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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CANADIAN REIT $43.00 (Toronto symbol REF.UN; Units outstanding: 73.0 million; Market cap: $3.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.2%; www.creit.ca) owns 197 properties, including retail, industrial and office buildings, across Canada and in Chicago. These holdings contain 24.9 million square feet of leasable area. The trust’s occupancy rate is 93.8%. In the three months ended December 31, 2015, Canadian REIT’s revenue rose 1.0%, to $110.6 million from $109.5 million a year earlier. Cash flow per unit gained 1.3%, to $0.76 from $0.754. The trust aims to expand by developing its own properties rather than through large acquisitions. Over the next two to three years, it’s developing 12 projects to add 1.1 million square feet of space. Canadian REIT takes on partners to help carry out big projects....
H&R REIT $18.72 (Toronto symbol HR.UN; Units outstanding: 279.6 million; Market cap: $5.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.2%; www.hr-reit.com) owns or has a stake in 517 office buildings, industrial properties and shopping malls in Canada and the U.S. In all, these holdings include 47.2 million square feet of leasable space. In December 2014, Canadian REIT sold part ownership in 101 industrial properties, or a total of 19.5 million square feet, for $731 million. The buyers included the Canadian Public Sector Pension Investment Board. H&R kept a 50% interest in the Canadian properties and a 49.5% stake in the U.S. portfolio. It continues to manage these assets and receives fees for doing so. H&R also held on to full ownership of 14 other industrial properties....
ISHARES CDN REIT SECTOR INDEX FUND $15.10 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index. Expenses for iShares CDN REIT are 0.60% of its assets. The fund yields 6.0%. The ETF’s largest holding is RioCan REIT at 20.6%, followed by H&R REIT (12.9%), Canadian Apartment Properties REIT (9.2%), Smart REIT (9.1%), Canadian REIT (7.7%), Allied Properties REIT (6.4%), Cominar REIT (6.2%), Dream Office REIT (5.4%), Boardwalk REIT (4.7%), Granite REIT (4.5%), Artis REIT (4.2%), Crombie REIT (2.6%), Dream Global REIT (2.2%), Pure Industrial REIT (2.1%) and Northview Apartment REIT (1.9%)....
ENCANA $6.14 (Toronto symbol ECA; Shares outstanding: 849.8 million; Market cap: $4.9 billion; TSINetwork Rating: Average; Dividend yield: 1.4%; www.encana.com) plans to spend $1.5 billion to $1.7 billion upgrading its properties in 2016, down 25% from 2015 (all amounts except share price and market cap in U.S. dollars). Even with the drop, it expects production at its four main oil projects—Montney (B.C.), Duvernay (Alberta) and Eagle Ford and Permian (both in Texas)—will rise 12% this year. The company has also cut its annual dividend rate by 78.6%, to $0.06 a share from $0.28. In addition, Encana has eliminated the 2% price discount it offered to shareholders who chose to reinvest their dividends in new shares. In all, these moves will save $185 million a year....
POWER CORP. $28.98 (Toronto symbol POW; Shares outstanding: 414.4 million; Market cap: $13.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.3%; www.powercorporation.com) holds its financial assets through its 65.7% ownership of Power Financial. That holding includes 58.7% of IGM Financial, a leading Canadian mutual fund provider. IGM had $131.0 billion worth of assets under management as of January 31, 2016, down 9.9% from $145.5 billion a year earlier. The company’s fee income rises and falls with the value of the mutual funds and other securities it manages, so its revenue and earnings decline when the price of these assets falls. However, IGM sells most of its funds through its own salesforce. This makes it less dependent on selling through the brokerage industry than its competitors. Its sales model also lets IGM form close relationships with its clients and keep redemption rates down....
MANITOBA TELECOM SERVICES INC. $33.27 (Toronto symbol MBT; Shares outstanding: 79.3 million; Market cap: $2.6 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.mts.ca) has completed the sale of its Allstream division to U.S.-based Zayo Group (New York symbol ZAYO)....
NEWMONT MINING $26.26 (New York symbol NEM; Shares outstanding: 529.1 million; Market cap: $13.4 billion; TSINetwork Rating: Average; Dividend yield: 0.4%; www.newmont.com) is one of the world’s largest gold and copper producers, with major mines in the U.S., Peru, Suriname, Australia, Ghana and Indonesia. Newmont’s shares have gained 41% since the start of 2016. That’s mainly because the recent volatility in global stock markets has pushed up gold prices during the same period by 17% to $1,242 an ounce. Rising gold prices will also improve the profitability of Newmont’s Cripple Creek & Victor gold mine in Nevada. The company acquired the operation in August 2015. Newmont expects its overall operating costs will fall as it opens new mines in the next few years....
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ISHARES MSCI GERMANY FUND $24.15 (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index. This index aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership. The ETF’s top holdings are Bayer (diversified chemicals), 8.9%; SAP (software), 7.6%; Siemens (engineering conglomerate), 7.3%; Allianz (insurance), 7.1%; Daimler (automobiles), 6.5%; BASF (chemicals), 5.9%; Deutsche Telekom, 5.5%; Munich Reinsurance, 3.1%; BMW AG, 2.7%; Fresenius (health care), 2.5%; Linde AG (industrial gases), 2.4%; Deutsche Bank AG, 2.4%; and Deutsche Post AG, 2.3%....