Loading...

Follow The Motley Fool on Feedspot

Continue with Google
Continue with Facebook
or

Valid

Millennials and other young Canadian professionals are facing retirement-planning challenges that weren’t present when their parents and grandparents were the same age.

What’s going on?

Buying a home used to be a pretty safe bet with respect to forced savings for retirement. In fact, many baby boomers have become “rich” simply as a result of having had the opportunity to buy a home in a major market when it was reasonably affordable.

Buying a house today could still prove to be a solid long-term investment, but the price gains are unlikely to be repeated in the next 20-30 years. In fact, there is a good chance prices might not be much different than they are right now.

In addition, the employment world is less retirement friendly than it was a couple of decades ago. The idea of retiring with a full defined-benefit pension at 55 or 60 is pretty much out the window. Any defined-benefit plan is now tough to find; every time you read a retirement article, the trend appears to be pushing people to work until they are 67 or even 70.

Fortunately, young Canadians can still find ways to have the necessary funds set aside to quit work in their 50s and enjoy a long retirement.

One popular strategy that has emerged involves using a Tax-Free Savings Account (TFSA) to own dividend stocks and invest the distributions in more shares. When the process starts early, the fund can grow significantly over the course of two or three decades.

Any Canadian resident who was at least 18 years old in 2009 now has up to $63,500 in available TFSA contribution room. That’s enough to start a solid retirement fund, and the contribution limit is expected to increase by at least $6,000 per year.

Let’s take a look at Fortis (TSX:FTS)(NYSE:FTS) to see why it might be an interesting pick to start your TFSA retirement portfolio.

Regulated assets

Fortis owns more than $50 billion in natural gas distribution, electric transmission, and power generation assets in Canada, the United States, and the Caribbean. The majority of the revenue comes from regulated businesses, meaning the company’s cash flow should be reliable and predictable regardless of the ongoing ups and downs of the global financial markets.

Fortis grows through acquisitions and investment in organic projects. The company’s current $17.3 billion capital program is expected to drive up the rate base enough over five years to support ongoing annual dividend increases of at least 6% through 2023.

The company has raised the distribution each year for more than four decades, so the guidance should be viewed as reasonable. At the time of writing, the stock provides a yield of 3.6%.

Long-term investors have done well with Fortis. A $10,000 investment in the stock just 20 years ago would be worth more than $120,000 today with the dividends reinvested. That means a $50,000 investment would be worth more than $600,000!

The bottom line

Fortis is just one example of a number of Canadian companies that have generated similar or even better returns. With the right mix of stocks and some patience, young Canadians could potentially turn a $50,000 TFSA into a $600,000 nest egg over the next 20 years. A couple in their mid-30s with $50,000 each in their TFSA could be looking at $1.2 million by the time they are 55.

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

More reading

Fool contributor Andrew Walker has no position in any stock mentioned.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

While quarterly conference calls can be company-specific, there’s huge value in paying attention to the information that management teams reveal, even if you’re not invested in their stocks.

Earlier this month, Kirkland Lake Gold Ltd (TSX:KL)(NYSE:KL) revealed its first- quarter results for 2019. Executives jumped on a call with analysts to discuss what happened and why.

If you’re invested in any gold stock, especially Kirkland Lake, you’ll want to read these highlights.

Record production, falling costs

Gold production last quarter hit 231,900 ounces, a company record. Management had been guiding for full-year output of 920,000 to one million ounces.

Annualized, Kirkland Lakes quarterly output is on pace for 927,600 ounces, which is at the low end of the expected range, but further production boosts should be anticipated as the year continues.

On the cost end of the equation, all-in sustaining costs per ounce—one of the most important ways to measure mining profitability—fell to $560 per ounce, another record.

Management reiterated its full-year all-in sustaining cost range of $520 to $560 per ounce, so further reductions should be realized as production grows.

On the right path

Rising revenues and falling costs have resulted in ramping profits and cash flow.

“From earnings per share perspective, we had record net earnings of $112 million or $0.53 a share, and record free cash flow of $93.1 million,” noted CEO Tony Makuch.

Kirkland Lake is making sure to return these profits to shareholders rather than continue to grow at all costs—that’s a mistake most miners seem to make these days.

In 2017, the quarterly dividend was just $0.01 per share. Over the next 24 months, management increased the payout by 600% to $0.06 per share.

