diversification

DUNDEE REIT, $34.63, symbol D.UN on Toronto, owns and manages 18.9 million square feet of office, industrial and retail space. The real estate investment trust’s occupancy rate is 95.6%. In the three months ended December 31, 2011, Dundee’s revenue jumped 73.2%, to $136.3 million from $78.7 million a year earlier. Most of the increase came from properties the trust recently purchased. The best way to assess a real estate investment trust’s operating performance is to look at its cash flow, and Dundee’s cash flow rose 62.6% in the latest quarter, to $41.0 million from $25.2 million. Cash flow per unit rose 12.7%, to $0.62 from $0.55, due to more units outstanding (the trust issued new units to pay for the acquired properties)....

As the stock market rebounded in 2009 from one of the worst crises in years, Pat McKeough was invited by Jonathan Chevreau of the Financial Post to appear on his ‘Wealthy Boomer’ telecast. In a two-part interview, Pat aired his views on a wide variety of investment subjects. Now, with the stock market coming off last autumn’s lows, we think it’s an appropriate time to replay the interview. Pat discusses not only specific solutions for volatile markets, but also how his investment advice applies in all market conditions. Here is part two of the interview, entitled “Spreading investments” on YouTube. (View part one here: Pat McKeough’s investment ideas as shown on YouTube.)...

Our view is that virtually all Canadian investors should have 20% to 30% of their portfolios in U.S. stocks, like the ones we recommend in Wall Street Stock Forecaster. We feel now is a good time to hold high-quality U.S. stocks, and we see U.S. dollar exposure as a plus—a valuable form of diversification. Another option is to add some foreign exchange traded funds (ETFs), such as those we recommend in Canadian Wealth Advisor, to your portfolio in reasonable quantities, perhaps 10% of your holdings if you are a conservative investor (including 5% or so in higher-risk funds, such as emerging market ETFs)....

CANADIAN REIT $36.18 (Toronto symbol REF.UN; Units outstanding: 67.3 million; Market cap: $2.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.0%; www.creit.ca) owns over 160 properties, including retail, industrial and office buildings, located across Canada and in the Chicago area. These properties contain over 24 million square feet of leasable area. Its occupancy rate is 93.7%.

In the three months ended September 30, 2011, the real estate investment trust’s revenue rose 5.5%, to $83.7 million from $79.4 million a year earlier. Cash flow per unit rose 5.3%, to $0.60 from $0.57.

Canadian REIT bought $264.5 million of properties in 2011, including its June 2011 purchase of two fully leased malls in Mississauga, Ontario, for $174.4 million. Tenants include Future Shop, Famous Players, Chapters, Rona and National Sports.

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SHERRITT INTERNATIONAL $6.36 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 296.4 million; Market cap: $1.9 billion; Dividend yield: 2.4%) is a diversified natural-resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 376 megawatts of power-generation capacity in Cuba. Sherritt is a major nickel producer, with operations in Cuba and Canada. It is also close to finishing a mine at its 40%-owned Ambatovy project on the island nation of Madagascar, off Africa’s east coast. As well, Sherritt produces oil and gas in Cuba, Spain and Pakistan. It is also Canada’s largest thermal coal producer. In the three months ended September 30, 2011, Sherritt’s earnings jumped 102.2%, to $45.5 million, or $0.15 a share. A year earlier, it earned $22.5 million, or $0.07 a share. Revenue rose 13.0%, to $466.4 million from $412.7 million. Higher coal and oil prices were the main reasons for the improved results....

SHERRITT INTERNATIONAL $6.36 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704-6698; www.sherritt.com; Shares outstanding: 296.4 million; Market cap: $1.9 billion; Dividend yield: 2.4%) is a diversified natural-resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 376 megawatts of power-generation capacity in Cuba.

Sherritt is a major nickel producer, with operations in Cuba and Canada. It is also close to finishing a mine at its 40%-owned Ambatovy project on the island nation of Madagascar, off Africa’s east coast. As well, Sherritt produces oil and gas in Cuba, Spain and Pakistan. It is also Canada’s largest thermal coal producer.

In the three months ended September 30, 2011, Sherritt’s earnings jumped 102.2%, to $45.5 million, or $0.15 a share. A year earlier, it earned $22.5 million, or $0.07 a share. Revenue rose 13.0%, to $466.4 million from $412.7 million. Higher coal and oil prices were the main reasons for the improved results.

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Recovering global economies should boost oil and natural gas prices—although rising oil sands and shale gas production could hold back those increases. Imperial Oil’s large oil and gas reserves should last for decades. But the company also owns four refineries and operates 1,850 Esso gas stations. This diversification helps shield Imperial from volatile oil and gas prices and further cuts its risk. IMPERIAL OIL $46.03 (Toronto symbol IMO; Shares outstanding: 850.5 million; Market cap: $39.1 billion; TSINetwork Rating: Average; Dividend yield: 1.0%; www.imperialoil.ca) is a major integrated-oil company that gets most of its production from its oil sands projects in Alberta. Imperial also has conventional oil and natural-gas operations in western Canada, and it holds interests in offshore projects in Atlantic Canada. In the three months ended September 30, 2011, Imperial’s earnings jumped 105.5%, to $859 million, or $1.01 a share. A year earlier, it earned $418 million, or $0.49 a share. Imperial increased its oil sands production and benefited from rising oil prices and improved refinery profits. Revenue rose 35.8%, to $7.9 billion from $5.9 billion....

CANADIAN REIT $36.18 (Toronto symbol REF.UN; Units outstanding: 67.3 million; Market cap: $2.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.0%; www.creit.ca) owns over 160 properties, including retail, industrial and office buildings, located across Canada and in the Chicago area. These properties contain over 24 million square feet of leasable area. Its occupancy rate is 93.7%. In the three months ended September 30, 2011, the real estate investment trust’s revenue rose 5.5%, to $83.7 million from $79.4 million a year earlier. Cash flow per unit rose 5.3%, to $0.60 from $0.57. Canadian REIT bought $264.5 million of properties in 2011, including its June 2011 purchase of two fully leased malls in Mississauga, Ontario, for $174.4 million. Tenants include Future Shop, Famous Players, Chapters, Rona and National Sports....

Today, we discuss three fairly common errors we remind our readers of from time to time. Almost all investors make one or more of these mistakes sooner or later.

Noranda Income Fund, $5.67, symbol NIF.UN on Toronto (Units outstanding: 50.0 million; Market cap: $283.5 million; www.norandaincomefund.com), was created in 2002 to buy the CEZinc processing facility and some assets that belonged to Noranda Inc. Falconbridge bought Noranda in 2005. Switzerland-based Xstrata plc then bought Falconbridge. Xstrata Canada holds a 25% interest in Noranda Income Fund. The fund first sold units to the public for $10 each and began trading on Toronto in May 2002. The fund’s CEZinc processing facility, located in Salaberry-de-Valleyfield, Quebec, is the second-largest zinc-processing facility in North America and the largest in eastern North America, where most of its customers are located....