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.

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If you want to find out how to hire a stock broker who meets your needs, you need to watch out above all for conflicts of interest
CISCO SYSTEMS INC. $29 (Nasdaq symbol CSCO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.1 billion; Market cap: $147.9 billion; Price-to-sales ratio: 3.0; Dividend yield 2.9%; TSINetwork Rating: Average; www.cisco.com) has seen falling sales of routers and other computer-networking equipment in China in the past few years.

That’s largely because of fears that U.S. intelligence agencies are secretly using the company’s gear to spy on foreign firms and governments. In the quarter ended April 25, 2015, Cisco’s Chinese sales fell 20% from a year earlier.

The company now aims to reverse the decline by investing in new partnerships with Chinese universities and other institutions. This should help Cisco develop new equipment to compete with products from domestic firms like Huawei Technologies.

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MCDONALD’S CORP. $97 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 958.5 million; Market cap: $93.0 billion; Price-to-sales ratio: 3.5; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.mcdonalds .com) earned $811.5 million in the three months ended March 31, 2015, down 32.6% from $1.2 billion a year earlier. Per-share profits fell 30.6%, to $0.84 from $1.21, on fewer shares outstanding.

The company is closing less-profitable restaurants, simplifying its menus and speeding up its drive-through lanes as part of a new restructuring plan. If you exclude unusual items and the negative impact of currency exchange rates, McDonald’s earned $1.10 a share in the latest quarter.

Sales fell 11.1%, to $6.0 billion from $6.7 billion. A drop in customer traffic cut same-store sales by 2.3%.

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BROADRIDGE FINANCIAL SOLUTIONS INC. $52
(New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 119.9 million; Market cap: $6.2 billion; Price-to-sales ratio: 2.4; Dividend yield: 2.1%; TSINetwork Rating: Average; www.broadridge.com) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. It processes 90% of all proxy votes in the U.S. and Canada. If you exclude one-time items, Broadridge earned $58.8 million, or $0.47 a share, in its fiscal 2015 third quarter, which ended March 31, 2015. That’s up 6.7% from $55.1 million, or $0.44 a share, a year earlier.

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DUN & BRADSTREET CORP. $128 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 36.0 million; Market cap: $4.6 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.4%; TSINetwork Rating: Average; www.dnb.com) provides credit reports on over 230 million companies. Its clients use this information to make lending and buying decisions.

Dun & Bradstreet gets 64% of its revenue from credit reports. The remaining 36% comes from other information products, like software businesses use to manage websites and customer data.

In 2010, the company sold subsidiary Dun & Bradstreet Credibility Corp. (DBCC) to private investors for $10.0 million. DBCC sells credit reports and related services to U.S. small businesses; it pays licensing fees to use the Dun & Bradstreet brand.

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CONAGRA FOODS INC. $44 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 427.1 million; Market cap: $18.8 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.conagrafoods.com) bought Ralcorp Holdings, the largest private-label food maker in the U.S., for $4.75 billion in January 2013.

The purchase has not worked out as well as ConAgra had hoped, as strong competition hurt Ralcorp’s sales and earnings. As a result, the company has had to write down this investment by $2.1 billion.

In response, ConAgra has launched a restructuring plan aimed at improving Ralcorp’s profitability. This strategy includes better packaging, speeding up deliveries and launching new products. It has also cut its private-label prices, which should help improve Ralcorp’s market share.

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AT&T INC. $36 (New York symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 5.2 billion; Market cap: $187.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 5.2%; TSINetwork Rating: Average; www.att.com) is the largest wireless provider in the U.S., with 121.8 million subscribers. Wireless supplies 55% of its revenue and 75% of its earnings.

The remaining 45% of revenue and 25% of earnings comes from the company’s wireline division, which sells phone services, television packages and highspeed Internet access to 34.2 million customers.

AT&T’s revenue rose 6.5%, from $124.4 billion in 2010 to $132.4 billion in 2014. Earnings fell 3.9%, from $2.29 a share (or a total of $13.6 billion) in 2010 to $2.20 a share (or $13.1 billion) in 2011, but they recovered to $2.33 a share (or $13.7 billion) in 2012.

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VERIZON COMMUNICATIONS INC. $47 (New York symbol VZ, Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 4.1 billion; Market cap: $192.7 billion; Priceto- sales ratio: 1.5; Dividend yield: 4.7%; TSINetwork Rating: Average; www.verizon.com) gets 70% of its revenue and 95% of earnings from its 108.6 million wireless subscribers. The other 30% of revenue and 5% of earnings comes from its wireline business, which serves 19.5 million traditional phone customers and 26.4 million high-speed Internet and digital TV users. In 2014, the company bought the 45% of the Verizon Wireless joint venture it didn’t already own from U.K.-based Vodafone Group (Nasdaq symbol VOD). Verizon Wireless sells wireless services in the U.S.

Verizon paid $130 billion for Vodafone’s stake, including $58.9 billion in cash. It also issued $61.3 billion worth of common shares to Vodafone shareholders and borrowed most of the remaining $9.8 billion.

The Vodafone stake, along with strong wireless demand, boosted the company’s revenue by 19.3%, from $106.6 billion in 2010 to $127.1 billion in 2014. Earnings fell from $0.90 a share (or a total of $2.5 billion) in 2010 to $0.31 a share (or $875 million) in 2012, mainly due to a $7.2-billion charge related to a change in its pension plan accounting policies. Earnings jumped to $4.00 a share (or $11.5 billion) in 2013 but fell to $2.42 a share (or $9.6 billion) in 2014 as the Verizon Wireless purchase added more one-time charges and other operating costs.

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Our portfolio advice: when you find the best stocks to invest in, and the shares begin to rise, avoid the temptation to sell them too soon.
We think the big banks remain some of the strongest Canadian dividend stocks, but warn against buying them through this split share company.