It’s been a while since I checked my Q&A inbox, so let’s remedy that right now. Here are some interesting questions that have come in recently.
BCE in RRIF
Q – Could you please comment about the suitability of BCE Inc. (BCE-T) in an RRIF account? – Pierre C.
A – After the company slashed its dividend in the spring of 2025, the stock ended its long slide and stabilized in the $30-$35 range. The new quarterly dividend is $0.4375 per share ($1.75 per year) to yield 5.75 per cent at the recent price of $30.41.
The yield would make BCE a suitable RRIF holding if the share price stays within the current range or climbs higher, as some analysts expect. However, the price has been wobbly, and we’ve seen it dip below the $30 level on a few occasions this summer. Year-to-date, the shares are down almost 6 per cent.
That doesn’t mean don’t buy. But recognize that the market remains uneasy about the company and there still could be some downside. I think the dividend is secure at the current level. – G.P.
Stock allocations
Q – What geographic allocation between U.S., Canada and international would you currently recommend for a 100-per-cent equity growth portfolio? – Arcady B.
A – An all-equity portfolio suggests your goal is high risk/high return. In that case, I’d suggest 50-per-cent U.S., 30-per-cent Canada and 20-per-cent international. U.S. stocks are very expensive but still have some momentum working for them so keep riding that wave while it lasts.
For more conservative investors, a mix of 30-per-cent U.S., 40-per-cent Canada and 30-per-cent international seems like a good fit. In general, both Canadian and European stocks have lower p/e ratios than the overheated U.S. market. – G.P.
Gold
Q – I’d be really interested in your thoughts on a new position in CI Gold+ Giants Covered Call ETF (CGXF-T). – David M.
A – That really depends on your view of where gold is going. You’d think the intensification of the Iranian war would have driven gold prices higher but that has not been the case.
The objective of this ETF is to provide unitholders, through an actively managed portfolio, with quarterly cash distributions and the opportunity for capital appreciation. This is done by investing is an equal weight portfolio of stocks from the 15 largest gold and precious metals companies listed on a North American stock exchange. CI says this results in lower volatility than owning a portfolio of individual gold-based securities.
The fund uses a covered call option writing program. The issuers included in the portfolio, which are based on their market capitalization, may be adjusted based on the portfolio manager’s view on the liquidity of the issuers’ equity securities and their related call options.
This fund is best suited to those who want North American equity exposure to companies in the gold sector plus the potential for high income generation.
So, how well does it deliver on those goals? For the year to June 30, the fund gained 34.6 per cent. That looks good, until you consider all that growth was in 2025. In 2026, the EFT was showing a loss of 10.6 per cent to June 30. Since it was launched in mid-2001, the fund shows an average annual compound rate of return of 3.8 per cent.
What about distributions? They are paid monthly and the amounts vary significantly. For example, in March, investors received $0.7086 per unit but in June it was only $0.1681. The 12-month trailing yield is 13.1 per cent.
The bottom line is that gold has lost its momentum for now and there is no way of knowing when it will recover. If the strong cash flow keeps you happy while you wait, go ahead and buy some units. If your main interest is to earn capital gains from a rebound in gold, you may have to wait a while. – G.P.
Preferred shares
Q – I see very little written about preferred shares as an income option. I am 81, retired, with an adequate portfolio to see me, optimistically, through another 25 years. My conservative portfolio consists of about 40-per-cent rate resets and split corp. preferreds (but no bonds). What is your opinion about this asset class as an alternative to bonds? – Peter J.
A- Preferreds used to be an excellent option for older investors seeking safety and income. Their share price has always been subject to interest rate movements, but the cash flow is higher than you’d get from common share dividends or most bonds.
However, the flood of new rate reset preferreds in recent years has complicated the picture. RBC Global Asset Management describes these as “hybrid securities that pay a fixed dividend for a set period (usually five years) based on a spread over a benchmark rate, such as the five-year Government of Canada bond. After this period, the dividend rate resets to a new rate, and investors can often convert to floating-rate shares.”
The rate resets introduced more volatility into the preferred share market, catching many investors by surprise. They introduced a new factor in the form of “reset risk” – a potential drop in the dividend at reset time if interest rates fell. Some investors found the calculations too difficult to deal with and lost interest.
We track several preferreds and split preferreds in my The Income Investor newsletter. – G.P.
High-interest accounts
Q – When I have cash in my RRSP that I want to hold, how do I get it into the high interest savings accounts you recommend without having to take it out of my RRSP? – Art L.
A – Ask the administrator of your RRSP. The company should have access to at least one and probably more high-interest accounts that can be used. Ask for the one with the best rate. – G.P.
If you have a money-related question you’d like me to answer, send it to Gordonpape@hotmail.com. I can’t guarantee a personal response but I’ll deal with as many questions as possible in this space.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.