How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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ISHARES S&P INDIA NIFTY 50 INDEX FUND $23.67 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities. The fund’s top holdings are ITC Ltd. (conglomerate), 8.8%; Reliance Industries Ltd. (conglomerate), 7.2%; HDFC Bank, 6.9%; Housing Development Finance, 6.8%; ICICI Bank, 6.7%; Infosys Technologies (software), 6.4%; Larsen & Toubro Ltd. (conglomerate), 4.8%; Tata Consultancy Services (information technology), 3.7%; Hindustan Unilever (consumer goods), 3.1%; and State Bank of India, 3.1%.
The fund’s industry breakdown includes Banks, 20.7%; Computers, 12.2%; Cigarettes, 8.8%; Refineries, 7.6%; Housing, 6.8%; Pharmaceuticals, 5.1%; Engineering, 4.8%; Automobiles, 3.6%; and Oil Exploration/Production, 3.6%. The ETF has an expense ratio of 0.89%.
India’s economy likely slowed to a 5.5% growth rate in the third quarter of 2012 from 6.9% a year earlier. But that could rise to over 7.0% next year.
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The fund’s industry breakdown includes Banks, 20.7%; Computers, 12.2%; Cigarettes, 8.8%; Refineries, 7.6%; Housing, 6.8%; Pharmaceuticals, 5.1%; Engineering, 4.8%; Automobiles, 3.6%; and Oil Exploration/Production, 3.6%. The ETF has an expense ratio of 0.89%.
India’s economy likely slowed to a 5.5% growth rate in the third quarter of 2012 from 6.9% a year earlier. But that could rise to over 7.0% next year.
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RIOCAN REAL ESTATE INVESTMENT TRUST $26.69 (Toronto symbol REI.UN; Units outstanding: 296.3 million; Market cap: $7.9 billion; TSINetwork Rating: Average; Dividend yield: 5.2%; www.riocan.com) recently formed a 50/50 joint venture with ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $30.71 (Toronto symbol AP.UN; Units outstanding: 60.0 million; Market cap: $1.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.3%; www.alliedpropertiesreit.com).
RioCan, Allied and privately held Diamond Corp. have now agreed to buy the headquarters of The Globe and Mail newspaper in downtown Toronto. RioCan and Allied will each own 40%, while Diamond will hold 20%.
The three partners plan to redevelop the site into a complex with residential, retail and office units. RioCan will manage thestores, and Allied will operate the office portion.
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RioCan, Allied and privately held Diamond Corp. have now agreed to buy the headquarters of The Globe and Mail newspaper in downtown Toronto. RioCan and Allied will each own 40%, while Diamond will hold 20%.
The three partners plan to redevelop the site into a complex with residential, retail and office units. RioCan will manage thestores, and Allied will operate the office portion.
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GUGGENHEIM CHINA SMALL CAP ETF $22.33 (New York Exchange symbol HAO; buy or sell through brokers; www.guggenheimfunds.com) 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.
The $231.4-millon fund’s top holdings are Great Wall Motor Co., 2.4%, Shimao Property Holdings, 1.8%; Sino-Ocean Land Holdings, 1.8%; Longfor Properties, 1.7%; China Railway Group, 1.6%; Guangdong Investment Ltd., 1.4%; China Railway Construction Corp., 1.3%; Zoomlion Heavy Industry, 1.3%; China State Construction International Holdings, 1.3%; and Agile Property Holdings, 1.2%.
As China’s economy matures and wages rise, domestic spending should continue to increase. As well, China’s leaders will likely need to spend more on programs to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.
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The $231.4-millon fund’s top holdings are Great Wall Motor Co., 2.4%, Shimao Property Holdings, 1.8%; Sino-Ocean Land Holdings, 1.8%; Longfor Properties, 1.7%; China Railway Group, 1.6%; Guangdong Investment Ltd., 1.4%; China Railway Construction Corp., 1.3%; Zoomlion Heavy Industry, 1.3%; China State Construction International Holdings, 1.3%; and Agile Property Holdings, 1.2%.
As China’s economy matures and wages rise, domestic spending should continue to increase. As well, China’s leaders will likely need to spend more on programs to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.
