BNN - Monday, May 27, 2024 - 03:00 p.m. (ET) - Segment #2

>>> Renata, in oakville, ontario, go ahead, please. >> Caller: good afternoon, gentlemen. My question to you, larry, zwe. A long time ago when you first recommended it I started buying it. I've done relatively well. At that time it was selling for under $20. Last week I bought it for about 21.52 or something. Do you think it's going to go higher or is it going to sell off? Shall I stick with it or would I rather go into a dividend paying regular stock? I look forward to your answer and hang up and wait for it. Thank you so much. Bye-bye. >> Andrew: thank you. >> So this etf has been out in the marketplace almost 10 years. Started in 2015. And it's a covered call strategy against high dividend-paying stocks in europe. The average total return has been around 7 1/2% annually since inception and the volatility of the portfolio is less than pure exposure to the market. So I still like it very, very much. What it's going to do over the next one week, one month, one quarter obviously hard to say but long-term structurally I think some of the best dividend-paying stocks in the world coming out of europe with a covered call overlay is a very, very nice complement to most yield-seeking portfolios. So I still love it. I still own it in my zzzd etf that we manage as part of my exposure to europe. >> Andrew: okay. Renata, thank you very much for that question. >>> Brian sent us an email asking about the bmo global base metals etf zmt. I have a small position. Is it time to sell or trim or let it run? >> So these are time frame questions generally speaking. And so depending on the caller's time frame maybe we could get a 10-year picture if it's possible of zmt to give us some much longer perspective because in the very short run copper prices are up, base metals, andy, you are the commodity guy so you know this is happening and so we are up against long-term highs here and we have slightly gone through them. So it's not early and it's not ideal. But how long is this demand for base metals and copper in particular going to drive this trade. That's really the question. And so I think a little while longer is still the electrification of the world isn't going away any time soon but would you argue that that story was true, you know, here and here and certainly during covid that was a bit of a shock but you could have argued that. So I don't love it here for new money. You are not early on the trend. How long can it keep going? I think it probably has years and years and years. >> Andrew: oh. >> My understanding of what's happening in the copper space in particular is they can't build mines quick enough to, you know, account for the incoming demand because of the electrification of the world. I can't speak to zinc and some of the other base metals but definitely copper's you know the lead here and I think I like it. It's not early. I would look to trim and buy into corrections in the sector. >> Andrew: okay. We have diane calling from kingston, ontario. Diane, go ahead, please. >> Caller: yes, good afternoon, andy and larry. So my question is on zwu and I have three parts to this question. So first, is it a good buy at this price. And second, is return of capital included in the distribution. And third, what would you suggest as an alternative to zwu if I decided to purchase something different. And that's my question. So thank you for your answer. >> Andrew: thanks. >> So when you look at and unpack a covered call etf of all what are the dividends coming off the underlying stocks? So that's kind of part one. And when you look at the weighting of these, utilities, telcos, pipelines, the underlying dividend yield is is around 5%. So that's a direct pass-through and as the underlying companies earn those dividends the etf accumulates them and pays them out.

>>> The second component is the covered call overlay and how much is that generating. And with utilities being a best less volatile than most asset classes you know that might add another, say, 2% a year so I think for now you are pretty comfortable you know, 7% a year as an income coming off a portfolio like this. And so I like it. I still own it in my portfolios. It is very interest rate sensitive. So again when the bank of canada and the fed start cutting interest rates because the economy is slowing utilities and interest rate sensitive names should outperform. So you've got some potential for some capital gains and growth there. Because it has pipelines what is happening in energy so you have to have that lens, too. But bce, parent of this company s also in that and really for the last year it's been a terrible performer of all the telcos. So you've got a lot of moving parts to unpack there but those are some of the considerations. I own it. I like it. It's a great dividend payer. It's not an alternative to fixed income so you wouldn't replace this with a bond or a corporate bond holding. It is equity market risk but it's a very nice tax efficient yield. As it pertains to the question on the return of capital you get capital gain as part of your distribution because the optional overlay on a portfolio like this gets treated on account of capital. So it's not a return of capital as in this fund is not earning that yield. It's paying out. And you are getting some of your own money back. There are funds that do that. This is not one of them. >> Andrew: okay. Not one of them. Okay. Diane, thanks for the question. >>> Victor in toronto, go ahead, please. >> Caller: hi, andy. Thank you for taking my call. >> Andrew: pleasure. >> Caller: larry, I would like to have your opinion short term and long-term about pfizer, the big pharma company. Hasn't been doing anything lately except dropping lately with the exception of the last couple of weeks. Could you give me your outlook, please, thank you very much. >> Andrew: thanks. >> At the peak of covid when pfizer and all the sort of the drug-making companies that were benefiting from covid when that started to unwind, you know, obviously a lot of underperformance in the name and I didn't like it when it was trading at 45 or 50 but I started accumulating in my growth portfolio around 35. And I have been keep adding to the exposure. I am probably under water at this point about 10 or 15% on the name but I think about it recovering. This stock to me is probably worth 40 to $45 and that's why I have been buying it in the low 30s and even here into the 20s. So I like it. Right now the analysts think it's probably worth about 32 bucks if you look out a year. I think this stock when the perspective of two, three, four years probably has MID-40s in it and test got a great dividend so I like that a lot here for lower risk type of investors that are looking for you know that dividend coming off the portfolio. >> Andrew: okay. Pfizer getting the green light there.

