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Email this4:35 pm
September 6, 2020
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I purchase more bank shares with the dividend every quarter. A passive investor. Works for me.
Have a Great Day
7:18 am
January 9, 2011
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Brompton Split Banc Corp A is interesting. A mutual fund as a stock. I couldn't find fees (MER) which are usually higher with mutual funds than ETFs, but did find there was a share dilution (bought deal) 3 months ago - watch out for that in future.
The underlying banks have done well in the past 3 months and paid dividends, and then there's return on capital - how much who knows. How can its performance be compared against ETFs in the financial segment, or core dividend ETFs which for a large part hold similiar shares. I can't do it.
I hope the tax treatment re: return on capital resulting in a reduction in the Adjusted Cost Base is kept track of for owners of these shares, and reported by the Company. The return on capital is kept track of by mutual funds, but with ETFs, we are on our own. A general heads up to ETF owners when reporting capital gains.
"Keep your stick on the ice. Remember, I'm pulling for you. We're all in this together." - Red Green
7:43 am
September 7, 2018
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dougjp said
Brompton Split Banc Corp A is interesting. A mutual fund as a stock. I couldn't find fees (MER) which are usually higher with mutual funds than ETFs, but did find there was a share dilution (bought deal) 3 months ago - watch out for that in future.The underlying banks have done well in the past 3 months and paid dividends, and then there's return on capital - how much who knows. How can its performance be compared against ETFs in the financial segment, or core dividend ETFs which for a large part hold similiar shares. I can't do it.
I hope the tax treatment re: return on capital resulting in a reduction in the Adjusted Cost Base is kept track of for owners of these shares, and reported by the Company. The return on capital is kept track of by mutual funds, but with ETFs, we are on our own. A general heads up to ETF owners when reporting capital gains.
1. The MER for Split Banc A shares is 0.55% same as for ZEB. Probably lower than most MERs for mutual funds.
2. Yes the Information slip I received for Split Banc does allocate to dividends and return of capital. Also my broker acct adjusts the figures eg the cost base is lowered to account for return of capital amounts. Easy for the investor - all done for you. I also had a return of capital on a REIT and similarly, my tax info slip allocated that as well to dividends, return of capital, as did my broker's acct reduced my cost base. No effort required on my part to do these calculations - it is done for you by the Company and also by your brokerage.
3. I believe Cdn bank shares are a good conservative investment, paying very good tax advantaged dividends - a good investment for the long term. One can buy bank shares directly or in an ETF or in a bank mutual fund like this Brompton product, and if bank shares appreciate (and I believe they will), all three should appreciate over the long term. But if you have a panic attack if and when shares go through a pull back, forget about shares and stick with Savings accts and GICs.
10:13 am
December 29, 2018
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dougjp said
Brompton Split Banc Corp A is interesting. A mutual fund as a stock. capital gains.
I would say more an ETF than a stock, because a mutual fund is not exchanged traded.
canadian.100 said
But if you have a panic attack if and when shares go through a pull back, forget about shares and stick with Savings accts and GICs.
If there is a pull back on the stock price you have something to fall back on, namely dividends. A hefty 11,23% yield (paid monthly), sit tight, collect the proceeds and wait until the banks recuperate. The only danger is if they cut dividends during a downfall, unlikely but not impossible.
1:43 pm
October 21, 2013
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I would not be willing to assume that ANY investment would guarantee me 11% right now.
If I were pursuing this, I'd do as canadian100 suggested, #19 above. And I'd take my profits and run, with this mutual fund, while I can.
3:00 pm
September 7, 2018
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picassocat said
I would say more an ETF than a stock, because a mutual fund is not exchanged traded.If there is a pull back on the stock price you have something to fall back on, namely dividends. A hefty 11,23% yield (paid monthly), sit tight, collect the proceeds and wait until the banks recuperate. The only danger is if they cut dividends during a downfall, unlikely but not impossible.