On an annualized basis, Kirkland Gold now yields 0.5%. That’s not overly impressive, but it’s important to see management raise the dividend in step with earnings and cash flow increases.

Lessons for the industry

Since 2015, shares of Kirkland Lake have increased by more than 2,500%. Barrick Gold Corp, a much more popular stock, has only returned around 70%.

What can Kirkland Lake’s history teach us about picking successful gold stocks?

First, pick low-cost producers.

“If we’re not industry-leading in terms of first or second, we’re definitely in the top 10 in terms of the lowest cost producers in the industry,” highlighted Kirkland Lake’s CEO.

Having a low cost of production helps in two ways.

First, when gold prices are rising, the company’s free cash flow generation will be significantly higher than its peers, allowing it to reinvest in worthy projects, pay down debt, and institute timely dividends and buybacks.

Low costs also insulate the company during times of turmoil. When selling prices crash, high-cost companies need to take on rising debt loads, which can be difficult to pay back even after the market reverses.

If you’re picking a gold mining stock for the long haul, keep it simple and pick a low-cost producer.

Kirkland Lake’s management team also puts a huge focus on cash flow.

For example, cash flow metrics feature just as prominently in its corporate releases as accounting earnings. Management also breaks down sustaining and growth capital expenditures by specific project.

This level of detail lets investors know that insiders are putting shareholder interests above all else.

Kirkland Gold had a terrific quarter. With a trusted management team, this looks like a stock to continue betting on.

If you stray into other names, be sure to pick low-cost producers that focus on cash flow versus fluffier numbers like GAAP earnings or EBITDA.

5 TSX Stocks for Building Wealth After 50

BRAND NEW! For a limited time, The Motley Fool Canada is giving away an urgent new investment report outlining our 5 favourite stocks for investors over 50.

So if you’re looking to get your finances on track and you’re in or near retirement – we’ve got you covered!

You’re invited. Simply click the link below to discover all 5 shares we’re expressly recommending for INVESTORS 50 and OVER. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a brief time only.

Click Here For Your Free Report!

More reading

Fool contributor Ryan Vanzo has no position in any stocks mentioned.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

The substantial short interest in Canada’s banks is weighing on their value. This has seen the third most-shorted stock by value on the Toronto Stock Exchange, Royal Bank (TSX:RY)(NYSE:RY), gain a meagre 6% over the last year, creating an opportunity for investors.

Shorting the Big Five, which has been a popular trade for almost a decade, hasn’t become known as a “widow-maker” trade without reason. Hedge funds have been betting against the banks and losing tremendous sums of money over that period, despite clear signs that the underlying fundamentals supporting their stellar performance have not changed. This makes now the time for investors to boost their exposure to Royal Bank.

Credible first-quarter 2019 results

Canada’s largest mortgage lender announced some robust first-quarter 2019 results, highlighting the strength of its operations. Those included a 5% year-over-year increase in net income to $3.2 billion on the back of strong revenue growth in personal and commercial banking as well as insurance.

Royal Bank’s expansion into the U.S., through wealth management and capital markets, was also a key driver of growth with those combined businesses responsible for 16% of total bank earnings over the last 12 months. For the first quarter, net interest income from Royal Bank’s U.S. wealth management business shot up by 19% compared to the equivalent period a year earlier, while its net interest margin (NIM) of 3.56% was higher than the 2.84% reported for its Canadian banking business.

Those operations will become an important driver of growth, because the U.S. is ranked as one of the largest financial services markets globally.

Demand for credit as well as insurance, advisory, and other wealth management services south of the border will expand at a solid clip as gross domestic product grows. The International Monetary Fund has forecast that the U.S. economy will expand by 2.3% during 2019 compared to 1.5% for Canada.

Royal Bank’s focus on expanding its U.S. operations along with growing earnings from wealth management, capital markets, and insurance for the remainder of 2019 will further boosting earnings.

Importantly, Royal Bank remains well capitalized, ending the first quarter with a common equity tier one capital ratio of 11.4%, which is considerably higher than the regulatory minimum. Credit quality is also strong, with the bank ending the period with a gross impaired loan ratio of 0.46%, which was one basis point (bps) greater than the same period in 2018.

The impact of any sharp uptick in Canadian mortgage defaults, as anticipated by the traders shorting Royal Bank, will have a minimal impact, because 38% of Royal Bank’s Canadian residential mortgage portfolio is insured. That forms an important backstop for the bank should a weaker-than-expected Canadian economy, along with stagnant wage growth, higher unemployment, and heavily indebted households cause impaired loans to rise.

