrador Iron Ore today (LIF.TO). P/E 6.7. 24% dividend. As long as they don't go down too much in the next 12 months, I should get my money back in a year.

Your math does not compute. I think you mean money back in 4 years assuming no dividend reinvestment.

[bizaro86]

Originally Posted by CaptainYooh

Bought Labrador Iron Ore today (LIF.TO). P/E 6.7. 24% dividend. As long as they don't go down too much in the next 12 months, I should get my money back in a year.

I'm not saying this isn't a good buy (and I've owned it a long time) but I doubt you're getting that 24% next year. Their dividend is very variable. Most of the value is a royalty on an iron mine, so basically most of the revenue is just production × royalty percentage x iron ore price.

Since iron ore pricing is way down revenue and dividends will be down as well.

[bluejays]

Lightspeed really didn’t do well with poor guidance and they’re getting punished for it. Given the drop and potentially the need for money down the road, I wonder if it’s a takeover target by Shopify or Amazon. I have a buy order for $83 for a small amount on the TSX.

[CaptainYooh]

Originally Posted by Dan02

Your math does not compute. I think you mean money back in 4 years assuming no dividend reinvestment.

No kidding, eh?... Blond moment...

Originally Posted by bizaro86

I'm not saying this isn't a good buy (and I've owned it a long time) but I doubt you're getting that 24% next year. Their dividend is very variable. Most of the value is a royalty on an iron mine, so basically most of the revenue is just production × royalty percentage x iron ore price.

Since iron ore pricing is way down revenue and dividends will be down as well.

Thanks for the insight. I've listened to BNN Bloomberg comparison of LIF to Stelco and the comparison was much in favour of LIF, as they distribute all of the profits to shareholders. I think that the likelihood of a short-term gain from increased iron demand when the economy recovers in 2022 is reasonably probable above 50%. Plus, huge dividend. Plus, low P/E. Plus, a well-run company. I think it's a decent bet.

[bizaro86]

Originally Posted by CaptainYooh

No kidding, eh?... Blond moment...


Thanks for the insight. I've listened to BNN Bloomberg comparison of LIF to Stelco and the comparison was much in favour of LIF, as they distribute all of the profits to shareholders. I think that the likelihood of a short-term gain from increased iron demand when the economy recovers in 2022 is reasonably probable above 50%. Plus, huge dividend. Plus, low P/E. Plus, a well-run company. I think it's a decent bet.

For sure, I agree with all of that (except maybe the part about increased iron demand from a recovery - that already happened and the price went up huge, it has now come down again as the Chinese have slowed steel production for both economic and environmental reasons). Like I said I've owned this for a long time (~5 years, average cost $16/share) and am not selling. Just wanted to make sure you knew not to necessarily expect 24%. Something like 12-15% is a lot more likely (and obviously still good).

[rain_e]

Originally Posted by CaptainYooh

Bought Labrador Iron Ore today (LIF.TO). P/E 6.7. 24% dividend. As long as they don't go down too much in the next 12 months, I should get my money back in a year.

If a company is paying a dividend over 7-10 percent (even that is high) I would be very concerned. There will be a dividend cut coming and you will lose capital.

[CaptainYooh]

Originally Posted by rain_e

If a company is paying a dividend over 7-10 percent (even that is high) I would be very concerned. There will be a dividend cut coming and you will lose capital.

This is a royalty corp. They distribute all profits as dividends and don't keep any for "future reinvestment". Hence; the higher dividends.

[bluejays]

Anyone know what the tax rates are in Canada on dividends vs. capital gains vs. interest?

[Slava]

It depends on your income. But interest is fully taxed as income, capital gains are half and eligible dividends are close to the capital gains rate. If you’re in the 38% bracket (about $131k-$155k), the capital gains rate is 19%, and the eligible dividend rate is 20.51%. Interest is still 38%.