You are incorrect to say the yield is 11.23% - the monthly distribution which is 11.23% consists of dividends AND return of capital - the return of capital part should not be considered "yield" and that is why Brompton calls the 11.23% monthly payment a "distribution". They correctly do not call the 11.23% "yield".
Loonie said
I would not be willing to assume that ANY investment would guarantee me 11% right now.If I were pursuing this, I'd do as canadian100 suggested, #19 above. And I'd take my profits and run, with this mutual fund, while I can.
Loonie - as I indicate above the 11.23% is not "yield" (Brompton calls it Distribution so as not to be misleading - since it includes dividends AND return of capital. The Banc Split product which I had, had a 5 year term, so they redeemed it - it was not my choice "to take my profits and run".
I do understand why picassocat likes the monthly distribution idea - like an annuity it works well for say a retiree and gives him/her a regular monthly cash flow.
Loonie - actually a yield of over 11% was quite likely achieved for bank shares in 2020 if you add the dividend of say 5% and the capital gain achieved in 2020. Of course who knows about 2021 but banks will still continue to pay the 5% dividends in 2021 and likely there will be some capital gains. The market loves the current paltry interest rates which are likely here to stay for at least another year and more likely two years.
4:02 pm
January 9, 2011
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iShares S&P/TSX Capped Financials ETF (XFN) that I have owned for years, a similiar "asset class" for comparison, had a past 3 month return increase of its net asset value (annualized) of 16.40%. XFN always has appeared in the first or second percentile rankings of like EFTs over time. Its not known for excessive volume share buys and sells that create return of capital and more taxation.... This particular 3 moth Covid rebound time period, IMO, should NOT be quoted as gospel, as if its the past or future.
I'm not saying XFN or the like are any better than competitors, however this 'monthly distribution as a percentage cash back' business is particularly annoying to me, because of marketing. Split Banc gets high performance type billing only because of structure and marketing.
As mentioned, return on capital is documented annually by brokerages, however IF you do all your business at a discount brokerage, they will give you a breakdown of distributions that splits out return of capital for that year. What they won't do, as the years go by, is track your Adjusted cost base, Cumulative, after years of ACB. For that, I have a .xls document where I input the annual changes. Mind you, for the work involved with that, maybe I should just pay the penalties for understating the capital gain when I eventually sell. 
"Keep your stick on the ice. Remember, I'm pulling for you. We're all in this together." - Red Green
8:05 pm
February 16, 2013
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canadian.100 said
actually a yield of over 11% was quite likely achieved for bank shares in 2020 if you add the dividend of say 5% and the capital gain achieved in 2020.
A word of caution to anyone reading this comment. In fact, the 5 big banks in Canada did NOT have ANY capital gain in 2020 as a group. So, no, 11% return was NOT achieved for bank shares in 2020. Here are the closing prices on December 31st of the last 2 years:
2019, 2020, % Incr/(Decr)
CM $108.06, $108.72, 0.8%
RY $102.75, $104.59 , 1.8%
BNS $73.35, $68.80, (6.2%)
TD $72.83, $71.92, (1.2%)
BMO $100.64, $96.78, (3.8%)
If you held just one share of each of the 5 banks, you would be down 1.5%. If you happened to hold more of the losers, you would be down even more. Yes, the capital loss is offset somewhat by the dividend but you can see that the return is nowhere near the claimed 11%.
I find it troublesome how easily misinformation can be spread. 
9:56 pm
December 12, 2009
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MG said
A word of caution to anyone reading this comment. In fact, the 5 big banks in Canada did NOT have ANY capital gain in 2020 as a group. So, no, 11% return was NOT achieved for bank shares in 2020. Here are the closing prices on December 31st of the last 2 years:
2019, 2020, % Incr/(Decr)
CM $108.06, $108.72, 0.8%
RY $102.75, $104.59 , 1.8%
BNS $73.35, $68.80, (6.2%)
TD $72.83, $71.92, (1.2%)
BMO $100.64, $96.78, (3.8%)If you held just one share of each of the 5 banks, you would be down 1.5%. If you happened to hold more of the losers, you would be down even more. Yes, the capital loss is offset somewhat by the dividend but you can see that the return is nowhere near the claimed 11%.