It is also worth noting that Royal Bank’s uninsured domestic mortgages have an average loan-to-valuation ratio of 51%, meaning there is significant room for the bank and its borrowers to restructure loans should economic conditions decline.

Such strong credit metrics mean that an economic downturn and subsequent uptick in loan defaults will have little to no material impact on Royal Bank.

Putting it together for investors

For the reasons discussed, Royal Bank will continue to experience solid growth, which will give its earnings a healthy lift. Growing net income will not only support the sustainability of Royal Bank’s dividend, which has a conservative payout ratio of around 45% and is yielding almost 4%, but also bankroll additional dividend hikes. Royal Bank has rewarded investors through a series of regular dividend hikes, which has seen the dividend increased annually for the last eight years straight.

Free investor brief: Our 3 top SELL recommendations for 2019

Just one ticking time bomb in your portfolio can set you back months – or years – when it comes to achieving your financial goals. There’s almost nothing worse than watching your hard-earned nest egg dwindle!

That’s why The Motley Fool Canada’s analyst team has put together this FREE investor brief, including the names and tickers of 3 TSX stocks they believe are set to LOSE you money.

Stock #1 is a household name – a one-time TSX blue chip that too many investors have left sitting idly in their accounts, hoping the company’s prospects will improve (especially after one more government bailout).

Still, our analysts rate this company a firm SELL.

Don’t miss out. Click here to see all three names right now.

More reading

Fool contributor Matt Smith has no position in any of the stocks mentioned.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Enbridge (TSX:ENB)(NYSE:ENB) is one of the finest energy stocks on the TSX. As the operator of a large and extensive oil and LNG transportation system, it has a highly diversified business that can withstand a decline in the price of oil. Over the past four years, which have seen the price of oil swing up and down dramatically, Enbridge has grown year in and year out.

This fact bodes particularly well for Enbridge’s value as a dividend stock.

Many Canadian investors are aware that Enbridge pays a dividend that yields around 6%. What most don’t know is that Enbridge also has excellent growth figures, which make its dividend more sustainable than high yielders usually are. To understand why that’s the case, we need to look at Enbridge’s recent financial performance.

Financial performance

Recently, Enbridge’s financial performance has been excellent over both short-term and long-term timeframes. Over the past four years, the company has grown its revenue from $33 billion to $46 billion. Over the same period, earnings have grown from $251 million to $2.8 billion. The company’s earnings growth has been much more erratic than its revenue growth, but the long-term trend has been unambiguously positive.

Enbridge’s trend also looks good on a quarter-by-quarter basis: over the past four quarters, the company has grown earnings from $1.1 billion to $1.9 billion.

Line 3 replacement

One major story for Enbridge is the company’s Line 3 replacement project, which will replace a 1,660 km pipeline system with newer and more modern infrastructure. The word replacement might carry connotations of a mere infrastructure upgrade, but this replacement will actually add transportation capacity.

The current Line 3 pipes are 34 inches wide, and they will be replaced with 36-inch pipes, which will slightly increase the amount of oil that can be transmitted across the pipeline each day. Thus, not only will Line 3 help Enbridge with safety and compliance, but it will also most likely increase its revenue.

Dividend yield and growth

Now we get on to the most interesting thing about Enbridge: its dividend. With a yield of about 5.9%, it’s just a hair short of 6% — at some of the lower prices in the past 12 months, you could have gotten a yield in excess of 6%.

However, it’s not just the yield you could get on Enbridge shares today that matters; it’s also the potential for dividend growth. Over the past five years, Enbridge has been increasing its dividend by about 17.5% per year, giving this stock real potential for dividend growth.

In fact, if the company keeps increasing the payouts at the rate it has been, it would only take about 5% to double your yield on cost. Whether this happens or not will depend on a number of factors. Some of them, like demand for Canadian oil, are beyond Enbridge’s control. Still, it has to be said that this is one of the best high-yield stocks on the TSX today.

Amazon CEO Shocks Bay Street Investors By Predicting Company "Will Go Bankrupt"

Amazon CEO Jeff Bezos recently warned investors that “Amazon will be disrupted one day” and eventually "will go bankrupt."

