holding company

We still think investors will profit most—and with the least risk—by buying shares of well-established, dividend-paying stocks with strong business prospects.

These are companies that have strong positions in healthy industries. They also have strong management that will make the right moves to remain competitive in a changing marketplace.

Stocks like these give investors an additional measure of safety in today’s volatile markets. And the best ones offer an attractive combination of moderate p/e’s (the ratio of a stock’s price to its per-share earnings), steady or rising dividend yields (annual dividend divided by the share price) and promising growth prospects.

Here are 20 stocks we think meet those criteria:

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Enbridge Income Fund Holdings Inc., $30.32, symbol ENF on Toronto (Shares outstanding: 56.5 million; Market cap: $2.0 billion; www.enbridgeincomefund.com), is a holding company that owns 85.6% of Enbridge Income Fund. Enbridge Inc. (symbol ENB on Toronto and a recommendation of The Successful Investor), holds the remaining 14.4%. If you include preferred shares and its 19.9% direct stake in Enbridge Income Fund Holdings, Enbridge Inc. has a 67.3% economic interest in the fund. Enbridge first sold units of Enbridge Income Fund Holdings to the public in 2003. In December 2010, the fund converted to a regular corporation....

The growing trend toward marijuana legalization has spurred a great deal of investor interest. (It has inspired a number of legitimate marijuana start-ups, as well as a variety of “pump & dump” operations—see above). We have yet to come across any attractive marijuana investments. Tweed Marijuana Inc., $2.69, symbol TWD on Toronto (Shares outstanding: 27.8 million; Market cap: $80.8 million; www.tweed.com), began trading on Toronto on April 3, 2014. The company is a licensed grower of medical marijuana in Canada. It produces marijuana at a facility in Smiths Falls, Ontario, and through Park Lane Farms in Niagara-on-the-Lake, Ontario....

Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves you should know about, from coverage in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor. We continue to advise against investing in bonds, because low interest rates hurt their appeal, while rising rates would push down their future value. For stable income and growth, we prefer high-yielding utilities. Their dividends also qualify for the dividend tax credit. ATCO LTD. (Toronto symbols ACO.X [class I non-voting] and ACO.Y [class II voting; www.atco.com) holds 53.2% of Canadian Utilities. It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction and energy exploration firms; Canadian Utilities owns the remaining 24.5%....

ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $48 and ACO.Y [class II voting] $48; Income Portfolio, Utilities sector; Shares outstanding: 115.3 million; Market cap: $5.5 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.atco.com) holds 53.2% of Canadian Utilities (see page 85). It also owns 75.5% of ATCO Structures & Logistics, which builds temporary buildings for construction and energyexploration firms; Canadian Utilities owns the remaining 24.5%.

The company recently agreed to sell its information technology subsidiaries in Canada and Australia. These businesses provide computer support, billing, payment processing and related services to ATCO’s other subsidiaries, as well as outside clients.

The buyer, Wipro Ltd., will pay $210 million when the sale closes later this year. In addition, Wipro will provide computer support and related services to ATCO under a new 10-year contract.

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Every Monday we now feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time. DUNDEE CORP. (Toronto symbol DC.A; www.dundeecorp.com) owns businesses in the wealth management, real estate, natural resource and agriculture industries. The company lost $92.6 million, or $1.88 a share, in 2013. That’s a big drop from the $25.2 million, or $0.29 a share, it earned in 2012. Revenue fell 6.3%, to $200.7 million from $214.2 million....

Inflation remains low in Canada. That’s one reason why interest rates remain at today’s historically low levels. However, the long-term outlook is for higher rates, as the expansion of the money supply in the past few years will likely spur inflation. We continue to advise against investing in bonds, because low interest rates hurt their appeal, while rising rates would push down their future value. If you need stable income, we prefer highyielding utilities like these four. Their dividends also qualify for the dividend tax credit....

MANITOBA TELECOM $30.63 (Toronto symbol MBT; Shares outstanding: 77.4 million; Market cap: $2.4 billion; TSINetwork Rating: Average; Dividend yield: 5.6%; www.mts.ca) jumped to just over $33 in response to BCE’s plan to buy 100% of Bell Aliant (see box on page 57). Investors believed Manitoba Telecom could also become a takeover target. However, as part of the company’s 1997 privatization, the Manitoba government limits any single shareholder’s ownership to 20%. The shares have since moved down to where they were before BCE’s announcement. Manitoba Telecom is still a hold....

DUNDEE CORP. $17 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 53.5 million; Market cap: $909.5 million; Price-to-sales ratio: 4.5; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) owns businesses in the wealth management, real estate, natural resource and agriculture industries.

Dundee is more risky than most of the stocks we recommend. Many brokers avoid it due to its complex holding company structure, so it has little following among institutional investors. Irregular earnings from real estate and resource operations also add to its risk, and the lack of a dividend hurts its appeal.

However, like most holding companies, Dundee typically trades at a discount to the market value of the assets it held. Occasionally, it would unlock some of this value, as it did in 2011 when it sold its Dynamic mutual fund operations. In 2013, it spun off its commercial real estate subsidiary —DREAM Unlimited (Toronto symbol DRM)—as a separate company.

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DUNDEE CORP. $17 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 53.5 million; Market cap: $909.5 million; Price-to-sales ratio: 4.5; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) owns businesses in the wealth management, real estate, natural resource and agriculture industries. Dundee is more risky than most of the stocks we recommend. Many brokers avoid it due to its complex holding company structure, so it has little following among institutional investors. Irregular earnings from real estate and resource operations also add to its risk, and the lack of a dividend hurts its appeal. However, like most holding companies, Dundee typically trades at a discount to the market value of the assets it held. Occasionally, it would unlock some of this value, as it did in 2011 when it sold its Dynamic mutual fund operations. In 2013, it spun off its commercial real estate subsidiary —DREAM Unlimited (Toronto symbol DRM)—as a separate company....