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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TRANSCANADA CORP. $45.02 (Toronto symbol TRP; Shares outstanding: 704.9 million; Market cap: $31.7 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.transcanada.com) has settled its dispute with the Ontario government.
In 2009, the company agreed to build a natural-gas-fired power plant in Oakville, Ontario. However, the provincial government cancelled the project in 2010.
This week, TransCanada agreed to build a new gas-fired power plant on the grounds of the Lennox generating station near Napanee in eastern Ontario.
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In 2009, the company agreed to build a natural-gas-fired power plant in Oakville, Ontario. However, the provincial government cancelled the project in 2010.
This week, TransCanada agreed to build a new gas-fired power plant on the grounds of the Lennox generating station near Napanee in eastern Ontario.
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POWERSHARES QQQ ETF $69.11 (Nasdaq symbol QQQQ; buy or sell through brokers; www.invescopowershares. com), formerly called Nasdaq 100 Trust Shares, holds the stocks that represent the Nasdaq 100 Index. That index is made up of the 100 largest shares on the Nasdaq exchange, based on market cap.
The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets. The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Oracle Corp., Comcast Corp. and Kraft Foods Inc.
The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets. The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Oracle Corp., Comcast Corp. and Kraft Foods Inc.
SPDR DOW JONES INDUSTRIAL AVERAGE ETF $134.68 (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average.
The fund’s top holdings are IBM, ExxonMobil, Chevron Corp., 3M, Wal-Mart Stores, McDonald’s Corp., Procter & Gamble, Caterpillar Inc., United Technologies and Boeing. The fund’s expenses are about 0.18% of its assets.
SPDR Dow Jones ETF is a buy.
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The fund’s top holdings are IBM, ExxonMobil, Chevron Corp., 3M, Wal-Mart Stores, McDonald’s Corp., Procter & Gamble, Caterpillar Inc., United Technologies and Boeing. The fund’s expenses are about 0.18% of its assets.
SPDR Dow Jones ETF is a buy.
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SPDR S&P 500 ETF $145.09 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major U.S. stocks that are chosen based on their market cap, liquidity and industry group.
The index’s highest-weighted stocks are Apple Inc., ExxonMobil, Microsoft, Procter & Gamble, Wells Fargo & Co., Johnson & Johnson, IBM, Chevron, General Electric, Pfizer Inc., Coca-Cola Co., Google and AT&T.
The fund’s expenses are just 0.10% of its assets.
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The index’s highest-weighted stocks are Apple Inc., ExxonMobil, Microsoft, Procter & Gamble, Wells Fargo & Co., Johnson & Johnson, IBM, Chevron, General Electric, Pfizer Inc., Coca-Cola Co., Google and AT&T.
The fund’s expenses are just 0.10% of its assets.
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ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $20.77 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.50%. It yields 4.6%.
The fund’s top holdings are CIBC, 7.1%; National Bank, 5.8%; TD Bank, 5.6%; Bank of Montreal, 5.3%; Bonterra Energy, 4.8%; Royal Bank, 4.6%; Telus Corp., 4.6%; Bank of Nova Scotia, 4.3%; BCE Inc., 4.1%; and AG Growth International, 4.0%.
The fund holds 54.4% of its assets in financial stocks. Utilities are next, at 21.2%. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.
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The fund’s top holdings are CIBC, 7.1%; National Bank, 5.8%; TD Bank, 5.6%; Bank of Montreal, 5.3%; Bonterra Energy, 4.8%; Royal Bank, 4.6%; Telus Corp., 4.6%; Bank of Nova Scotia, 4.3%; BCE Inc., 4.1%; and AG Growth International, 4.0%.
The fund holds 54.4% of its assets in financial stocks. Utilities are next, at 21.2%. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.
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ISHARES S&P/TSX 60 INDEX FUND $17.71 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good, low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets.
The index mostly consists of high-quality companies. However, as the fund must ensure that all sectors are represented, it holds a few stocks we wouldn’t include.
The index’s top holdings are Royal Bank, 7.4%; TD Bank, 6.8%; Bank of Nova Scotia, 5.8%; Suncor Energy, 4.5%; Barrick Gold, 3.7%; CN Railway, 3.5%; Bank of Montreal, 3.4%; Potash Corp., 3.3%; Goldcorp, 3.3%; BCE Inc., 3.1%; Canadian Natural Resources, 3.0%; TransCanada Corp., 2.9%; CIBC, 2.8%; Enbridge, 2.8%; Cenovus Energy, 2.4%; and Telus Corp., 1.8%.
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The index mostly consists of high-quality companies. However, as the fund must ensure that all sectors are represented, it holds a few stocks we wouldn’t include.
The index’s top holdings are Royal Bank, 7.4%; TD Bank, 6.8%; Bank of Nova Scotia, 5.8%; Suncor Energy, 4.5%; Barrick Gold, 3.7%; CN Railway, 3.5%; Bank of Montreal, 3.4%; Potash Corp., 3.3%; Goldcorp, 3.3%; BCE Inc., 3.1%; Canadian Natural Resources, 3.0%; TransCanada Corp., 2.9%; CIBC, 2.8%; Enbridge, 2.8%; Cenovus Energy, 2.4%; and Telus Corp., 1.8%.
