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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IVY GROWTH AND INCOME FUND $23.87 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor St. West, Toronto, Ont. M5S 3B5. 1-800-387-0780; Web site: www.mackenziefinancial.com. Load fund — available from brokers) is a balanced fund, holding a mixture of stocks, bonds and cash. The fund has returned 7.5% annually for the 10 years. It made 10.2% over the last year. The fund’s MER is 2.14%. The fund’s top stock holdings are Shoppers Drug Mart, PepsiCo, Omnicom Group (U.S. media services), Bank of Nova Scotia, Danaher Corp. (U.S. control products and tools), Reckitt Benckiser plc (UK household & healthcare products), Thomson Corp., Manulife Financial and United Parcel Service. This $3.5 billion fund holds 21% of its assets in bonds. Interest rates on bonds are now under 5% annually in Canada. That’s the total return that a bond can provide, from today until it matures. However, bonds leave investors at the mercy of inflation, which shrinks the purchasing power of all fixed-return investments. In fact, an upsurge in inflation could wipe out all returns on bonds, and some of their principal besides....
H&R REAL ESTATE INVESTMENT TRUST $25.75 (Toronto symbol HR.UN; SI Rating: Extra risk) holds interests in 34 office properties, 115 single-tenant industrial properties and 143 retail properties. Over half are in the Greater Toronto Area. The rest are elsewhere in Ontario, in Quebec, western Canada and the U.S. H&R aims to acquire only properties that it can lease long-term to creditworthy tenants. It now has an industry-leading portfolio occupancy rate of 99.6%. Revenue in the three months ended December 31, 2006 was $151.1 million, up 21.4% from $124.4 million a year earlier. Cash flow per unit fell 2.3%, to $0.43 from $0.44. H&R’s units now yield 5.3%....
CANADIAN REIT $32.98 (Toronto symbol REF.UN; SI Rating: Extra Risk) owns a portfolio of more than 140 income properties consisting of retail, industrial and office properties across Canada and in the Chicago, Illinois area. The company’s portfolio contains more than 19.1 million square feet of space.
CREIT’s revenue in the three months ended December 31, 2006 was $71.8 million, up 13.4% from $63.3 million a year earlier. Cash flow per unit was unchanged at $0.49. The units now yield 3.9%.
CREIT focuses on acquiring properties in prime locations, usually near major metropolitan centres, that attract strong tenants, maintain high occupancy rates and deliver a reliable stream of rental income.
Canadian REIT is a buy.
CREIT’s revenue in the three months ended December 31, 2006 was $71.8 million, up 13.4% from $63.3 million a year earlier. Cash flow per unit was unchanged at $0.49. The units now yield 3.9%.
CREIT focuses on acquiring properties in prime locations, usually near major metropolitan centres, that attract strong tenants, maintain high occupancy rates and deliver a reliable stream of rental income.
Canadian REIT is a buy.
RIOCAN REAL ESTATE INVESTMENT TRUST $26.61 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has total assets of $4.6 billion, consisting of ownership interests in a portfolio of 206 retail properties across Canada, including nine under development. These properties contain over 52.1 million square feet of leasable area. RioCan’s revenue in the three months ended December 31, 2006 was $151.2 million, up 8.8% from $138.9 million a year earlier. Cash flow per unit rose 14.7%, to $0.39 from $0.34. Portfolio occupancy is at an all-time high of 97.7%. RioCan’s annual distribution of $1.32 gives it a current yield of 5.0%. RioCan is still a buy.
GREAT-WEST LIFECO $36.20 (Toronto symbol GWO; SI Rating: Above-average) is a leading Canadian insurance company, with $210.6 billion in assets under administration. The company also provides wealth management and other financial services. It also operates in the U.S. and Europe. Power Financial controls about 75% of Great-West. Great-West’s earnings in the three months ended December 31, 2006 rose 4.9%, to $491 million or $0.55 a share from $456 million or $0.51. Revenues rose 29.7%, to $8.5 billion from $6.5 billion. Great-West recently raised its quarterly payout by 6.3%, to $0.255 from $0.24. It now yields 2.8%. Great-West has agreed to buy U.S.-based investment management firm and mutual fund company Putnam Investments Trust for $3.9 billion U.S. The deal also gives Great-West a 25% stake in Thomas H. Lee Partners, a private equity firm. It will more than double Great-West’s assets under administration....
MANULIFE FINANCIAL $39.22 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife has assets under administration of $414 billion, up 11.4% from $371.5 billion at the end of 2005. In the three months ended December 31, 2006. Manulife’s earnings rose 14%, to $1.1 billion or $0.70 a share, from $908 million or $0.56 a share a year earlier. Revenue rose 9.5%, to $9.2 billion from $8.4 billion. The shares yield 1.8%. Manulife’s operations are well diversified among life and health insurance, segregated mutual funds, and reinsurance. Its geographic diversification in the U.S. and Asia, including China, offers growth prospects....
SUN LIFE FINANCIAL $50.54 (Toronto symbol SLF; SI Rating: Above-average) offers savings, retirement, pension and life and health insurance products and services to individuals and corporations. The company operates mainly in Canada, the U.S. and the UK, and also in Asia and India. It has assets under administration of $436.5 billion. In the three months ended December 31. 2006, Sun Life’s earnings rose 14%, to $545 million or $0.95 a share, from $478 million or $0.82 a share a year earlier. Revenue rose 15%, to $6.1 billion from $5.3 billion a year earlier. The company recently raised its quarterly dividend by 6.7%, to $0.32 from $0.30. The shares now yield 2.4%. Sun Life is still a buy.
SCOTIA CANADIAN GROWTH FUND $69.01 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9 269; Website: www.scotiabank.com. No load — deal directly with the company.) uses fundamental analysis to identify what the managers see as investments that have the potential for above-average growth. The $609.0 million Scotia Canadian Growth Fund’s 10 largest holdings are Manulife, Suncor Energy, Royal Bank, TD Bank, Goldcorp, Petro-Canada, CN Railway, CIBC, Sun Life Financial and EnCana. Scotia Canadian Growth currently holds 31.5% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 19.7%....
CIBC CANADIAN EQUITY FUND $25.59 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.cibc.com. No load — deal directly with the company.) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify companies that trade at reasonable valuations and yet have growth potential. The $644.5 million fund’s top holdings are Petro- Canada, EnCana, Manulife Financial, Teck Cominco, Bank of Nova Scotia, TD Bank, Canadian National Railway, Bank of Montreal, National Bank and Suncor Energy. CIBC Canadian Equity holds 39.4% of its portfolio in Financial services stocks and 24.1% in Energy stocks....
BMO EQUITY FUND $31.63 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) generally invests in the shares of 20 to 40 “blue-chip” Canadian companies. These stocks are selected based on the manager’s outlook for the industry they operate in, the earnings record of each company, the strength of management, and the potential for growth. BMO Equity Fund’s 10 largest holdings are Manulife Financial, Suncor Energy, Royal Bank, TD Bank, Sun Life Financial, EnCana Corporation, Barrick Gold, CIBC, Bank of Nova Scotia and Telus. The $2.2 billion fund currently holds 35.9% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 20.0%....