Capitalization

Many investors buy units of asset allocation mutual funds because they think these funds provide an easy and profitable way to diversify between stocks, bonds and cash equivalents.

How asset allocation funds work

Asset allocation funds are mutual funds that can shift their portfolio allocations between stocks, bonds and cash in order to capitalize on perceived investment opportunities in any one …read more »

Many investors buy bonds to make their portfolios less volatile. But high-quality utility stocks, like the five we analyze in this issue, have several advantages over bonds.

One advantage of utility stocks is that there is no set limit to the returns they provide. That can help protect you from inflation. Bonds can’t provide this protection, because they’re fixed-return investments.

Utility stocks …read more »

In light of recent headlines, it’s not surprising that some investors consider investing in South Korea to be a risky proposition.

That’s because the country borders on North Korea, with its nuclear weapons and seemingly unstable leader. Certainly, North Korea’s unpredictability is a continuing drawback to investing in South Korea. However, the North Korean leader’s bluster has so far stopped …read more »

Exchange-traded funds (ETFs) have gained popularity in recent years, mainly because many ETFs offer very low management fees. In addition to low fees, the best ETFs offer well-diversified, highly tax-efficient portfolios.

However, quality varies. The investment industry has created all sorts of ETFs. All too many exist to tap into popular, but risky, themes and fads, so you need to be …read more »

PENN WEST ENERGY TRUST $21.77 (Toronto symbol PWT.UN; Units outstanding: 423.2 million; Market cap: $9.2 billion; SI Rating: Extra Risk; Dividend yield: 8.3%) is the largest oil and gas trust in North America. It produces an average of 170,164 barrels of oil equivalent per day (weighted 60% to oil and 40% to natural gas).

In the three months ended December 31, …read more »

ENCANA CORP $32.25 (Toronto symbol ECA; Shares outstanding: 747.9 million; Market cap: $24.1 billion; SI Rating: Average; Dividend yield: 2.5%) has announced plans to double its natural-gas production over five years.

The company is particularly interested in producing more gas at its Haynesville shale-gas property in Louisiana. (Shale gas is natural gas that is trapped in rock formations. To extract it, …read more »

CAPITAL POWER INCOME L.P. $17.78 (Toronto symbol CPA.UN; Shares outstanding: 53.9 million; Market cap: $958.3 million; SI Rating: Extra Risk; Dividend yield: 9.9%) is the new name of Epcor Power L.P. The change was made because Capital Power Corporation (Toronto symbol CPX) bought Epcor Utilities’ controlling interest in Epcor Power L.P.

Capital Power Income has stakes in 26 power plants in …read more »

Every year, you gain an additional $5,000 of contribution room in your tax free savings account (TFSA). That means you have $10,000 of contribution room in 2010, rising to $15,000 in 2011, $20,000 in 2012 and so on. You also get to carry forward unused contribution room from previous years.

Tax-free savings accounts let you earn investment income — including interest, …read more »

TRANSCANADA CORP. $36 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 684.4 million; Market cap: $24.6 billion; Price-to-sales ratio: 2.6; Dividend yield: 4.4%; SI Rating: Above Average) operates a 60,000-kilometre pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. The company’s pipelines supply 20% of North America’s natural gas. In 2009, TransCanada’s pipelines …read more »

In Canada, capital gains are taxed at a lower rate than interest. You can take advantage of that — and substantially cut your tax bill — if you structure your investments so that more of your income is in the form of capital gains.

(Our new free report, “Capital Gains Canada: 7 Secrets for Managing Your Canadian Capital Gains Tax Liabilities,” …read more »