>>> Nizar in scarborough, ontario go ahead, please. >> Caller: hi, andy. Hi, larry. May I have your thoughts on sun life financial and if I may lifecos in general. Sun life financial's shares dropped following its last quarterly results. If as you said in your opening remarks with andy that interest rates will start to decline soon as early as next week as you said, is it okay to buy sun life now? Thank you for taking my call. >> Andrew: thanks. >> When you look at what analysts think the stock is worth a year from now they are probably around $75. So at 70 you know the risk-reward to me is okay but it's not great. At 60 or 65 I like it a lot if it's still going to ultimately be worth 75. So I would say right here I would be neutral on this stock, maybe have half a position on. Do I love them? Do I think falling interest rates are going to be good for the lifecos? The answer is no. Generally you want higher rates because of how they invest their money generally speaking. They are not banks in that case the slope of the yield curve is not a big factor for them. Generally lifecos will do better with higher rates for longer not falling rates. So I am not sure that that's a positive for the stock. I would say the stock probably trades at 65 before it trades to 75 and so I would be patient here but I would look to accumulate into weakness. >> Andrew: okay. Wow, we are flying through the show. >>> Coming up the educational segment. Larry is going to look at how the market does in presidential election years. We'll be right back. [ ] At the cse, we're always invested in public markets, in business, in growth, in you. With Cascade Platinum Plus, I have upped my dish game. Auntie, in that dishwasher? Watch me. Platinum Plus gives you our highest standard of clean, even in your machine. —Clean enough for you? —Yeah. Scrape. Load. Done. No prewash, no rewash,or your money back. So, it's a financial approach that just flows together. Kinda like this: Investments in the front... Insurance in the back. We do both. [phone ringing] ( ) Feeling sluggishor weighed down?Could be a sign that yourdigestive system isn't at its best. But a little Metamucilevery day can help. Metamucil psyllium fiber gels to trap and remove the wastethat weighs you down and also helpslower cholesterol and slows sugar absorption to promote healthyblood sugar levels. So you can feel lighter. Lighten up every daythe Metamucil way and try Metamucil Fibre +Collagen Peptides to help promotedigestive health and reduce joint pain. Investing for monthly income made easy with hyld. A high income alternative to the s&p 500 and hdiv, outperforming the tsx 60 with a higher yield. Hyld and hdiv, more income every month. From Hamilton ETFs. With a focus on a clean future. Hertz energy offers investors a diversified portfolio of district scale uranium and lithium assets. The company has projects around the globe, including the world class James Bay Lithium District in Quebec. Hertz projects are located in highly prospective geological formations and near other large discoveries. Hertz energy is well positioned for the ever expanding global green energy market. Hertz Energy, powering the future. Closed captioning of this program is brought to you in part by Bell switch to Canada's fastest Internet. [ ] >> Andrew: welcome back to "berman's call." it's time for larry's educational segment. Larry, take it away. >> So I want to talk about the market frays sell in may and & gi away. >> Andrew: okay. >> So this is seasonality in the markets but there is one thing that's very interesting during the fourth year of the presidential cycle. So in the year that we are going into or the year we are in now where the election is in november the fourth year of the

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