Canadian stock portfolio, input required.

[Milu]

Due to unique scenario with Irish tax system and non-domicile status of my wife I have a somewhat unique requirement. Wife has cash (Cad) in her canadian brokerage account, it can't be remitted back to ireland due to convoluted remittance rules, however it can be kept offshore, invested tax free, and spent offshore. All permitted by the resident non-domicile status of individuals not born in Ireland but reside here for tax purposes.

 

So due to this we'd have perhaps 50-100k, possibly more, that would be invested in a some reliable, fairly valued canadian compounders, that we would sell down a small amount when we go back for holidays and other trips. And otherwise just let them compound without much management.

 

So for example buy 75,000 of Canadian stock A, or maybe portfolio of Canadian stock a, b, and c, Portfolio grows to 100k over a few years, visit Canada for holiday, sell down 10k of portfolio for spending money, rinse and repeat. First things that come to mind might be something like Fairfax or Constellation Software, but curious to get further input on what might be a good approach for this requirement?

[SharperDingaan]

If you are nimble and have the tolerance, look at a 75/25 IPO/CJ portfolio, that changes to 25/75 nine months out. Both pay a healthy monthly dividend, that will contribute > half of your spending money requirement ... if they happen to run up while you're holding - a bonus 

 

SD

[Spooky]

Would you consider an ETF? I like this Vanguard Canadian High Dividend Yield Index ETF: https://www.vanguard.ca/en/product/etf/equity/9560/vanguard-ftse-canadian-high-dividend-yield-index-etf

 

Roughly 15.6x p/e and 3.55% dividend yield. Includes a lot of the big name companies.

[Junior R]

11 minutes ago, Spooky said:

Would you consider an ETF? I like this Vanguard Canadian High Dividend Yield Index ETF: https://www.vanguard.ca/en/product/etf/equity/9560/vanguard-ftse-canadian-high-dividend-yield-index-etf

 

Roughly 15.6x p/e and 3.55% dividend yield. Includes a lot of the big name companies.

Vdy / xdiv

 

+1

[bizaro86]

52 minutes ago, Milu said:

Due to unique scenario with Irish tax system and non-domicile status of my wife I have a somewhat unique requirement. Wife has cash (Cad) in her canadian brokerage account, it can't be remitted back to ireland due to convoluted remittance rules, however it can be kept offshore, invested tax free, and spent offshore. All permitted by the resident non-domicile status of individuals not born in Ireland but reside here for tax purposes.

 

So due to this we'd have perhaps 50-100k, possibly more, that would be invested in a some reliable, fairly valued canadian compounders, that we would sell down a small amount when we go back for holidays and other trips. And otherwise just let them compound without much management.

 

So for example buy 75,000 of Canadian stock A, or maybe portfolio of Canadian stock a, b, and c, Portfolio grows to 100k over a few years, visit Canada for holiday, sell down 10k of portfolio for spending money, rinse and repeat. First things that come to mind might be something like Fairfax or Constellation Software, but curious to get further input on what might be a good approach for this requirement?

 

 

I'd probably go with an etf. If you wanted to pick a few something like FFH/CSU/RY (or substitute one of the other banks) would probably work. I also like CNQ as a long tern compounder.

 

Do dividends matter here? Ie - is it better to have/not have them? 

 

As a Canadian married to an Irish citizen I'd be interested in any details you'd be willing to share - does your wife still file Canadian taxes?

[UK]

7 hours ago, Milu said:

Due to unique scenario with Irish tax system and non-domicile status of my wife I have a somewhat unique requirement. Wife has cash (Cad) in her canadian brokerage account, it can't be remitted back to ireland due to convoluted remittance rules, however it can be kept offshore, invested tax free, and spent offshore. All permitted by the resident non-domicile status of individuals not born in Ireland but reside here for tax purposes.

 

So due to this we'd have perhaps 50-100k, possibly more, that would be invested in a some reliable, fairly valued canadian compounders, that we would sell down a small amount when we go back for holidays and other trips. And otherwise just let them compound without much management.

 

So for example buy 75,000 of Canadian stock A, or maybe portfolio of Canadian stock a, b, and c, Portfolio grows to 100k over a few years, visit Canada for holiday, sell down 10k of portfolio for spending money, rinse and repeat. First things that come to mind might be something like Fairfax or Constellation Software, but curious to get further input on what might be a good approach for this requirement?

I think now/perhaps until results it is very good time to add to FFH. Otherwise ETF or 50/50?

