investment
An investment is an asset or property acquired to generate income or gain appreciation. Appreciation is the increase in the value of an asset over time. It requires the outlay of a resource today, like time, effort, and money, for a greater payoff in the future or for generating a profit.
An investment involves using capital in the present to increase an asset’s value over time.
Investments may include bonds, stocks, real estate, or alternative investments.
Investments can be diversified to reduce risk, though this may reduce the amount of earning potential.
In business contexts, investments are financial; however, consider how some people spend time to make higher incomes in the future (i.e. invest in a college education).
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WESTJET AIRLINES, $20.49, symbol WJA on Toronto, carried a record 5.3 million passengers in March 2016, up 8.4% from 4.9 million a year earlier. The company’s load factor rose to 83.2% from 81.3%. Load factor is the percentage of available seats that are occupied by paying passengers. Revenue passenger miles (the total number of paying passengers on each plane multiplied by the distance travelled in miles) rose 7.2% in the latest quarter....
FORTIS INC., $39.86, Toronto symbol FTS, owns electrical utilities across Canada and in the U.S. and the Caribbean. It also distributes natural gas in British Columbia. The company has completed its latest acquisition in northern B.C.—a 93.8% stake in the Aitken Creek natural gas storage facility. Fortis paid Chevron Corp (New York symbol CVX) $266 million U.S. for the underground complex. To put that in context, Fortis earned $589 million, or $2.11 a share, in 2015. BP Canada owns the remaining 6.2% stake in the B.C. facility. Currently, Fortis leases one-third of Aitken Creek’s capacity. Owning this facility should reduce the company’s costs....
MANULIFE FINANCIAL CORP. $18.04 (Toronto symbol MFC; Shares outstanding: 2.0 billion; Market cap: $35.1 billion; TSINetwork Rating: Above Average; Dividend yield: 4.1%; www.manulife.ca) sells life and other related forms of insurance, as well as mutual funds and investment management services. In the three months ended December 31, 2015, Manulife’s earnings per share dropped sharply, to $0.11 from $0.33. That was largely due to writedowns in the value of its own investments in oil and gas stocks. However, excluding one-time items, per-share earnings rose 16.7%, to $0.42 from $0.36. The company continues to expand in growing Asian markets. Right now, about 40% of its insurance premiums come from that region....
ARC RESOURCES $18.38 (Toronto symbol ARX; Shares outstanding: 348.3 million; Market cap: $6.2 billion; TSINetwork Rating: Speculative; Dividend yield: 3.3%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 119,243 barrels of oil equivalent is 66% gas and 34% oil. In the three months ended December 31, 2015, ARC’s cash flow per share dropped 26.6%, to $0.58 from $0.79 a year earlier. Production increased 1.1%, but its realized oil price fell 32.1%. Gas prices declined 37.6%. Like many oil and gas producers, ARC is cutting exploration and development spending. In 2016, it will devote $390.0 million to this purpose. That’s down 29.1% from $550.0 in 2015....
SUN LIFE FINANCIAL $41.71 (Toronto symbol SLF; Shares outstanding: 612.3 million; Market cap: $25.4 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.sunlife.ca) sells life insurance, savings, retirement and pension products to individuals and corporations. The company has $891.3 billion of assets under management and mainly operates in Canada, the U.S. and the U.K. It’s also expanding in Asia. In the three months ended December 31, 2015, Sun Life’s earnings per share rose 7.4%, to $0.87 from $0.81. The company continues to diversify in the U.S. At the same time, it’s focusing on highly profitable niche markets with low capital requirements....
Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers almost $3 trillion U.S. across 175 mutual funds and ETFs. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds are only available in a limited number of provinces. Canadians can, however, buy Vanguard exchange traded funds that trade on stock exchanges. Here are two Vanguard ETF we see as low-fee buys....
ISHARES CANADIAN SHORT-TERM BOND INDEX ETF $28.47 (Toronto symbol XSB; buy or sell through brokers) mirrors the performance of the DEX Short-Term Bond Index. This index consists of a range of investment-grade federal, provincial, municipal and corporate bonds with one- to five-year terms to maturity. The fund holds 437 bonds with an average term to maturity of 2.94 years. The bonds in the index are 65.0% government and 35.0% corporate. The fund’s MER is 0.28%. The iShares Canadian Short-Term Bond Index Fund yields 2.4%, but this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. As a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, meaning the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields....
ARC RESOURCES $18.38 (Toronto symbol ARX; Shares outstanding: 348.3 million; Market cap: $6.2 billion; TSINetwork Rating: Speculative; Dividend yield: 3.3%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 119,243 barrels of oil equivalent is 66% gas and 34% oil. In the three months ended December 31, 2015, ARC’s cash flow per share dropped 26.6%, to $0.58 from $0.79 a year earlier. Production increased 1.1%, but its realized oil price fell 32.1%. Gas prices declined 37.6%. Like many oil and gas producers, ARC is cutting exploration and development spending. In 2016, it will devote $390.0 million to this purpose. That’s down 29.1% from $550.0 in 2015....
RIOCAN REAL ESTATE INVESTMENT TRUST $26.68 (Toronto symbol REI.UN; Units outstanding: 321.9 million; Market cap: $8.7 billion; TSINetwork Rating: Average; Dividend yield: 5.2%; www.riocan.com) owns all or part of 305 shopping centres in Canada, including 16 properties under development. The trust pays monthly distributions of $0.1175 a unit, for a 5.2% annual yield. These payouts accounted for 90.4% of RioCan’s cash flow in 2015. However, 31.5% of the trust’s investors take part in its distribution reinvestment plan, so they get units rather than cash. On this basis, RioCan’s cash payouts were a more reasonable 62.0% of its cash flow. (If you want the units instead of cash, you still have to pay income taxes on your distributions for the year when you receive them.) This week, RioCan announced that with the April 2016 distribution, it eliminated the 3.1% discount it offered to unitholders who reinvested their distributions....
The Bank of Canada is unlikely to raise interest rates any time soon. That’s because low prices for oil and other commodities will likely continue to offset higher exports due to a low Canadian dollar, as well as increased government spending. Even so, the long-term outlook is for higher interest rates. That’s because heavy deficit spending and the expansion of the money supply in the past few years make higher inflation more likely. We continue to advise against investing in bonds right now. That’s because today’s low interest rates make bonds unattractive, and rising rates would push down their future value....