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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MANULIFE FINANCIAL $22.70 (Toronto symbol MFC; Shares outstanding: 2.0 billion; Market cap: $45.4 billion; TSINetwork Rating: Above Average; Dividend yield: 3.0%; www.manulife.ca) sells life and other forms of insurance, as well as mutual funds and investment management services.
In the three months ended March 31, 2015, Manulife’s earnings per share gained 5.4%, to $0.39 from $0.37 a year earlier. Revenue rose 25.1%, to $7.83 billion from $6.26 billion.
The company continues to expand in growing Asian markets. Right now, about 40% of its insurance premiums come from that region, which is adding to its revenue and profits.
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In the three months ended March 31, 2015, Manulife’s earnings per share gained 5.4%, to $0.39 from $0.37 a year earlier. Revenue rose 25.1%, to $7.83 billion from $6.26 billion.
The company continues to expand in growing Asian markets. Right now, about 40% of its insurance premiums come from that region, which is adding to its revenue and profits.
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SUN LIFE FINANCIAL $41.43 (Toronto symbol SLF; Shares outstanding: 612.1 million; Market cap: $25.6 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.sunlife.ca) sells life insurance, savings, retirement and pension products to individuals and corporations. It has $812.6 billion of assets under management and mainly operates in Canada, the U.S. and the U.K. It’s also expanding in Asia.
In the three months ended March 31, 2015, Sun Life’s revenue rose 2.2%, to $3.72 billion from $3.64 billion a year earlier. Earnings per share gained 16.7%, to $0.84 from $0.72.
The company continues to expand its asset management business, which generates high profit margins and requires little capital investment. It recently paid $560 million for Bentall Kennedy Group, which manages more than $27 billion in real estate for over 550 institutional clients across the U.S. and Canada.
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In the three months ended March 31, 2015, Sun Life’s revenue rose 2.2%, to $3.72 billion from $3.64 billion a year earlier. Earnings per share gained 16.7%, to $0.84 from $0.72.
The company continues to expand its asset management business, which generates high profit margins and requires little capital investment. It recently paid $560 million for Bentall Kennedy Group, which manages more than $27 billion in real estate for over 550 institutional clients across the U.S. and Canada.
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LOBLAW COMPANIES $63.46 (Toronto symbol L; Shares outstanding: 412.6 million; Market cap: $26.3 billion; TSINetwork Rating: Above Average; Dividend yield: 1.6%; www.loblaw.ca) has sold 38 of its stores to Choice Properties Real Estate Investment Trust (Toronto symbol CHP.UN).
Loblaw received $201.3 million, which is equal to 66.9% of the $301.0 million, or $0.73 a share, it earned in the three months ended March 28, 2015.
That total included $102.2 million worth of Choice Properties’ units. As a result, Loblaw now owns 83.1% of this REIT. It also accounts for 91.0% of Choice’s earnings.
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Loblaw received $201.3 million, which is equal to 66.9% of the $301.0 million, or $0.73 a share, it earned in the three months ended March 28, 2015.
That total included $102.2 million worth of Choice Properties’ units. As a result, Loblaw now owns 83.1% of this REIT. It also accounts for 91.0% of Choice’s earnings.
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NEWMONT MINING $22.52 (New York symbol NEM; Shares outstanding: 529.0 million; Market cap: $11.9 billion; TSINetwork Rating: Average; Dividend yield: 0.4%; www.newmont.com) is buying the Cripple Creek & Victor gold mine in Colorado from AngloGold Ashanti (New York symbol AU) for $820 million.
Cripple Creek will produce 350,000 to 400,000 ounces of gold a year once it finishes an expansion in 2016. To put that in context, Newmont expects to produce 4.6 million to 4.9 million ounces this year. The mine should last until at least 2026.
To help pay for Cripple Creek, the company will sell 29.0 million common shares for a total of $682 million. Newmont also recently agreed to sell its Waihi gold mine in New Zealand for $101 million.
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Cripple Creek will produce 350,000 to 400,000 ounces of gold a year once it finishes an expansion in 2016. To put that in context, Newmont expects to produce 4.6 million to 4.9 million ounces this year. The mine should last until at least 2026.
To help pay for Cripple Creek, the company will sell 29.0 million common shares for a total of $682 million. Newmont also recently agreed to sell its Waihi gold mine in New Zealand for $101 million.
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ISHARES MSCI CANADA INDEX FUND $25.90 (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 1.6%.
The index’s top holdings are Royal Bank, 7.2%; TD Bank, 6.4%; Valeant Pharmaceuticals, 6.0%; Bank of Nova Scotia, 5.1%; CN Railway, 3.9%; Suncor Energy, 3.3%; Enbridge, 3.3%; Bank of Montreal, 3.1%; and Manulife Financial, 3.0%.
If you want to own a Canadian index fund, you should buy the iShares S&P/TSX 60 Index Fund (see previous page). You’ll pay about a third of the management fees.
