diversification
What is diversification?
Diversification involves the planned distribution of investments across various securities to minimize the risk exposure to a specific industry or geographic segment. However, the risk of over-diversification exists, in which an investor can at best expect to mirror the market returns, minus any brokerage fees or management expenses.
What is diversification?
Today, we look at a hedged ETF, a BMO dividend fund that Pat McKeough was asked to evaluate by a Member of his Inner Circle....
CVR Refining LP, $17.82, symbol CVRR on New York (Shares outstanding: 147.6 million; Market cap: $2.6 billion; www.cvrrefining.com), refines and markets fuels. The company operates a 115,000-barrel-a-day oil refinery in Kansas and another (70,000 barrels a day) in Oklahoma. CVR’s subsidiaries support these refineries with 540 kilometres of pipelines, more than 150 oil-transport trucks, a network of oil-gathering tanks and over six million barrels of owned and leased storage capacity. The company is majority owned and operated by CVR Energy, which itself is majority owned by activist investor Carl Icahn....
BMO US Dividend Hedged to CAD ETF, $17.36, symbol ZUD on Toronto (Units outstanding: 5.3 million; Market cap: $92.0 million; www.etfs.bmo.com), holds U.S. stocks that have maintained or increased their dividend rates over the last three years and meet other criteria, including yield and dividend payout ratio. The fund’s managers rebalance the underlying portfolio in June and December. Top holdings are Philip Morris International, ONEOK Inc., Garmin, Noble Corp., Verizon Communications, Mattel, Williams Cos., Gamestop, McDonald’s and Darden Restaurants. The ETF is hedged against movements of foreign currencies against the Canadian dollar. Its value rises and falls solely with the stocks in its portfolio, so it wouldn’t give you any diversification through foreign currency exposure....
GOODYEAR TIRE & RUBBER CO. $32.22 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 269.6 million; Market cap: $8.8 billion; Dividend yield: 0.7%) is the world’s largest tire maker, with 50 plants in 22 countries. In the three months ended June 30, 2015, Goodyear’s revenue fell 10.4%, to $4.17 billion from $4.66 billion a year earlier. The rising U.S. dollar cut the contribution from the company’s foreign sales (particularly in Europe and Brazil) by $401 million. Excluding one-time items, earnings rose 1.8%, to $229.0 million, or $0.84 a share, well ahead of the consensus estimate of $0.74. A year earlier, the company earned $225.0 million, or $0.80 a share....
Because it’s always important to diversify beyond Canada, a look at two Vanguard ETFs that offer a low-fee way to achieve diversification.
With subprime loans shrinking and a new deal with GE Capital in hand, blue chip stock Wells Fargo should easily keep raising its dividend.
Simplifying operations and boosting its balance sheet under new capital rules, JP Morgan Chase remains one of our top U.S. dividend stocks.
WESTJET AIRLINES LTD., $24.07, symbol WJA on Toronto, has announced that its pilots have rejected plans to form a union, with 55% voting against and 45% in favour. The result follows a June 2015 vote in which 82% of the company’s almost 3,000 flight attendants approved a new five-year work agreement. That deal was important because it ended a unionization drive some flight attendants started more than a year ago. The company has a great hidden asset in its non-union workforce, as many flyers find that it provides friendlier service than they get from unionized airlines. WestJet also benefits from the fact that most of its employees are shareholders....
Takeovers help Genuine Parts sustain growth—and dividend hikes—in a cyclical field. Our take on how lower gasoline prices help its outlook.