EIT.UN (also known as the Canoe EIT fund) is a Canadian investment fund that gives shareholders consistent cash flow.
The portfolio is diversified and has been actively managed by Robert Taylor, the SVP and Portfolio Manager of Canoe Financial.
So how does Canoe operate and who usually invests in it?
Let’s dive in…
Who would invest in this Canadian income fund?
If you’re retired and looking to supplement your retirement income, buying shares of EIT.UN could help.
Or anyone looking for relatively stable stock with cash flow will want to investigate EIT.UN as well.
As you will see below, EIT.UN doesn’t appreciate in price at all. That’s not its purpose. It’s there for when your portfolio has grown to a sizable value and you’re ready to start taking income for retirement.
EIT.UN vs. SPY: $100,000 5 year comparison
For consistency, we will take the prices of both securities ($SPY and $EIT.UN) from the June 26th close (2017) and see the returns they would have yielded.
|$100,000 Invested in:||EIT.UN||SPY|
|Price (June 2017)||$11.91||$243.29|
|Dividend amount per share after 5 years||$6.00||$27.66|
|# of Shares||8396 Shares||411 Shares|
|5 Year dividend total||$50,376.00||$11,368.26|
|Price (June 2022)||$12.68||$388.59|
|5 Year ROI||56.84%||71.09%|
Investing in $100,000 in EIT.UN yields some interesting cash flow numbers, no denying that! But the appreciation isn’t there.
Investing $100,000 in SPY doesn’t yield the same dividend return, but the appreciation is more than the dividend payments for EIT.UN in the same period of time.
Of course there’s no guarantee that SPY will always appreciate like that. But there’s also no guarantee that EIT.UN will be able to keep up its dividend payment.
This is why your investing goal really matters. If you need growth, SPY looks better. If you need cash flow, EIT.UN looks better.
Metric to watch
An interesting metric to watch would be how much longer Canoe Financial will keep its fund payout at $0.10 per unit. It has been consistently at this price regardless of the price action of the ETF since 2008.
Canoe manages this fund intentionally to keep the price as stable as possible and to consistently pay a $0.30 dividend per unit (share) every quarter.
As of June 30th, 2022 the unit (share) price of EIT.UN is $12.70. At that price, its dividend yield is 9.41%.
EIT.UN Top Holdings
The Canoe EIT income fund disclosed its top 25 equity holdings as of March 31st, 2022. These holdings make up 77.6% of the fund They are shown below:
|Royal Bank of Canada||Johnson & Johnson||Caterpillar Inc.|
|Chubb LTD||Northrop Grumman Corp.||Bristol-Myers Squibb LTD|
|Anthem Inc.||Barrick Gold Corp.||Mondelez international Inc|
|Bank of Nova Scotia||Intact Financial Corp.||CVS Health Corp.|
|Tourmaline Oil Corp.||Cenovus Energy Inc.||Topaz Energy Corp.|
|UnitedHealth group Inc.||Berkshire Hathaway Inc.||Restaurant Brands Intl Inc.|
|Rogers Communications Inc.||Canadian Pacific Railway LTD||Canadian Natural Resources LTD|
|L3Harris Technologies Inc.||Tricon Residential Inc.||Arc Resources LTD|
What do I do with this information?
EIT.UN is just one Canadian income fund of many. But it’s been around for a while, since 1998. If you’re looking for consistent, predictable returns, this could be a good place to start investigating.
Dividend investing is a very popular way to build wealth in Canada. If you’re interested in learning more, make sure you read our article about Dividend investing for beginners.
That’s all for now.
Your fellow Stock Hackers,
🍒Cherry & Erwin
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