I find it troublesome how easily misinformation can be spread.
In fairness, MG, canadian.100 didn't say there was a capital gain of 11% on Canadian bank shares in 2020; they simply speculated by saying it was "quite likely." Evidently, that was not the case.
If you take a longer term view, the compound annual growth rate in terms of dividend and capital gain bank shares is likely between 6-10%.
Longer term, my bank shares have been great investments, and in the spring, I bought more. My only regret was being too cautious in not buying more. Best investment buy this spring was Genworth MI Canada Inc., which I'll now need to look for a new home for my capital. 🙁
Also, to Loonie's point, I don't think anyone claimed 11% return was "guaranteed."
I'll take the potential for better than 1-1.5% in guaranteed savings deposits in a moderately conservatively managed equity portfolio any day versus watching my purchasing power erode year over year.
Cheers,
Doug
11:15 pm
October 21, 2013
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Post 24 gave me the impression that the poster thought this investment was basically a sure thing, which alarmed me. So my reference to "guarantee" reflected that. I wanted to alert readers to the fact that it was by no means a sure thing. My underlying thinking was, "if it sounds too good to be true, it probably is". candian100 and MG have demonstrated how that applies.
If the idea is that one should look at it as a longer term investment, which makes sense, then why not just put your money in a Cdn index fund? Is a bank ETF better over the long term? I may be wrong but I don't think they've been around long enough to know. And, if it is, why assume it would continue to be?
Dividends are attractive and have certain tax advantages, especially for low net income people, but I think it's also easy to be distracted by them. I remember when they weren't very popular at all as they were significantly lower than now and interest rates were higher. This situation is likely to occur again at some point.
Good reality check from MG!
11:42 pm
October 21, 2013
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Doug, is your "likely" any more likely than canadian100's?
5:41 am
September 7, 2018
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MG said
A word of caution to anyone reading this comment. In fact, the 5 big banks in Canada did NOT have ANY capital gain in 2020 as a group. So, no, 11% return was NOT achieved for bank shares in 2020. Here are the closing prices on December 31st of the last 2 years:
2019, 2020, % Incr/(Decr)
CM $108.06, $108.72, 0.8%
RY $102.75, $104.59 , 1.8%
BNS $73.35, $68.80, (6.2%)
TD $72.83, $71.92, (1.2%)
BMO $100.64, $96.78, (3.8%)If you held just one share of each of the 5 banks, you would be down 1.5%. If you happened to hold more of the losers, you would be down even more. Yes, the capital loss is offset somewhat by the dividend but you can see that the return is nowhere near the claimed 11%.
I find it troublesome how easily misinformation can be spread.
Like Doug, I bought a fair amount of bank shares in the spring of 2020 when shares were lower than Dec 31-19 values - I still hold them, so your calculation is not necessarily relevant for some of us who bought shares during early/mid 2020 at lower costs than Dec 31-19 values. (and in fact we were already holding shares bought in prior years at lower cost values than Dec 31-19). For us, we did achieve much higher returns than your straight % calculation Dec 31-19 to Dec 31-20.) So hopefully this puts into perspective comments made earlier.
PS - I don't see where anyone including me said that returns were guaranteed, Loonie. You must have had a rough New Years.
5:54 am
September 6, 2020
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Doug said
In fairness, MG, canadian.100 didn't say there was a capital gain of 11% on Canadian bank shares in 2020; they simply speculated by saying it was "quite likely." Evidently, that was not the case.
If you take a longer term view, the compound annual growth rate in terms of dividend and capital gain bank shares is likely between 6-10%.
Longer term, my bank shares have been great investments, and in the spring, I bought more. My only regret was being too cautious in not buying more. Best investment buy this spring was Genworth MI Canada Inc., which I'll now need to look for a new home for my capital. 🙁
Also, to Loonie's point, I don't think anyone claimed 11% return was "guaranteed."
