Pat McKeough

A professional investment analyst for more than 30 years, Pat has developed a stock-selection technique that has proven reliable in both bull and bear markets. His proprietary ValuVesting System™ focuses on stocks that provide exceptional quality at relatively low prices. Many savvy investors and industry leaders consider it the most powerful stock-picking method ever created.

As early as 1980, Pat was recognized as #1 in the world of published investment advice by the Washington, DC–based Newsletter Publishers Association, and he was the first multi-year winner of The Globe and Mail’s stock picking contest.

Both CBS MarketWatch and The Hulbert Financial Digest recognized Pat as one of North America’s top stock analysts. The Wall Street Journal called him “one of only four investment newsletter advisors who have managed to serve their readers well over the long haul.”

A best-selling Canadian author, he wrote Riding the Bull, his 1993 book that predicted the stock-market boom of the last half of that decade. Through his many television appearances, he is well-known to investors for his insightful analysis and his candid, unpretentious style.

Bottom line: Pat’s conservative, reduced-risk strategy is a proven approach to safe investing.

Posts by the author
MANITOBA TELECOM $28.74 (Toronto symbol MBT; Shares outstanding: 78.9 million; Market cap: $2.3 billion; TSINetwork Rating: Average; Dividend yield: 4.5%; www.mts.ca) has acquired AWS-1 radio frequencies (or spectrum) in Manitoba from rival wireless carrier WIND Mobile.

The $45-million purchase will boost the speed and capacity of the company’s wireless networks.

Manitoba Telecom is a hold.

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BCE INC. $52.87 (Toronto symbol BCE; Shares outstanding: 848.1 million; Market cap: $44.1 billion; TSINetwork Rating: Above Average; Dividend yield: 5.0%; www.bce.ca) has sold its 15% stake in the Globe and Mail newspaper to Woodbridge Co., the private firm controlled by the Thomson family. Woodbridge now owns 100% of the Globe.

The company didn’t say how much it received, but the sale will let it focus on its main media businesses, including CTV Television, specialty channels, radio stations and their related websites.

In the second quarter of 2015, the media division’s earnings rose 2.4% from a year earlier and accounted for 9.8% of BCE’s total.

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ISHARES CANADIAN UNIVERSE BOND INDEX ETF $31.67 (Toronto symbol XBB; buy or sell through brokers) mirrors the performance of the Canadian Universe Bond Index. The 929 bonds in the portfolio have an average term to maturity of 10.34 years. The fund’s MER is 0.33%.

The bonds in the index are 71.3% government and 28.7% corporate.

The fund yields 2.8%, compared to the Short-Term Bond Fund’s 2.4%. Its yield to maturity is 1.93%, 0.85% above the Short-Term Fund. That reflects the added risk of holding long-term bonds.

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ISHARES CANADIAN SHORT-TERM BOND INDEX ETF $28.69 (Toronto symbol XSB; buy or sell through brokers) mirrors the performance of the DEX Short-Term Bond Index. This index consists of a range of investment-grade federal, provincial, municipal and corporate bonds with one- to five-year terms to maturity. The fund holds 430 bonds with an average term to maturity of 2.98 years. The bonds in the index are 64.8% government and 35.2% corporate. The fund’s MER is 0.28%.

The iShares Canadian Short-Term Bond Index Fund yields 2.4%, but this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, meaning the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields.

The key figure when looking at the long-term return of this fund is yield to maturity. This yield takes into account the series of capital losses the fund will experience as its above-market-rate bonds mature. The iShares Canadian Short-Term Bond Index ETF’s yield to maturity is around 1.08%—less than the 2.4% yield but still higher than the 0.42% you’d earn by investing in, say, a one-year T-bill.

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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $35.71 (Toronto symbol BEP.UN; Units outstanding: 265.2 million; Market cap: $9.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.1%; www.brookfieldrenewable.com) owns 209 hydroelectric generating stations, 38 wind farms and five natural-gas-fired plants. In all, it has over 7,000 megawatts of generating capacity.

Roughly 26% of that capacity is in Canada, with another 51% in the U.S. and 16% in Brazil.

In the three months ended June 30, 2015, Brookfield’s cash flow per share fell 28.4%, to $0.53 from $0.74 a year earlier. That’s because below-normal rainfall slowed the company’s hydroelectric production. The units trade at 15.5 times Brookfield’s forecast 2015 cash flow of $2.30 a share. They yield 6.1%.

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INNERGEX RENEWABLE ENERGY $10.14 (Toronto symbol INE; Shares outstanding: 101.3 million; Market cap: $1.0 billion; TSINetwork Rating: Extra Risk; Dividend yield 6.1%; www.innergex.com) operates 26 hydroelectric plants, six wind farms and one solar power facility in Quebec, Ontario, B.C. and Idaho. The company gets 73% of its power from hydroelectric plants, 26% from wind and 1% from solar. In contrast to Algonquin, Innergex is growing slowly, mostly by building its own hydroelectric and wind facilities, rather than through acquisitions. Right now, the company has five projects under construction. But like Algonquin, Innergex makes sure it has firm long-term power-purchase contracts in place before it starts building new plants....
ALGONQUIN POWER & UTILITIES CORP. $9.38 (Toronto symbol AQN; Shares outstanding: 239.5 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.3%; www.algonquinpower.com) has used acquisitions to nearly triple in size over the past three years and is planning more purchases.

The company’s regulated utility businesses now provide water, electricity and natural gas to over 489,000 customers, up sharply from 120,000 three years ago. Its hydroelectric, thermal energy, solar and wind facilities now generate 1,050 megawatts, up from 460.

Emera (Toronto symbol EMA), a recommendation of The Successful Investor, our conservative growth advisory, owns 20.9% of Algonquin.

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TRANSCANADA CORP. $43.86 (Toronto symbol TRP; Shares outstanding: 708.9 million; Market cap: $31.2 billion; TSINetwork Rating: Above Average; Dividend yield: 4.7%; www.transcanada.com) wants to build the Energy East pipeline, which would pump oil from Alberta to Eastern Canadian refineries. The plan involves converting parts of its existing natural gas pipeline to handle oil.

The company recently signed deals with three major gas distributors (two in Ontario and one in Quebec) that ensure the project will not cut their gas supplies or increase their costs. As part of this agreement, TransCanada will add new, smaller gas pipelines to replace the portions of the main gas line it will convert to oil.

These deals help cut Energy East’s risk. The project faces strong environmental and political opposition, but if regulators approve the new line, it could start up in 2020.

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GUGGENHEIM CHINA SMALL CAP ETF $22.04 (New York symbol HAO) aims to track the AlphaShares China Small Cap Index, which is made up of all Chinese stocks that are legal for foreign investors and have market caps between $200 million and $1.5 billion.

Chinese stocks have plunged since this summer. Chinese leader Xi Jinping seems focused on shoring up the Communist party and the Chinese stock market, rather than strengthening the Chinese economy.

Brazil has officially entered a recession with news that its economy shrank in the second quarter this year, at a faster rate than in the first. Brazil’s per-capita income has been falling since last year, and the Brazilian real has lost a quarter of its value in the year to date. State-controlled oil and gas giant Petrobras is also in the midst of a huge corruption scandal.

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