[Milu]

Thanks for the answers so far, one thing I should have also added is that it can’t be ETF, due to another nonsensical aspect of this Irish tax policy etf’s don’t come under this offshore tax free rule and are liable for tax at a 38% rate. So we can only do single stocks. This is what makes it tricky for me to decide, as I need a few reliable single stocks at fair prices that will hopefully go up over coming years and provide some capital gains or dividends that give us some tax free spending money every few years. Not my usual investment approach of set it an forget for 10 years plus.

[Milu]

7 hours ago, bizaro86 said:

 

 

I'd probably go with an etf. If you wanted to pick a few something like FFH/CSU/RY (or substitute one of the other banks) would probably work. I also like CNQ as a long tern compounder.

 

Do dividends matter here? Ie - is it better to have/not have them? 

 

As a Canadian married to an Irish citizen I'd be interested in any details you'd be willing to share - does your wife still file Canadian taxes?

It’s only applicable to you if you live in Ireland as a tax resident but were not born here. If this is your situation then due to a status called ‘resident non domicile’ all of your offshore assets don’t fall under Irish tax net until you choose to remit them (transfer to Irish bank account). If you choose to keep the onshore indefinatley then they can grow tax free and either be spent outside of Ireland, or if you ended up leaving Ireland and moving back to home country they would never need to be remitted. The UK had a similar loophole but they have tightened theirs up relative to Irelands. Wife doesn’t pay Canadian taxes anymore, had to file some final tax return in Canada when we left and that was end of that. 

Edited January 29 by Milu

[UK]

1 hour ago, Milu said:

Thanks for the answers so far, one thing I should have also added is that it can’t be ETF, due to another nonsensical aspect of this Irish tax policy etf’s don’t come under this offshore tax free rule and are liable for tax at a 38% rate. So we can only do single stocks. This is what makes it tricky for me to decide, as I need a few reliable single stocks at fair prices that will hopefully go up over coming years and provide some capital gains or dividends that give us some tax free spending money every few years. Not my usual investment approach of set it an forget for 10 years plus.

 

So with FFH I think you kind of have both: a set it and forget 10 year b I would argue that currently it trades not at but well bellow FV and buybacks its shares it is high probability you will not incur losses even after much shorter period of time. At the same time it is not much of a Canadian stock, I view its exposure something like 30-40 US+10-20 CA, with the rest global (will free to correct anyone), so you would take exposure to a Canadian economy, as e.g. with some bank. CSU perhaps also fits the needs, but here you have to answer the disruption question. Also, from what I understand, your portfolio is quite mag7 biased? So perhaps FFH would be a nice diversification to the other side...but of course, choice is yours!:)

 

Edited January 29 by UK

[Milu]

49 minutes ago, UK said:

 

So with FFH I think you kind of have both: a set it and forget 10 year b I would argue that currently it trades not at but well bellow FV and buybacks its shares it is high probability you will not incur losses even after much shorter period of time. At the same time it is not much of a Canadian stock, I view its exposure something like 30-40 US+10-20 CA, with the rest global (will free to correct anyone), so you would take exposure to a Canadian economy, as e.g. with some bank. CSU perhaps also fits the needs, but here you have to answer the disruption question. Also, from what I understand, your portfolio is quite mag7 biased? So perhaps FFH would be a nice diversification to the other side...but of course, choice is yours!:)

 

Thanks, it's definitely something I will look into. There seems to be a broad consensus on the forum that Fairfax is a great company, still fairly valued even after a significant run up, and has good growth potential ahead. To my detriment I have avoided paying too much attention to it as I typically avoid the conglomate/insurance company firms due to the complexity of these businesses. Although I did own Berkshire in the past and did well out of it, but that was mainly just based on my admiration and trust for Buffett rather than a deep understanding of the business and it's valuation.

[UK]

17 minutes ago, Milu said:

Thanks, it's definitely something I will look into. There seems to be a broad consensus on the forum that Fairfax is a great company, still fairly valued even after a significant run up, and has good growth potential ahead. To my detriment I have avoided paying too much attention to it as I typically avoid the conglomate/insurance company firms due to the complexity of these businesses. Although I did own Berkshire in the past and did well out of it, but that was mainly just based on my admiration and trust for Buffett rather than a deep understanding of the business and it's valuation.