[bluejays]

Originally Posted by Slava

It depends on your income. But interest is fully taxed as income, capital gains are half and eligible dividends are close to the capital gains rate. If you’re in the 38% bracket (about $131k-$155k), the capital gains rate is 19%, and the eligible dividend rate is 20.51%. Interest is still 38%.

Thanks man! I'm personally not, so I'd fall into the first portion. The payouts from income trust payments is that considered interest?

[Slava]

Well there aren’t really income trusts in Canada any more. If you’re talking about LIF here, that’s dividend income and most are that way I think. It could depend on the specific trust and their structure though.

[bizaro86]

Originally Posted by fleury

Thanks man! I'm personally not, so I'd fall into the first portion. The payouts from income trust payments is that considered interest?

What specific security are you asking about? It really depends. As an example, REIT distributions are often a mix of return of capital (which isn't taxed but does reduce your cost base when you sell) and regular income.

If you're in a lower tax bracket dividends are really advantageous. You pay tax in your bracket, but the tax credit essentially assumes you are in the highest bracket. So the effective tax rate on eligible dividends is very low for people in lower brackets.

[bluejays]

Originally Posted by bizaro86

What specific security are you asking about? It really depends. As an example, REIT distributions are often a mix of return of capital (which isn't taxed but does reduce your cost base when you sell) and regular income.

If you're in a lower tax bracket dividends are really advantageous. You pay tax in your bracket, but the tax credit essentially assumes you are in the highest bracket. So the effective tax rate on eligible dividends is very low for people in lower brackets.

Thanks. I don’t have any REITs at the moment but moreso now I want to think about the tax implications for whatever I invest in. I used to do REITs like pizza pizza and keg but have stayed away in favour of large cap stocks. I’m probably in the bracket just below the one mentioned by Slava so just seeing what’s advantageous if over the next year growth is flat and I move more into dividend based stocks.

[bizaro86]

Originally Posted by fleury

Thanks. I don’t have any REITs at the moment but moreso now I want to think about the tax implications for whatever I invest in. I used to do REITs like pizza pizza and keg but have stayed away in favour of large cap stocks. I’m probably in the bracket just below the one mentioned by Slava so just seeing what’s advantageous if over the next year growth is flat and I move more into dividend based stocks.

As an example, neither of Keg or pizza pizza are REITs (a REIT has specific requirements around owning real estate). Keg is actually still an income trust, and the distributions there tend to be mostly (90%+) eligible dividends with a small bit of return of capital.

Pizza pizza is just a regular corporation now, and pays eligible dividends.

[#-3]

Originally Posted by #-3

With all the talk of expensive building materials I picked up some STLC about a month ago. That was a fun +40% in month. wish I was on to that a little earlier, they are like 9x in past 9 months.

Still playing with my first experiment in directly managing money in a wealth simple TFSA, normally I have been a mutual fund/index kinda guy.

STLC is still treating me pretty good.

• In @ $26 in March
  Dividend in May
  out @ $45 in Aug
  Back in @ $37 in Oct
  Up to $45 now. (+$4.00 today )

I added it all up today +82.5% with my money tide up 6 of 8 months, I think it's poised for a good run next week, with q3 earning reaching almost 20% of total share value.

All told I'm up 135% since February, this game would be pretty easy if every year was 2021.

[tony-soprano]

Curious if anyone bought Rivian? 80b valuation was too high for me, and now we're sitting at 170b lol.

[Slava]

Originally Posted by tony-soprano

Curious if anyone bought Rivian? 80b valuation was too high for me, and now we're sitting at 170b lol.

You don’t think it’s the third largest car company in the world having delivered a whopping 56 vehicles?

Fundamentals and this market are hilariously out of whack at this point.

[bizaro86]

Originally Posted by Slava

You don’t think it’s the third largest car company in the world having delivered a whopping 56 vehicles?

Fundamentals and this market are hilariously out of whack at this point.

I'm going to be interested to see what is the AOL-Time Warner merger of this bubble. You've got to think one of these firms is going to use their shares as currency to buy something with more durable value.