I'll take the potential for better than 1-1.5% in guaranteed savings deposits in a moderately conservatively managed equity portfolio any day versus watching my purchasing power erode year over year.
Cheers,
Doug
I have held BNS shares for a long time. I did not BUY or SELL any BNS shares in 2020. I reinvested the dividends quarterly. I compared year end values. BNS value is down .37%. The stock price declined from $73.35 to $68.80.
Have a Great Day
6:03 am
September 11, 2013
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topgun, hope your year-end comparison .37% calculation is not indicative of all the other numbers you've given here re your returns, etc!
6:20 am
October 21, 2013
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Dec 31 is as good a date as any to show year over year figures. It's the conventional date for comparison purposes. The date you bought or sold may be very important to an individual, but it doesn't enable us to see how one stock or a group of stocks fared in comparison to others.
I think Dec 31 is also particularly appropriate for 2020 because it covers the entire covid period to date, starting from just before covid hit our shores and extending one full year, so it is not skewed by the dip in March.
Obviously one-year results do not reveal long term patterns. But they do tell us how these stocks did during the first year of the covid pandemic.
7:13 am
September 7, 2018
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topgun said
I have held BNS shares for a long time. I did not BUY or SELL any BNS shares in 2020. I reinvested the dividends quarterly. I compared year end values. BNS value is down .37%. The stock price declined from $73.35 to $68.80.
So you earned/received approx 5% dividends (paid quarterly) on your BNS shares through 2020 and you reinvested those dividends to buy some additional BNS shares at a lower cost.
7:42 am
April 6, 2013
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Dividends were likely reinvested to bring the loss down to just -0.37%.
Otherwise, a $73.35 BNS share at the start of the year would be a $68.80 BNS share and $3.60 in dividends at the end of 2020. That would be
($68.80 + $3.60) / $73.35 - 1 = -1.30%
For comparison, the TSX 300 Total Return index ended 2019 at 60,460.25 and ended 2020 at 63,846.13. That gives total return of +5.60% for 2020. But, it was quite a rough ride:
| Date | TSX 300 Total Return |
YTD |
| 31/03/2020 | 47,826.36 | -20.90% |
| 30/06/2020 | 55,943.07 | -7.47% |
| 30/09/2020 | 58,590.32 | -3.09% |
| 31/12/2020 | 63,846.13 | +5.60% |
7:50 am
September 7, 2018
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Norman1 said
Dividends were likely reinvested to bring the loss down to just -0.37%.Otherwise, a $73.35 BNS share at the start of the year would be a $68.80 BNS share and $3.60 in dividends at the end of 2020. That would be
($68.80 + $3.60) / $73.35 - 1 = -1.30%
For comparison, the TSX 300 Total Return index ended 2019 at 60,460.25 and ended 2020 at 63,846.13. That gives total return of +5.60% for 2020.
For sure, BNS was not a star in 2020 if you bought it at Dec 31-19 price.
7:58 am
September 6, 2020
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Bill said
topgun, hope your year-end comparison .37% calculation is not indicative of all the other numbers you've given here re your returns, etc!
My portfolio has done well over the years. Best to be diversified.
Have a Great Day
8:53 am
January 28, 2015
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I was in mutual funds for like 20 years ,took a stock market course at a local college at night and then sold all the rip off funds and started buying dividend stocks. Here are the ones I own.
bns, td, bmo, enb,mfc,gwo,cu,fts,rsi,pza,sjr,bpy,rei,kmp,car,mx,fis/us,fnf/us,bac/us, f/us, key/us,aqn,su,hlf,csh.
Most likely lost about 25,000 over the years with companies in oil , however ,I now have over 800,000
paying about 25,000 a year in dividends.
For years I kept telling myself the market is going to crash don't buy, now I look forward to a crash to buy and I don't care anymore ,I just want the dividends.
I will pickup BCE,ACO in the new year and if the market crashes I will buy more of banks , top up on others, and average down on ones that go into the red.
Please write your comments in the forum.