Yes, I hear you. I do not like leveraged institutions myself, especially for a large position. But FFH, like BRK, is different, perhaps still not as safe, but the level of trust is the same for me. And with insurance you need that. Now, not to pick on your other positions, but I would argue that TSLA is also high level trust situation? So is it easier to trust owner here vs FFH? Not trying to be negative on anyone or to persuade anyone, but for me FFH definitelly rings as an answer to you question!:)

 

Edited January 29 by UK

[Milu]

11 minutes ago, UK said:

Yes, I hear you. I do not like leveraged institutions myself, especially for a large position. But FFH, like BRK, is different, perhaps still not as safe, but the level of trust is the same for me. And with insurance you need that. Now, not to pick on your other positions, but I would argue that TSLA is also high level trust situation? So is it easier to trust owner here vs FFH? Not trying to be negative on anyone or to persuade anyone, but for me FFH definitelly rings as an answer to you question!:)

 

Yes Tesla definately based on a lot of trust too, but I've followed and consumed about every interview or article written about Musk for the last 15 years so I have the faith (rightly or wrongly). Same with Buffett and Munger which made the Berkshire investment easy. Prem Watsa and the team I don't have this but would possibly like to start building it up. Probably need to read every letter, watch a load of interviews, find some books and get a sense of the person, the ethics, the culture, and then if that all passes the test for me, and the price isn't crazy, just take the plunge and buy some.

[SharperDingaan]

Look at the CJ thread; there was another positive announcement this morning 

 

SD

[Jaygo]

My personal advice would be to buy an index fund like ZCN.to it has a couple hundred Canadian companies. Pays a small dividend but if your interested you can buy a fund that is similar but does not pay a dividend or if it works you can buy XEI.to that has a slightly higher div and is organised in a similar style of the dogs of the tsx portfolio.

 

Canadian tax payers are generally best in Canadian companies and we trade at a slight discount to the united states and you don't have the headwind of the US brand being  damaged right now. 

 

 

 

 

[Spooky]

8 hours ago, Milu said:

Thanks for the answers so far, one thing I should have also added is that it can’t be ETF

 

A basket of individual stocks could work well then. I'm a buyer of Fairfax and CSU. Maybe add in a bank or two (oligopolies), one of the telcos (oligopolies) and some resource companies.

[bizaro86]

9 hours ago, Milu said:

It’s only applicable to you if you live in Ireland as a tax resident but were not born here. If this is your situation then due to a status called ‘resident non domicile’ all of your offshore assets don’t fall under Irish tax net until you choose to remit them (transfer to Irish bank account). If you choose to keep the onshore indefinatley then they can grow tax free and either be spent outside of Ireland, or if you ended up leaving Ireland and moving back to home country they would never need to be remitted. The UK had a similar loophole but they have tightened theirs up relative to Irelands. Wife doesn’t pay Canadian taxes anymore, had to file some final tax return in Canada when we left and that was end of that. 

 

Interesting. Neither my wife nor I was born in Ireland but she is a citizen so we could move there. We've talked about it in the past but that adds a different wrinkle I hadn't considered as the savings are potentially significant.

 

Although having a deemed disposition on my assets to exit Canada would be a pretty nasty one-time bill.

 

Something to think about for sure, probably wouldn't do anything there until our kids are grown up anyway.

[RichardGibbons]

10 hours ago, Milu said:

I should have also added is that it can’t be ETF

 

If you do just want to closet index, according to Gemini, you can basically reproduce the TSX composite index with about 25 stocks.

 

Sector	TSX Weight	Stocks Needed (Total ~25)	Strategy
Financials	30%	6–7	Buy the "Big 5" Banks + 1 Insurer (e.g., Manulife or Sun Life).
Energy	17%	4–5	Buy the giants (e.g., CNQ, Suncor, Enbridge, TC Energy).
Industrials	14%	3–4	Focus on rail (CN/CP) and waste/infrastructure (e.g., WSP, GFL).
Materials	11%	3	Gold & Copper leaders (e.g., Barrick, Agnico Eagle, Teck).
Tech	9%	2	Critical: You must own Shopify (it moves the index alone) + 1 other (e.g., CGI).
Telecom/Util	9%	2	BCE, Telus, or Rogers + 1 Utility (e.g., Fortis or Hydro One).
Cons. Discret.	4%	1	A leader like Dollarama or Restaurant Brands Intl.
Cons. Staples	4%	1	A leader like Loblaw or Metro.

 

 

[UK]

1 hour ago, RichardGibbons said:

1 Insurer (e.g., Manulife or Sun Life)