A spinoff is a new company broken off from an existing company to create more value for shareholders.
You might be familiar with Kraft Foods Group and Hewlett-Packard, two major brands who have done it with great success.
To create a spinoff, a company sets up one or more of their divisions or subsidiaries as an independent company, then hands out shares in that company to their own shareholders, as a special dividend or spinoff’.
Often, the parent company starts by selling a portion of the new company to the public, to establish a market and a following among investors. That way, by the time of the spin-off, stock in the new company may be liquid enough to be sold relatively easily, or retained with some confidence as a worthwhile investment.
As a general rule, you’d be better off to buy more of any stock you receive as a spinoff, rather than selling. In fact, many studies have shown that after an initial adjustment period of a few months, spinoffs tend to outperform groups of comparable stocks for several years.
You can contrast a corporate spin-off with a new stock issue, which is when a company first sells shares to the public.
The two situations are like two sides of a coin—one favourable to investors, the other unfavourable. The motivations of the companies are nearly the opposite.
To determine which stocks are best to invest in, use our three-part Successful Investor philosophy:
Discover how to build a winning stock market portfolio in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada, from TSI Network
Pipeline giant TC Energy is your #1 Spinoff Buy for 2024. The former TransCanada Pipelines will soon spin off its oil pipeline business and its remaining operations will consist of gas pipelines and electrical power assets.
The stock has gained 11% since the spinoff announcement in… Read More
AGNICO EAGLE MINES LTD., $70.48, symbol AEM on Toronto, owns currently producing gold mines in Canada, Australia, Finland and Mexico.
Specifically, in Canada, it owns the La Ronde, Canadian Malarctic, Goldex, Maccassa, Detour Lake, Meliadine, Meadowbank and Hope Bay mines. It also owns the Fosterville mine… Read More
CHEVRON CORP., $150.40, New York symbol CVX, remains s a buy for the Resources portion of your portfolio.
Through your shares, you tap the operations of the second-largest integrated oil producer in the U.S. by revenue. That’s after ExxonMobil (New York symbol XOM).
Due to regulatory changes… Read More
TC ENERGY INC., $52.79, is a buy. The company (Toronto symbol TRP; Shares outstanding: 1.0 billion; Market cap: $54.3 billion; TSINetwork Rating: Above Average; Dividend yield: 7.1%; www.tcenergy.com) still plans to spin off its oil pipelines division as a separate, publicly traded company called South Bow Corp.
The new… Read More
Using our selection criteria to spot the best TSX stock list recommendations will help you choose top stocks for your portfolio
The TSX is the largest stock exchange in Canada and the third largest in North America. Of note is that the Toronto Stock Exchange has… Read More
Forget relying on a market timing strategy to boost returns. Focus instead on these proven tips for successful investing.
Market timing is the practice of trying to predict future trends and turning points in stock prices. For most people, this is a wasted, if not harmful,… Read More
With share splits, a company is simply cutting itself up into a number of pieces, without changing its fundamental value. It wants its stock to trade in a price-per-share range that seems reasonable to investors. This can affect stock market trading in more ways than… Read More
New stock issues can be in the form of a spinoff or an IPO. One option is a much better investment than the other
We can say without reservation that, in investing, spinoffs are the closest thing you can find to a sure thing. It all… Read More
Pfizer’s shares are down 45% in the past year due to lower demand for its COVID-19 treatments as the pandemic eases. However, new products from its acquisition of Seagen and its high research spending, generally, should spur long-term growth and your dividends.
PFIZER INC. $28 is… Read More
H&R’s spinoff of Primaris let both REITs better focus on their main businesses and expand their cash flow. That improves the sustainability of their current distributions.
H&R REAL ESTATE INVESTMENT TRUST $9.75 is a buy. The REIT (Toronto symbol HR.UN; Cyclical-Growth Dividend Payer Portfolio, Manufacturing sector; Units outstanding:… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
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