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 S&P 500 ETF $206.43 (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 expenses are just 0.10% of its assets.
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 expenses are just 0.10% of its assets.
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 $23.80 (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 4.2%.
The fund’s top holdings are CIBC, 8.4%; Bank of Montreal, 6.3%; Royal Bank, 6.1%; Bank of Nova Scotia, 5.3%; BCE, 5.1%; IGM Financial, 4.7%; Ag Growth International, 4.4%; Laurentian Bank of Canada, 4.3%; TransCanada Corp., 4.2%; and TD Bank, 4.0%.
The ETF holds 53.5% of its assets in financial stocks. 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, 8.4%; Bank of Montreal, 6.3%; Royal Bank, 6.1%; Bank of Nova Scotia, 5.3%; BCE, 5.1%; IGM Financial, 4.7%; Ag Growth International, 4.4%; Laurentian Bank of Canada, 4.3%; TransCanada Corp., 4.2%; and TD Bank, 4.0%.
The ETF holds 53.5% of its assets in financial stocks. 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 ETF $21.90 (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, 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, 7.8%; TD Bank, 7.1%; Valeant Pharmaceuticals, 5.6%; Bank of Nova Scotia, 5.4%; CN Railway, 4.8%; Suncor Energy, 3.6%; Enbridge, 3.6%; Bank of Montreal, 3.5%; BCE, 3.2%; Manulife Financial, 3.1%; Canadian Natural Resources, 2.9%; Trans- Canada Corp., 2.8%; Brookfield Asset Management, 2.7%; CIBC, 2.6%; and CP Rail, 2.5%.
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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, 7.8%; TD Bank, 7.1%; Valeant Pharmaceuticals, 5.6%; Bank of Nova Scotia, 5.4%; CN Railway, 4.8%; Suncor Energy, 3.6%; Enbridge, 3.6%; Bank of Montreal, 3.5%; BCE, 3.2%; Manulife Financial, 3.1%; Canadian Natural Resources, 2.9%; Trans- Canada Corp., 2.8%; Brookfield Asset Management, 2.7%; CIBC, 2.6%; and CP Rail, 2.5%.
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TELUS $42.07 (Toronto symbol T; Shares outstanding: 609.0 million; Market cap: $25.7 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.telus.com) continues to expand its health care division, which helps doctors, pharmacies and hospitals convert patient records and other information to electronic formats.
The company recently paid an undisclosed sum for Quebec-based Medesync, a privately held maker of cloud-based software that lets doctors access patient data and other information from any computer or mobile device. Medesync’s software also makes it easier for doctors to schedule checkups, view test results and process billing.
As well, Medesync is linked to over 3,000 Quebec pharmacies, so doctors can submit a patient’s prescription directly.
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The company recently paid an undisclosed sum for Quebec-based Medesync, a privately held maker of cloud-based software that lets doctors access patient data and other information from any computer or mobile device. Medesync’s software also makes it easier for doctors to schedule checkups, view test results and process billing.
As well, Medesync is linked to over 3,000 Quebec pharmacies, so doctors can submit a patient’s prescription directly.
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VERESEN $16.68 (Toronto symbol VSN; Shares outstanding: 286.1 million; Market cap: $4.7 billion; TSINetwork Rating: Average; Dividend yield: 6.0%; www.vereseninc.com) owns pipelines, power plants and gas-processing facilities across North America.
A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Veresen also owns the Alberta Ethane Gathering System, 42.7% of the Aux Sable NGL plant and the Hythe/Steeprock natural gas gathering and processing complex in the Cutbank Ridge region of Alberta and B.C.
In the quarter ended December 31, 2014, Veresen’s cash flow per share fell 7.1%, to $0.26 from $0.28 a year earlier.
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A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Veresen also owns the Alberta Ethane Gathering System, 42.7% of the Aux Sable NGL plant and the Hythe/Steeprock natural gas gathering and processing complex in the Cutbank Ridge region of Alberta and B.C.
