investment

Takeovers help Genuine Parts sustain growth—and dividend hikes—in a cyclical field. Our take on how lower gasoline prices help its outlook.

VeriFone Systems Inc., $32.58, symbol PAY on New York (Shares outstanding: 114.3 million; Market cap: $3.7 billion; www.verifone.com), designs and sells point-of-sale terminals and software for security and encryption. These systems process various payment types, including signature and PIN-based debit cards, credit cards and contactless payment systems. The company started up in 1981. It first sold shares to the public on May 4, 2005, for $10.00 each. VeriFone’s customers include banks, retailers and government agencies. It gets 65% of its revenue by selling hardware; the remaining 35% comes from software support, installation, maintenance and related services....

Northland Power Inc., $15.92, symbol NPI on Toronto (Shares outstanding: 168.2 million; Market cap: $2.7 billion; www.northlandpower.ca), develops, builds, owns and operates natural-gas-fired power plants, wind farms, solar projects and hydroelectric facilities. The company converted to a corporation from an income trust on January 1, 2011. Northland owns or has stakes in 1,345 megawatts of operating generating capacity, with an additional 1,072 megawatts (692 megawatts net to Northland) under construction....

Our outlook on blue chip stock Manitoba Telecom as its shares begin to recover in the wake of a strategic review and network upgrades.

BROADRIDGE FINANCIAL SOLUTIONS $55.76 (New York symbol BR; TSINetwork Rating: Average) (201-714-3000; www.broadridge.com; Shares outstanding: 119.9 million; Market cap: $6.7 billion; Dividend yield: 2.2%) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 90% of all proxy votes in the U.S. and Canada.

Without one-time items, Broadridge earned $171.5 million in its fiscal 2015 fourth quarter, which ended June 30, 2015. That’s up 18.6% from $144.6 million a year earlier. Earnings per share rose 20.7%, to $1.40 from $1.16, on fewer shares outstanding.

Revenue gained 4.9%, to $929.6 million from $885.9 million. The company continues to add new clients and is doing a good job of holding on to existing ones. Recurring fee revenue rose 7% in the latest quarter and accounted for 65% of the total.

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Two questions—on Greek recovery and a tech ETF—bring our response on the risks and rewards of profiting from market trends through ETFs.

Following the 2008 financial crisis, the U.S. Federal Reserve ordered banks and other big lenders to boost the capital (cash, bonds and other securities) they hold. That put them in a better position to absorb future loan losses. The Fed recently announced that starting in 2019, it will bring in tougher new capital requirements for the eight largest U.S. banks, including Wells Fargo and J.P. Morgan (see below). However, both Wells and Morgan have bolstered their balance sheets and unloaded many of their riskier businesses since the crisis. That should help them meet the new standards without having to issue new shares. WELLS FARGO & CO. $58 (New York symbol WFC; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 5.2 billion; Market cap: $301.6 billion; Price-to-sales ratio: 3.5; Dividend yield: 2.6%; TSINetwork Rating: Average; www.wellsfargo.com) operates through three divisions: Community Banking provides consumer 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%). The U.S. supplies 95% of Wells Fargo’s revenue....

The drop in the stock market in the past few weeks is spurring renewed interest in market timing—the practice of trying to predict future trends and turning points in stock prices. For most people, this is wasted if not harmful effort. Random events tend to occur in bunches. Market timing generates a lot of random buy and sell signals, and some are bound to work out well. But few work out well enough to offset losses on the inevitable erroneous signals, and leave a decent profit besides. Instead of trying to master market timing, you are far better off to study the earmarks of successful investments. Your long-term investment results will improve a great deal if you simply learn to spot and recognize these earmarks, and understand how they differ from the common risk factors in unsuccessful investments....

With today’s low interest rates, investors are paying more attention to dividend yields (a company’s total annual dividends paid per share divided by the current stock price). Dividend-paying companies are responding by doing their best to maintain, or even increase, their payouts.

In fact, dividends can now contribute up to a third of your long-term investment returns, without even considering the tax-cutting effects of the dividend tax credit (see below).

In addition, dividends are far more reliable than capital gains. A stock that pays a $1 dividend this year will probably do the same next year. It may even increase its dividend payment.

Canadian dividends give you tax advantages

Taxpayers who hold dividend-paying Canadian stocks get an additional bonus: their dividends can be eligible for the dividend tax credit in Canada.

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Pumping $27 billion into network upgrades helps keep Telus competitive in the telecom race we see it as a clear buy among blue chip stocks.