How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
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Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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Nestlé (ADR), $78.07, symbol NSRGY on the U.S. over-the-counter market (ADRs outstanding: 3.2 billion; Market cap: $249.8 billion; www.nestle.com), is one of the world’s largest nutrition, health and wellness companies. It was founded by Henri Nestlé, a pharmacist who developed infant-nutrition products, in 1866. Nestlé has over 2,000 global and local brands, including Gerber (baby food), Poland Spring (bottled water), Nescafé (coffee), Purina (pet food), Dreyer’s (ice cream) and Stouffer’s (frozen prepared meals). It employs about 333,000 workers at 447 factories in 86 countries. The company’s main listing is on the SIX Swiss Exchange....
Unilever plc (ADR), $43.57, symbol UL on New York (Shares outstanding: 1.3 billion; Market cap: $56.6 billion; www.unilever.com), is one of the world’s largest makers of consumer goods. Asia and Africa supply 43% of its sales, followed by the Americas (33%) and Europe (24%). The company gets 59% of its sales from emerging markets. Unilever operates through four divisions:
- Personal Care (37% of sales) makes skin and hair care products, deodorants and oral care goods. Top brands include Dove and Lux (soap), Sunsilk (shampoo), Axe (deodorant), Pond’s (skin cream), Vaseline (petroleum jelly) and Close Up (toothpaste).
- Foods (25%) makes a variety of packaged products, including Becel margarine, Knorr soups and Hellmann’s mayonnaise.
BCE’s wireless revenue continues to grow steadily, rising 26.5% from $4.9 billion in 2010 to $6.2 billion in 2014. At the same time, wireline (land line) revenue has dropped from $10.7 billion to $10.0 billion. That’s because many traditional land line phone customers have switched to wireless. However, BCE’s Fibe Internet TV is now spurring new demand for its fibre optic land lines. This is a big growth market for the company. BCE INC. $54.15 (Toronto symbol BCE; Shares outstanding: 841.9 million; Market cap: $45.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.8%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also offers satellite and Internet TV across the country. In the three months ended March 31, 2015, BCE’s earnings per share rose 3.7%, to $0.84 from $0.81 a year earlier. Revenue increased 2.8%, to $5.2 billion from $5.1 billion....
MANULIFE FINANCIAL $22.18 (Toronto symbol MFC; Shares outstanding: 2.0 billion; Market cap: $43.7 billion; TSINetwork Rating: Above Average; Dividend yield: 2.8%; www.manulife.ca) now gets about a third of its insurance premiums from Asia—but that’s about to rise sharply. The company has just entered into a 15-year “bancassurance” partnership with Singapore-based banker DBS Group Holdings. The deal will let Manulife sell life and health insurance through DBS’s Asian branch network. Manulife won the deal over a group of companies that included Aviva plc, Prudential and AIA Group. It will pay DBS $1.2 billion to replace Aviva in its branches....
ISHARES CHINA LARGE-CAP ETF $51.98 (New York symbol FXI; buy or sell through brokers) is an exchange traded fund that aims to track the Financial Times Stock Exchange (FTSE) China 50 Index, which is made up of the 50 largest, most liquid Chinese stocks. All of the companies in the index trade on the Hong Kong exchange. Some also trade as American depositary receipts (ADRs) on New York. The fund’s top holdings are Tencent Holdings, 8.8%; China Mobile, 8.0%; China Construction Bank, 7.5%; Industrial & Commercial Bank, 6.8%; Bank of China, 5.9%; Ping An Insurance, 4.5%; China Life, 4.4%; CNOOC Ltd., 3.9%; PetroChina, 3.8%; China Petroleum and Chemical, 3.4%; and China Overseas Land & Investment, 2.5%. The fund’s holdings give it the following industry breakdown: Financials, 48.1%; Telecommunications, 11.7%; Oil and Gas, 11.6%; Technology, 11.1%; Industrials, 6.2%; Consumer Goods, 6.4%; and Utilities, 2.1%. Its expense ratio is 0.74%....
LOBLAW COMPANIES $62.05 (Toronto symbol L; Shares outstanding: 412.5 million; Market cap: $25.8 billion; TSINetwork Rating: Above Average; Dividend yield: 1.6%; www.loblaw.ca) is testing a new home-delivery service with San Francisco-based Uber Technologies, which offers users rides from private drivers in 300 cities. Users of Loblaw’s Click & Collect online service can order groceries from three of the company’s Toronto supermarkets. They can then pick up their goods at their local store and get a free ride home from Uber. This is a limited-time promotion, but if it’s successful, Uber may offer Loblaw customers a discounted fare. That could prompt them to buy more groceries than they normally would....
BONAVISTA ENERGY $8.02 (Toronto symbol BNP; Shares outstanding: 203.8 million; Market cap: $1.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.2%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and British Columbia. Its production is 70% gas and 30% oil. In the three months ended December 31, 2014, Bonavista’s cash flow per share rose 1.6%, to $0.63 from $0.62 a year earlier. The company’s output gained 14.3%, to 85,810 barrels of oil equivalent a day from 75,072. However, lower oil prices mostly offset the production increase and higher realized gas prices....
ISHARES CDN REIT SECTOR INDEX FUND $17.31 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index. iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 4.7%. The ETF’s largest holding is RioCan REIT at 20.0%, followed by H&R REIT (13.5%), Canadian REIT (7.1%), Canadian Apartment REIT (7.0%), Allied Properties REIT (6.6%), Calloway REIT (6.6%), Dream Office REIT (6.4%), Cominar REIT (4.4%), Boardwalk REIT (5.0%), Chartwell REIT (4.5%), Artis REIT (4.3%), Granite REIT (4.3%), Crombie REIT (2.2%), Pure Industrial REIT (2.1%) and Northern Property REIT (1.7%)....
Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers almost $3 trillion U.S. in 170 mutual funds. Vanguard, which went into business in 1975, offers low-fee index mutual funds. 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 aren’t available in all provinces. Canadians can, however, buy Vanguard exchange traded funds (ETFs) that trade on stock exchanges. We don’t recommend all of Vanguard’s ETFs, but here are two we do see as low-fee buys....
CANADIAN PACIFIC RAILWAY LTD. $232.62 (Toronto symbol CP; Shares outstanding: 164.2 million; Market cap: $38.5 billion; TSINetwork Rating: Average; Div. yield: 0.6%; www.cpr.ca) has reported record first-quarter results. In the three months ended March 31, 2015, the company earned $375 million, up 49.4% from $251 million a year earlier. Per-share profits jumped 59.2%, to $2.26 from $1.42, on fewer shares outstanding. Revenue rose 10.3%, to $1.67 billion from $1.51 billion. CP saw strong gains from shipping grain, fertilizers, coal, forest products, chemicals and consumer goods. That offset fewer shipments of crude oil, automotive products and metals....