In the quarter ended December 31, 2014, Veresen’s cash flow per share fell 7.1%, to $0.26 from $0.28 a year earlier.
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PEMBINA PIPELINE $40.02 (Toronto symbol PPL; Shares outstanding: 336.0 million; Market cap: $13.5 billion; TSINetwork Rating: Average; Dividend yield: 4.4%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil.
Pembina also owns extensive facilities to extract, process and store NGLs.
In the quarter ended December 31, 2014, Pembina’s cash flow per share fell 16.9%, to $0.49 from $0.59. However, that’s mainly because lower oil and gas prices cut volumes and profit margins at its NGL extraction business.
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Pembina also owns extensive facilities to extract, process and store NGLs.
In the quarter ended December 31, 2014, Pembina’s cash flow per share fell 16.9%, to $0.49 from $0.59. However, that’s mainly because lower oil and gas prices cut volumes and profit margins at its NGL extraction business.
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LOBLAW COMPANIES $61.92 (Toronto symbol L; Shares outstanding: 412.5 million; Market cap: $25.6 billion; TSINetwork Rating: Above Average; Dividend yield: 1.6%; www.loblaw.ca) is Canada’s largest food retailer, with about 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills. George Weston Ltd. owns 46% of the company.
In the three months ended January 3, 2015, Loblaw’s sales jumped 49.4%, to $11.4 billion from $7.6 billion a year earlier. The gain was mainly due to the 1,300-store Shoppers Drug Mart chain, which the company bought in March 2014. Same-store sales rose 3.3% at Loblaw’s supermarkets and 3.8% at Shoppers.
Excluding integration costs and other unusual items, Loblaw’s earnings jumped 146.0%, to $396 million from $161 million. Per-share profits gained 68.4%, to $0.96 from $0.57, on more shares outstanding.
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In the three months ended January 3, 2015, Loblaw’s sales jumped 49.4%, to $11.4 billion from $7.6 billion a year earlier. The gain was mainly due to the 1,300-store Shoppers Drug Mart chain, which the company bought in March 2014. Same-store sales rose 3.3% at Loblaw’s supermarkets and 3.8% at Shoppers.
Excluding integration costs and other unusual items, Loblaw’s earnings jumped 146.0%, to $396 million from $161 million. Per-share profits gained 68.4%, to $0.96 from $0.57, on more shares outstanding.
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While this split-share company dabbles in call options, investors would be better off buying the bank and oil stocks it holds separately.
Helped by a rise in online shopping and a string of takeovers in international markets, FedEx is taking off.
Pat McKeough responds to many requests from members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions.
Q: What is your opinion of the following investment: First Capital Realty? Thanks.
A: First Capital Realty Inc. (symbol FCR on Toronto; www.firstcapitalrealty.ca) owns, develops and operates shopping centres throughout Canada. It focuses on big cities, including Toronto, Montreal, Calgary, Vancouver, Ottawa and Edmonton.
First Capital owns interests in 157 properties. Supermarkets and drugstores account for 31% of its rental revenue, followed by national and discount retailers (15%), medical clinics, gyms and daycare facilities (14%), restaurants (13%) and banks and government offices (11%). Other retailers supply the remaining 16%.
The company’s largest tenants include Sobeys, Loblaw, Metro, Canadian Tire, Wal-Mart and Dollarama.
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Q: What is your opinion of the following investment: First Capital Realty? Thanks.
A: First Capital Realty Inc. (symbol FCR on Toronto; www.firstcapitalrealty.ca) owns, develops and operates shopping centres throughout Canada. It focuses on big cities, including Toronto, Montreal, Calgary, Vancouver, Ottawa and Edmonton.
First Capital owns interests in 157 properties. Supermarkets and drugstores account for 31% of its rental revenue, followed by national and discount retailers (15%), medical clinics, gyms and daycare facilities (14%), restaurants (13%) and banks and government offices (11%). Other retailers supply the remaining 16%.
The company’s largest tenants include Sobeys, Loblaw, Metro, Canadian Tire, Wal-Mart and Dollarama.
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