Thanks Resilience, Fagerheim is a very sharp guy. If you bought Whitecap last March, and I did it has a been a tremendous performer this past year. WCP currently pays me approx. a 20% annual dividend on that cost base. Any divvy raises going forward will be a bonus. Most WCP I own is in a taxable account, a 6 bagger since those purchases.
Some discussion of ignoring taxes when buying and selling the other day, trading the pullbacks in oil. Agree with the concept but then there is the reality. When your at the top tax rate, dividends are tax advantaged in Canada, you have a top notch company with mgmt that has a great track record well you do the math is not to your advantage to dip in and out of a stock like this with these small pullbacks. In non-taxable accounts no problem but since I have both I have watched a few times over the years how being real active can actually hinder performance versus sitting tight. Often depends on the market backdrop.
To sell a share of WCP in my taxable account today triggers about $1.10 in taxes on that share. That is 19% of the current value of a share. You better time a pull back perfectly and get a fairly substantial pullback to break even. My other energy holdings are similiar with big gains this past year, I have PPL, FRU, KEY in taxable accounts. I have re-arranged a few things , that has put me in the top tax rate for 2021 given dividends expected, income , etc... I have to pay quarterly installments so keep track of where I am, know when I cross those marginal thresholds. So now I have to consider that in taxable accounts with each trade.
History also reminds me of similiar scenarios I faced in 2009 thru '14, had a few stocks that were like those above, bought very cheap during the financial crisis. One being IPL that I loaded up in the fall of 2008. I was forced to be patient with it because of taxes. I had a double in it within a year or so, then it continued to rise yr after yr as did the dividend. Taxes made me hold on although I dribbled a bit out each year. In my non-taxable it was all gone by the second year. The stock went from $6 to the mid $30's in that period, that tax induced discipline was actually a advantage in the long run. IPL raised their dividend each year and the cap gains were steady. Patience can pay, particularly if your in a bull energy market. Sometimes being too active is a disadvantage, taxes do matter.
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