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SPDR S&P CHINA ETF $68.92 (New York Exchange symbol GXC; buy or sell through brokers; www.spdrs.com) is an ETF that aims to track the S&P China BMI Index, which is made up of all publicly traded Chinese stocks that are available to foreign investors. Right now, SPDR S&P China ETF holds 184 stocks.
The $919.1-million fund’s top holdings are China Mobile, 7.6%; China Construction Bank, 7.5%; Industrial & Commercial Bank, 6.1%; CNOOC Ltd., 4.4%; Tencent Holdings Limited, 4.4%; PetroChina Corp., 3.7%; Bank of China, 3.7%; Baidu, 3.3%; China Life, 2.8%; and China Petroleum & Chemical, 2.4%.
The fund’s breakdown by industry is as follows: Financials, 33.4%; Oil and Gas, 14.9%; Information Technology, 11.4%; Telecommunication Services, 9.7%; Industrials, 9.5%; Consumer Discretionary, 6.1%; Consumer Staples, 5.8%; Basic Materials, 4.9%; Utilities, 2.6%; and Health Care, 1.8%.
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The $919.1-million fund’s top holdings are China Mobile, 7.6%; China Construction Bank, 7.5%; Industrial & Commercial Bank, 6.1%; CNOOC Ltd., 4.4%; Tencent Holdings Limited, 4.4%; PetroChina Corp., 3.7%; Bank of China, 3.7%; Baidu, 3.3%; China Life, 2.8%; and China Petroleum & Chemical, 2.4%.
The fund’s breakdown by industry is as follows: Financials, 33.4%; Oil and Gas, 14.9%; Information Technology, 11.4%; Telecommunication Services, 9.7%; Industrials, 9.5%; Consumer Discretionary, 6.1%; Consumer Staples, 5.8%; Basic Materials, 4.9%; Utilities, 2.6%; and Health Care, 1.8%.
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ISHARES CDN REIT SECTOR INDEX FUND $16.40 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 13 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of each REIT is limited to 25% of the ETF’s value.
iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 4.5%.
The ETF’s largest holding is RioCan REIT at 20.8%, followed by H&R REIT (11.6%), Dundee REIT (9.1%),Canadian REIT (7.4%), Calloway REIT (7.3%), Cominar REIT (6.7%), Boardwalk REIT (6.6%), Canadian Apartment REIT (6.0%), Primaris Retail REIT (5.5%), Allied Properties REIT (4.9%), Chartwell Seniors REIT(4.6%), Artis REIT (4.6%), Northern Property REIT (2.6%) and Crombie REIT (2.0%).
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iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 4.5%.
The ETF’s largest holding is RioCan REIT at 20.8%, followed by H&R REIT (11.6%), Dundee REIT (9.1%),Canadian REIT (7.4%), Calloway REIT (7.3%), Cominar REIT (6.7%), Boardwalk REIT (6.6%), Canadian Apartment REIT (6.0%), Primaris Retail REIT (5.5%), Allied Properties REIT (4.9%), Chartwell Seniors REIT(4.6%), Artis REIT (4.6%), Northern Property REIT (2.6%) and Crombie REIT (2.0%).
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PENN WEST PETROLEUM $10.70 (Toronto symbol PWT; Shares outstanding: 476.8 million; Market cap: $5.1 billion; TSINetwork Rating: Average; Dividend yield: 10.1%) is one of North America’s largest oil and gas producers. Its production is 66% oil and 34% gas. In the quarter ended September 30, 2012, Penn West’s cash flow per share fell 2.7%, to $0.72 from $0.74 a year earlier. Lower oil and gas prices hurt cash flow, as did a fall in daily output, to 160,339 barrels of oil equivalent from 161,323 barrels.
Penn West has taken on debt, but the resulting investments have failed to increase its production. To improve its performance, it has fired four senior executives and will likely hire outside the company to bring in new expertise.
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CRESCENT POINT ENERGY CORP. $39.03 (Toronto symbol CPG; Shares outstanding: 350.1 million; Market cap: $13.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.1%; www.crescentpointenergy.com) produces oil and natural gas in western Canada. Its production is weighted 90% toward oil and 10% to natural gas.
