Copyright ©2012 Jordan Wealth Management Group - ScotiaMcLeod Truro. All Rights Reserved.
Web services provided by The Iconic Group

Jordan Wealth Management Group - ScotiaMcLeod Truro

Your Morning Start

Stock Rating Changes, Economic Releases due Today, Closing Values for Stocks, Commodities, Bonds and Currencies, View Report

Investment Ideas March 2009

The Jordan Wealth Management Group places a very high importance on giving a "job description" to every investment you make. Mistakes are made, for example, when money is invested in a long-term investment but is required in the short term.

To this end, Financial Planning is essential. I cannot provide a blanket recommendation that is suitable to all investors, but I will outline 3 examples of what I believe to be very attractive investment opportunities (March 09). These investments could be attractive for you IF your objectives meet the type of investment being chosen.

We would be very happy to discuss these and other opportunities with you to determine if they are suitable for your portfolio.

INCOME AND GROWTH

Banking on the Banks

Current
Price
3/05/09

Dividend

Dividend
Yield

Interest
Equivalent
Yield 2

12 Month
Target
Price 1

12 Month
Expected
Return

Bank of Nova Scotia

$27

$1.96

7.3%

10%

N/A

N/A

Bank of Montreal

$28

$2.80

10.2%

14%

$42

50%

CIBC

$38

$3.48

9.1%

12%

$60

57%

National Bank

$36

$2.48

6.95%

9%

$50

38%

Royal Bank

$30

$2.00

6.7%

9%

$48

60%

Toronto Dominion

$36

$2.44

6.9%

9%

$50

38%

As reported by Kevin Choquette, Scotia Capital Analyst on January 26, 2009
For a NS resident in the top tax bracket

TAX-EFFICIENT INCOME (NOT GROWTH)

5 Year Rate Reset Preferred Shares


Dividend Rate for 5 Years

Option #1 After Five Years

OR

Option #2 After Five Years

Royal Bank

6.25%

Matures at Issue Price

OR

Rate is reset at new Government of Canada 5-Year Bond rate + 4.5%

TD Bank

6.25%

Mature at Issue Price

OR

Rate is reset at new Government of Canada 5-Year Bond rate + 4.38%

CIBC

6.50%

Mature at Issue Price

OR

Rate is reset at new Government of Canada 5-Year Bond rate + 4.47%


Preferred shares are normally suited to taxable accounts because of the lower tax treatment dividend income has over interest income. For a NS resident in the top tax bracket, a 6.25% dividend yield is the equivalent of a GIC paying approximately 8.65%!

Some investors have placed these high quality income generating preferred shares in their registered plan, because even without the tax benefit, the 6.25% yield is better than the 5 year GIC rates of 3.75 to 4.0%.

To learn more about this interesting investment opportunity, refer to the following link:

Preferred_Shares_Rate_Reset.pdf

LONG-TERM GROWTH (NO INCOME)

Investors with a time horizon of 3 to 5 years or more and an objective of capital appreciation must understand that the crisis we have endured in this market downturn has resulted in little differentiation in "good" companies and "bad" ones. In many cases "the baby has been thrown out with the bath water".

We believe this is an excellent opportunity to invest in (or add to) actively managed, globally diversified portfolios of stocks and bonds – portfolios such as Pinnacle, Sovereign, and LifePoints. This strategy will allow the investment to participate in the recovery that is expected.

SUMMARY

In summary, we encourage you to look for ways to benefit from this severe downturn. I believe it may be appropriate for many longer-term investors to change their mindset from defense to offence.

If you are fully invested (no cash available for investment), the best strategy may be for you to defer any expenses that require liquidation of securities at their currently depressed price.

Proactive strategies include:

  • Assessing your cash positions. If you "parked" money on the sidelines, we believe this is an opportune time to give that money a job description and possibly take advantage of opportunities such as those I have outlined above.
  • During normal circumstances, I abhor debt and recommend my clients avoid using borrowed money to invest. That being said, with interest rates near all-time lows, and markets having undergone the largest and quickest correction in most of our memories; borrowing to invest may be worth considering

Please call us with any questions or clarification you may require from this communication.

A referral remains the highest compliment we can receive. If you know of family or friends who can benefit from our wealth management services - or even a second opinion, we will be grateful for the introduction.