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The index’s top holdings are Royal Bank, 7.2%; TD Bank, 6.4%; Valeant Pharmaceuticals, 6.0%; Bank of Nova Scotia, 5.1%; CN Railway, 3.9%; Suncor Energy, 3.3%; Enbridge, 3.3%; Bank of Montreal, 3.1%; and Manulife Financial, 3.0%.
If you want to own a Canadian index fund, you should buy the iShares S&P/TSX 60 Index Fund (see previous page). You’ll pay about a third of the management fees.
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POWERSHARES QQQ ETF $106.09 (Nasdaq symbol QQQ; buy or sell through brokers; www.invescopowershares.com), formerly called Nasdaq 100 Trust Shares, holds stocks representing the Nasdaq 100 Index, which 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 1.0%.
The index’s highest-weighted stocks are Apple, Microsoft, Amgen, Google, Cisco Systems, Intel Corp., Amazon.com, Gilead Sciences, Comcast and Facebook.
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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 1.0%.
The index’s highest-weighted stocks are Apple, Microsoft, Amgen, Google, Cisco Systems, Intel Corp., Amazon.com, Gilead Sciences, Comcast and Facebook.
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SPDR S&P 500 ETF $204.53 (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. companies that are chosen based on their market cap, liquidity and industry group.
The index’s highest-weighted stocks are Apple, ExxonMobil, Microsoft, Procter & Gamble, Johnson & Johnson, J.P. Morgan Chase, Pfizer, General Electric, Berkshire Hathaway and Wells Fargo & Co. The fund’s MER is just 0.10% and it yields 2.0%.
If you want exposure to the S&P 500 Index, the SPDR S&P 500 ETF is a buy.
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The index’s highest-weighted stocks are Apple, ExxonMobil, Microsoft, Procter & Gamble, Johnson & Johnson, J.P. Morgan Chase, Pfizer, General Electric, Berkshire Hathaway and Wells Fargo & Co. The fund’s MER is just 0.10% and it yields 2.0%.
If you want exposure to the S&P 500 Index, the SPDR S&P 500 ETF is a buy.
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ISHARES CANADIAN SELECT DIVIDEND INDEX ETF $23.07 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highestyielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of the ETF’s assets. The fund’s MER is 0.55%, and it yields 4.5%. The fund’s top holdings are CIBC, 8.5%; Bank of Montreal, 6.3%; Royal Bank, 6.3%; Bank of Nova Scotia, 5.4%; BCE, 5.3%; Laurentian Bank of Canada, 4.4%; IGM Financial, 4.3%; TD Bank, 4.1%; National Bank, 4.1%; Rogers Communications, 4.1%; and TransCanada Corp., 4.0%.
The ETF holds 53.7% of its assets in financial stocks. The top Canadian finance stocks have sound prospects, but 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 ETF $21.18 (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 0.18% of assets, and it yields 3.0%.
The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include. The index’s top holdings are Royal Bank, 7.9%; TD Bank, 7.1%; Valeant Pharmaceuticals, 6.6%; Bank of Nova Scotia, 5.6%; CN Railway, 4.2%; Suncor Energy, 3.6%; Enbridge, 3.6%; Bank of Montreal, 3.4%; BCE, 3.3%; Manulife Financial, 3.3%; Brookfield Asset Management, 2.8%; and Canadian Natural Resources, 2.6%.
iShares S&P/TSX 60 Index ETF is a buy.
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The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include. The index’s top holdings are Royal Bank, 7.9%; TD Bank, 7.1%; Valeant Pharmaceuticals, 6.6%; Bank of Nova Scotia, 5.6%; CN Railway, 4.2%; Suncor Energy, 3.6%; Enbridge, 3.6%; Bank of Montreal, 3.4%; BCE, 3.3%; Manulife Financial, 3.3%; Brookfield Asset Management, 2.8%; and Canadian Natural Resources, 2.6%.
iShares S&P/TSX 60 Index ETF is a buy.
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IBM $163.16 (New York symbol IBM; Shares outstanding: 984.7 million; Market cap: $162.5 billion; TSINetwork Rating: Above Average; Dividend yield: 3.2%; www.ibm.com) has formed an alliance with Box Inc. (New York symbol BOX), which sells cloud-storage services to businesses.
Under the deal, IBM will develop programs that combine its analytics software with Box’s cloud-based data. It will also integrate some of Box’s programs with its business email and online collaboration services, while Box’s clients will gain access to IBM’s consultants and online security technologies.
Teaming up with Box should help IBM compete with cloud-computing providers like Amazon.com and Oracle.
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Under the deal, IBM will develop programs that combine its analytics software with Box’s cloud-based data. It will also integrate some of Box’s programs with its business email and online collaboration services, while Box’s clients will gain access to IBM’s consultants and online security technologies.
Teaming up with Box should help IBM compete with cloud-computing providers like Amazon.com and Oracle.
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