The company continues to focus on its Bakken light-oil development in southeastern Saskatchewan.
In the three months ended September 30, 2012, Crescent Point’s cash flow per share rose 3.7%, to $1.13 from $1.09 a year earlier. The company’s shares yield a high 7.0%. Crescent Point paid out just 62% of its cash flow as dividends in the latest quarter, so its current payout rate looks sustainable.
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The company continues to focus on its Bakken light-oil development in southeastern Saskatchewan.
In the three months ended September 30, 2012, Crescent Point’s cash flow per share rose 3.7%, to $1.13 from $1.09 a year earlier. The company’s shares yield a high 7.0%. Crescent Point paid out just 62% of its cash flow as dividends in the latest quarter, so its current payout rate looks sustainable.
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GREAT-WEST LIFECO $23.52 (Toronto symbol GWO; Shares outstanding: 949.9 million; Market cap: $22.3 billion; TSINetwork Rating: Above Average; Dividend yield: 5.2%) is Canada’s largest insurance company, with $532.0 billion in assets under administration. It also operates in the U.S. and Europe.
In the three months ended September 30, 2012, Great-West’s earnings rose 13.8%, to $520 million, or $0.55 a share. A year earlier, it earned $457 million, or $0.48. Revenue rose 1.5%, to $8.6 billion from $8.5 billion.
The company’s balance sheet is strong. As well, Great-West trades at just 11.5 times the $2.05 a share that it is likely to earn in 2012. The stock yields a high 5.2%.
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In the three months ended September 30, 2012, Great-West’s earnings rose 13.8%, to $520 million, or $0.55 a share. A year earlier, it earned $457 million, or $0.48. Revenue rose 1.5%, to $8.6 billion from $8.5 billion.
The company’s balance sheet is strong. As well, Great-West trades at just 11.5 times the $2.05 a share that it is likely to earn in 2012. The stock yields a high 5.2%.
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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $29.47 (Toronto symbol BEP.UN; Units outstanding: 262.5 million; Market cap: $7.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.7%; www.brpfund.com) owns 172 hydroelectric generating stations, seven wind farms and two natural-gas-fired plants. In all, it has 4,909 megawatts of generating capacity.
Roughly 35% of Brookfield Renewable’s generating capacity is in Canada, with another 45% in the U.S. and 20% in Brazil. The company sells virtually all of its power under agreements that are an average of 24 years in length.
In the three months ended September 30, 2012, Brookfield’s revenue declined 26.4%, to $229 million from $311 million a year earlier. Cash flow per unit fell sharply, to $0.04 from $0.46.
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Roughly 35% of Brookfield Renewable’s generating capacity is in Canada, with another 45% in the U.S. and 20% in Brazil. The company sells virtually all of its power under agreements that are an average of 24 years in length.
In the three months ended September 30, 2012, Brookfield’s revenue declined 26.4%, to $229 million from $311 million a year earlier. Cash flow per unit fell sharply, to $0.04 from $0.46.
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BELL ALIANT INC. $27 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $6.2 billion; TSINetwork Rating: Average; Dividend yield: 7.0%; www.aliant.ca) sells telephone and Internet services to 2.5 million customers in Atlantic Canada and rural parts of Ontario and Quebec. The company also sells wireless services through an alliance with BCE, which owns 45% of Bell Aliant.
The company faces strong competition from cable providers. In addition, many of its phone customers are switching to wireless devices. However, Bell Aliant’s wireless agreement with BCE, plus upgrades to its high-speed Internet network, are helping it hold on to its current clients and attract new ones.
Bell Aliant’s high-speed fibre optic systems now reach 621,000 homes. The company plans to increase that to 650,000 by the end of 2012.
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The company faces strong competition from cable providers. In addition, many of its phone customers are switching to wireless devices. However, Bell Aliant’s wireless agreement with BCE, plus upgrades to its high-speed Internet network, are helping it hold on to its current clients and attract new ones.
Bell Aliant’s high-speed fibre optic systems now reach 621,000 homes. The company plans to increase that to 650,000 by the end of 2012.
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