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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SPDR DOW JONES INDUSTRIAL AVERAGE ETF $176.32 (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average. This ETF’s top holdings are Goldman Sachs, IBM, Home Depot, Travelers Cos., Johnson & Johnson, UnitedHealth, United Technologies, McDonald’s, 3M and Boeing. The fund’s expenses are about 0.17% of its assets, and it yields 2.4%. SPDR Dow Jones ETF is a buy.
POWERSHARES QQQ ETF $105.05 (Nasdaq symbol QQQ; buy or sell through brokers; www. invescopowershares.com), formerly called Nasdaq 100 Trust Shares, holds stocks representing the Nasdaq 100 Index. That consists of the 100 largest shares on the Nasdaq exchange by 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 firms. The fund’s expenses are about 0.20% of its assets. It yields 1.2%. The index’s highest-weighted stocks are Apple, Microsoft, Texas Instruments, Alphabet Inc., Cisco Systems, Intel Corp., Amazon.com, Gilead Sciences, Comcast and Facebook....
ISHARES MSCI CANADA INDEX FUND $24.16 (New York symbol EWC; buy or sell through brokers; ca.ishares.com) holds the stocks in the Morgan Stanley Capital International Canada Index. The fund has a 0.48% MER and yields 2.4%. The index’s top holdings are Royal Bank, 7.9%; TD Bank, 7.1%; Bank of Nova Scotia, 5.4%; CN Railway, 4.2%; Suncor Energy, 4.0%; Bank of Montreal, 3.6%; Enbridge, 3.3%; Canadian Natural Resources, 2.8%; and CIBC, 2.8%. If you want to own a Canadian index fund, you should buy the iShares S&P/TSX 60 Index ETF (see previous page). You’ll pay about a third of the management fees....
GREAT-WEST LIFECO $36.60 (Toronto symbol GWO; Shares outstanding: 993.2 million; Market cap: $36.4 billion; TSINetwork Rating: Above Average; Yield: 3.8%; www.greatwestlifeco.com) is one of Canada’s largest insurance firms. The company also offers mutual funds and wealth management services. Power Financial owns 67.2% of Great-West. In the past few years, the insurer has expanded its presence in Ireland. In July 2013, it paid $1.75 billion for Irish Life, that country’s largest pension manager and life insurance provider. Irish Life has now announced two purchases: it is buying Aviva Health, and increasing its stake in GloHealth from 49% to 100%....
RIOCAN REIT $27.17 (Toronto symbol REI.UN; Units outstanding: 322.4 million; Market cap: $8.8 billion; TSINetwork Rating: Average; Dividend yield: 5.2%; www.riocan.com) formed a 50/50 joint venture in July 2012 with ALLIED PROPERTIES REIT $35.35 (Toronto symbol AP.UN; Units outstanding: 78.5 million; Market cap: $2.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.2%; www.alliedreit.com). Their goal was to purchase buildings in urban areas and “intensify” their revenue and cash flow, mainly by adding tenants. RioCan manages the retail portion of these developments, while Allied handles the office portion. The partners own the King-Portland Centre in downtown Toronto, among others. They are now building a new office/retail structure on the site. This week, online shopping firm Shopify Inc. agreed to become the anchor tenant for the building. RioCan and Allied expect to complete this project in 2018....
BCE INC. $59.10 (Toronto symbol BCE; Shares outstanding: 868.1 million; Market cap: $50.8 billion; TSINetwork Rating: Above Average; Dividend yield: 4.6%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also offers satellite and Internet TV across the country. In the three months ended March 31, 2016, the company’s earnings per share rose 1.2%, to $0.85 from $0.84 a year earlier. Revenue increased slightly, to $5.27 billion from $5.24 billion. Revenue from wireless services (30% of the total) rose 5.3% as the company’s network upgrades continued to attract new subscribers. BCE also benefited from the rising use of smartphones. It can charge higher service fees for those devices than for regular cellphones....
TELUS $39.66 (Toronto symbol T; Shares outstanding: 593.3 million; Market cap: $23.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.6%; www.telus.com) is Canada’s second-largest wireless carrier (behind Rogers Communications) with 8.4 million subscribers. In addition, its wireline division serves 3.1 million landline phone customers in B.C., Alberta and eastern Quebec. This business also has 1.5 million Internet users and 980,000 TV customers. Telus will now extend its reach into Manitoba with BCE’s takeover of Manitoba Tel (see page 33). To satisfy Canadian telecom regulators, BCE plans to sell to Telus about one-third of Manitoba Telecom’s current postpaid wireless accounts, or a block of about 140,000 subscribers. BCE will also transfer one-third of Manitoba Tel’s retail outlets to Telus. In the three months ended March 31, 2016, the company earned $414 million, down 3.0% from $427 million a year earlier. However, earnings per share were unchanged at $0.70, due to fewer shares outstanding. Revenue gained 2.6%, to $3.11 billion from $3.03 billion....
TD BANK $55.77 (Toronto symbol TD; Shares outstanding: 1.9 billion; Market cap: $103.5 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.td.com) is the first Canadian bank to use Visa’s new tokenization technology in its mobile banking app. This system uses encrypted “tokens” instead of credit card numbers and other account information. That helps protect sensitive client information from online intruders. It also speeds up mobile payments and other transactions. Better security should encourage more of TD’s customers to do their banking online. That would cut its costs as electronic transactions are cheaper to process than those in physical branches....
ENBRIDGE INC. $50.95 (Toronto symbol ENB; Shares outstanding: 924.3 million; Market cap: $47.5 billion; TSINetwork Rating: Above Average; Divd. yield: 4.2%; www.enbridge.com) has received Canadian regulatory approval to replace its Line 3 pipeline, which began operating in the 1960s. It pumps crude oil from Hardisty, Alberta, to Superior, Wisconsin. U.S. regulators have already approved the plan. The project will also enlarge the line’s capacity, from 390,000 barrels a day to 760,000 barrels. Enbridge expects to complete these upgrades by 2019. Regulators have imposed 89 conditions on the project—mainly additional measures to improve safety and environmental protections. But these conditions are unlikely to increase the project’s $7.5 billion cost....
PENGROWTH ENERGY $1.82 (Toronto symbol PGF; Shares outstanding: 543.0 million; Market cap: $1.1 billion; TSINetwork Rating: Speculative; No dividends paid; www.pengrowth.com) started up its Lindbergh oil sands project in Alberta in April 2015. The project includes an electrical power plant that provides the operation with steam used to melt the tar-like bitumen. That makes it easier to pump to the surface. The provincial power grid then buys the company’s excess power. Pengrowth is now selling this plant to a local First Nations group for $35 million. As part of the deal, Pengrowth will lease back the facility for 20 years and continue to operate it....