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A Member of Pat McKeough’s Inner Circle asked for his advice on an ETF that focuses on Canadian finance firm common shares, preferred shares and corporate bonds.
Pat likes the high distribution rate but warns that rate may be unsustainable....
Pat likes the high distribution rate but warns that rate may be unsustainable....
BOMBARDIER INC., Toronto symbols BBD.A $1.50 and BBD.B $1.42, announced this week that it will form a new joint venture with the government of Quebec.
Under the deal, the government pay $1.0 billion for 49.5% of a partnership that will own the CSeries passenger jet business (all amounts except share prices in U.S. dollars). Bombardier will own the remaining 50.5%.
The company is also giving Quebec warrants to buy up to 200 million class B subordinate voting shares at the U.S. dollar equivalent of $2.21 (Canadian) each. The warrants expire in five years. If Quebec exercises all of them, the extra shares would equal 8.18% of the total class A and B shares currently outstanding.
Bombardier has also promised to keep its headquarters and CSeries plants in Quebec for the next 20 years.
The cash from this sale will help Bombardier finish certifying the CSeries; flight tests are now 97% complete. Quebec’s backing should also help attract more buyers. The company has firm orders for 243 CSeries planes but hasn’t received any new orders in the past year.
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Under the deal, the government pay $1.0 billion for 49.5% of a partnership that will own the CSeries passenger jet business (all amounts except share prices in U.S. dollars). Bombardier will own the remaining 50.5%.
The company is also giving Quebec warrants to buy up to 200 million class B subordinate voting shares at the U.S. dollar equivalent of $2.21 (Canadian) each. The warrants expire in five years. If Quebec exercises all of them, the extra shares would equal 8.18% of the total class A and B shares currently outstanding.
Bombardier has also promised to keep its headquarters and CSeries plants in Quebec for the next 20 years.
The cash from this sale will help Bombardier finish certifying the CSeries; flight tests are now 97% complete. Quebec’s backing should also help attract more buyers. The company has firm orders for 243 CSeries planes but hasn’t received any new orders in the past year.
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Visa has shot up 310.5% since we first recommended it at $19 (adjusted for a 4-for-1 share split in March 2015) in our December 2010 issue, but we think it still has plenty of room to rise. The company will continue to benefit as consumers switch from cash to credit and debit cards, and it’s well-positioned to profit from the continued growth of online shopping. Meantime, its popular and well-respected brand is helping it expand in developing countries. VISA INC. $79 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 2.4 billion; Market cap: $189.6 billion; Price-to-sales ratio: 13.9; Dividend yield: 0.7%; TSINetwork Rating: Above Average; www.visa.com) operates the world’s largest electronic payments network, through which it processes credit, debit, prepaid and commercial transactions. The company’s systems can process over 56,000 transactions per second....
ALPHABET INC. (Nasdaq symbols GOOG $713 [class C: non-voting] and GOOGL $737 [class A: one vote per share]; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 680.2 million; Market cap: $491.0 billion; Price-tosales ratio: 6.8; No dividends paid; TSINetwork Rating: Above Average; www.abc.xyz) is the new parent company for Google’s Internet search business (still called Google) and other operations, such as self-driving cars and home thermostats. Each of these subsidiaries will function independently. In the three months ended September 30, 2015, earnings gained 18.7%, to $5.1 billion from $4.3 billion a year earlier. Per-share profits rose 17.6%, to $7.35 from $6.25, on more shares outstanding. Revenue rose 13.0%, to $18.7 billion from $16.5 billion. The number of paid clicks on advertisers’ads rose 23% in the latest quarter, helping offset an 11% drop in the average cost advertisers paid per click. More users are accessing the Internet with mobile devices, but advertisers pay lower rates for mobile ads because they’re harder to see on smaller screens....
Low interest rates are cutting the income these lenders earn on new loans. At the same time, they’ve had to increase the rates they pay out to attract depositors, which has squeezed their margins. In response, they’re making acquisitions and cutting costs. These moves should fuel their earnings, particularly as interest rates will likely rise in 2016. WELLS FARGO & CO. $55 (New York symbol WFC; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 5.1 billion; Market cap: $280.5 billion; Price-to-sales ratio: 3.3; Dividend yield: 2.7%; TSINetwork Rating: Average; www.wellsfargo.com) operates through three divisions: Community Banking provides mortgages, loans, credit cards and other financial services (57% of 2014 revenue, 59% of earnings); Wholesale Banking supplies business loans (27%, 32%); and Wealth, Brokerage and Retirement offers wealth management, brokerage and trust services to individuals and institutions, such as pension plans (16%, 9%)....