Canoe – EIT.UN – money machine or trap?

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Hello,

I have been investing in Canoe (EIT.UN) and buy shares whenever it drops below $9.00, and sell whenever it passes $12. It pays approximately 13% at current levels.

The shares move slowly and seem to stay within the $10+/- $2 range.

It pays monthly.

My new broker keeps trying to get me out of it, and into firms like QSR and RY.

You seem to agree with her, as you do not mention EIT.UN in any of your portfolios.

Thoughts?

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Asked on July 12, 2020 6:51 pm
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Private answer

If you're making consistent profits by buying at $9 and selling at $12, not sure why your broker would want you out of it.

Overall though it's been a relatively poor investment over the past decade. Since its IPO in 1997 the stock has a compound annual growth rate of -5%. That's a sizable annual loss over a 23 year time span. Over the last 10 years, it has a CAGR of -3.7%.

The distribution is nice, but a lot of it is just eaten up by capital losses. There's just better options out there in terms of overall returns.

If we look to the 2 stocks your advisor mentioned, RBC has a CAGR of 8.68% (remember this isn't including dividends) over the 23 year time span and 5.48% over the last decade. Since QSR started trading in 2014, it's CAGR is 10.62%.

Some people get tunnel vision when they see a high distribution like this, but it's important to account for the fact you're still investing initial capital. Which has been shrinking at a pretty decent clip with EIT.

However, with you trading it over the short term like you said, you're making solid gains to go along with a nice distribution. So I can't see why you wouldn't want to continue doing that if you can do it consistently.

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Posted by Dan Kent
Answered on July 13, 2020 7:52 am