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GREAT-WEST LIFECO $22.23 (Toronto symbol GWO; Shares outstanding: 949.8 million; Market cap: $21.1 billion; TSINetwork Rating: Above Average; Dividend yield: 5.5%) is Canada’s largest insurance company, with $523.6 billion in assets under administration. It operates under several well-known banners, including Great West Life, Canada Life and Freedom 55. It also sells mutual funds and retirement planning and wealth management services. Power Financial Corp. owns 68.2% of Great-West.
In the three months ended June 30, 2012, Great-West’s revenue rose 9.2%, to $7.8 billion from $7.1 billion a year earlier. Earnings fell 6.7%, to $491 million, or $0.52 a share, from $550 million, or $0.55 a share.
Earnings declined from exceptionally strong results a year ago, but they still beat the consensus estimate of $0.48 a share.
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In the three months ended June 30, 2012, Great-West’s revenue rose 9.2%, to $7.8 billion from $7.1 billion a year earlier. Earnings fell 6.7%, to $491 million, or $0.52 a share, from $550 million, or $0.55 a share.
Earnings declined from exceptionally strong results a year ago, but they still beat the consensus estimate of $0.48 a share.
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GEORGE WESTON LTD. $63.26 (Toronto symbol WN; Shares outstanding: 128.2 million; Market cap: $8.1 billion; TSINetwork Rating: Above Average; Dividend yield: 2.3%) makes a number of products through Weston Foods, including fresh and frozen baked goods in Canada and frozen baked goods, biscuits, cookies, cones and wafers in the U.S. The company also owns a 63% interest in Loblaw (see left).
Weston’s revenue rose 1.3% in the three months ended June 30, 2012, to $7.63 billion from $7.53 billion a year earlier. Without one-time items, earnings per share fell 20.9%, to $1.06 from $1.34, largely due to a lower contribution from Loblaw.
The company holds cash of $3.6 billion, which it could use to increase its stake in Loblaw or make other investments to add to its growth.
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Weston’s revenue rose 1.3% in the three months ended June 30, 2012, to $7.63 billion from $7.53 billion a year earlier. Without one-time items, earnings per share fell 20.9%, to $1.06 from $1.34, largely due to a lower contribution from Loblaw.
The company holds cash of $3.6 billion, which it could use to increase its stake in Loblaw or make other investments to add to its growth.
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LOBLAW COMPANIES $34.65 (Toronto symbol L; Shares outstanding: 289.9 million; Market cap: $10.0 billion; TSINetwork Rating: Above Average; Dividend yield: 2.4%; www.loblaw.ca) is Canada’s largest food retailer, with about 1,000 stores.
In the three months ended June 16, 2012, Loblaw’s sales rose 1.3%, to $7.4 billion from $7.3 billion a year earlier. Overall sales at its supermarkets rose 1.1%, while same-store sales gained 0.2%. Revenue from its financial-services division, which mainly issues credit cards, rose 14.9%.
Earnings fell 19.3%, to $159 million, or $0.57 a share, from $197 million, or $0.70 a share, a year earlier. But the decline was mainly because Loblaw continues to invest in new computers as part of a far-reaching plan to improve its efficiency and avoid product shortages in its stores. In the latest quarter, the company spent $20 million on these initiatives.
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In the three months ended June 16, 2012, Loblaw’s sales rose 1.3%, to $7.4 billion from $7.3 billion a year earlier. Overall sales at its supermarkets rose 1.1%, while same-store sales gained 0.2%. Revenue from its financial-services division, which mainly issues credit cards, rose 14.9%.
Earnings fell 19.3%, to $159 million, or $0.57 a share, from $197 million, or $0.70 a share, a year earlier. But the decline was mainly because Loblaw continues to invest in new computers as part of a far-reaching plan to improve its efficiency and avoid product shortages in its stores. In the latest quarter, the company spent $20 million on these initiatives.
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BANK OF NOVA SCOTIA $53.87 (Toronto symbol BNS: Shares outstanding: 1.1 billion; Market cap: $63.6 billion; TSINetwork Rating: Above Average; Div. yield: 4.2%, www.scotiabank.com) continues to build on its extensive international operations.
The bank recently announced deals with China’s Bank of Xi’an and India’s Kotak Mahindra Bank that make it easier for immigrants, international students and foreign workers to transfer their accounts to Bank of Nova Scotia’s Canadian branches.
Once they arrive in Canada, these clients can also apply for credit cards and other services.
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The bank recently announced deals with China’s Bank of Xi’an and India’s Kotak Mahindra Bank that make it easier for immigrants, international students and foreign workers to transfer their accounts to Bank of Nova Scotia’s Canadian branches.
Once they arrive in Canada, these clients can also apply for credit cards and other services.
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