What might be even more alarming is that Bezos has been dumping roughly $1 billion worth of Amazon stock every year…

But Bezos isn’t just cashing out, he’s reinvesting his money into a company utilizing a fast-emerging technology that he believes will “improve every business.”

In fact, this tech opportunity could be bigger than bigger than Amazon, Tesla, and Berkshire Hathaway combined.

Get the full scoop on this opportunity that has billionaire investors like Bezos convinced – before it’s too late…

Click here to learn more!

More reading

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Oil continues to see-saw wildly as a combination of good and bad news emerges over the outlook for crude. Despite the latest pullback, the North American benchmark West Texas Intermediate (WTI) is still up by around 33% since the start of 2019, and there are signs that firmer crude is here to stay.

This has sparked considerable speculation among pundits that now is the time to boost exposure to Canada’s energy patch. The third largest oil sands operator, Cenovus (TSX:CVE)(NYSECVE), which has only gained 18% for the year to date, is attracting considerable attention.

Improved first-quarter 2019 results

Cenovus was struggling to operate profitability when Canadian heavy crude known as Western Canadian Select (WCS) plunged to record lows. It was one of the oil sands operators that was lobbying Alberta’s provincial government to introduce mandatory production cuts to drain local oil inventories and boost WCS prices.

Those cuts, while responsible for significantly bolstering WCS, are the reason for Cenovus’ first-quarter 2019 production declining by 8% year over year to 447,270 barrels daily.

They are also the rationale behind Cenovus reducing its 2019 production guidance to see it anticipating oil sands output of around 350,000 to 370,000 barrels daily. At the midpoint of that range, Cenovus’ annual oil sands production will be roughly 1% lower than 2018.

Nonetheless, significantly higher oil prices have had a positive effect on the company’s earnings despite the decline in oil and natural gas output. First-quarter cash from operating activities was $436 million compared to negative cash flow of $123 million for the same period in 2018, while net earnings soared to $110 million against a loss of $914 million a year earlier.

That significant improvement in Cenovus’ financial position can be attributed to substantially higher WCS prices, which saw it realize an average sale price of $46.66 per barrel over the quarter that was 80% higher than a year earlier. This more than offset the moderate increases in transportation and operating expenses reported for the period.

As a result, Cenovus reported a notable operating netback of $26.99 per barrel pumped before the application of commodity price hedges, which was more than five times greater the prehedging netback reported for the same period in 2018.

The oil sands company is also focused on boosting market access by ramping up the volume of crude by rail shipments to around 100,000 barrels daily during 2019. Cenovus’ has also secured 275,000 barrels daily of capacity on the Keystone XL and the Trans Mountain pipeline projects, but there is no indication that those pipelines will be completed anytime soon. It is here that the real risk associated with investing in Cenovus emerges.

External risks abound

Once Alberta ends the compulsory production cuts, it is feared that WCS will plunge once again, sharply impacting Cenovus, because 77% of its petroleum output comes from oil sands and is bench marked to WCS. The cuts have only provided temporary relief from a lack of pipeline exit capacity, which has yet to be addressed through the construction of new pipelines or the expansion of existing infrastructure.

Even the company’s much-vaunted Line 3 Replacement Project has been delayed by roughly a year after permitting issues forced the midstream services giant to push back its scheduled in-service date to the second half of 2020.

There is also speculation that the cuts have failed to drain local oil stocks, with industry consultancy Genscape estimating that local inventories in April 2019 hit a record of 3.71 million barrels. While the mandatory cuts have curtailed production growth, all of Canada’s major oil sands companies will ramp-up activity once they come to an end.

This means that WCS will collapse once again when Edmonton ends the cuts and production outstrips the transportation capacity of existing pipeline and rail infrastructure. Unlike Suncor Energy, Cenovus lacks substantial refining capacity, meaning that it can’t profit from a wide price differential between WCS and WTI — and the profitability of its operations will therefore suffer once again.

Free investor brief: Our 3 top SELL recommendations for 2019

Just one ticking time bomb in your portfolio can set you back months – or years – when it comes to achieving your financial goals. There’s almost nothing worse than watching your hard-earned nest egg dwindle!

That’s why The Motley Fool Canada’s analyst team has put together this FREE investor brief, including the names and tickers of 3 TSX stocks they believe are set to LOSE you money.

Stock #1 is a household name – a one-time TSX blue chip that too many investors have left sitting idly in their accounts, hoping the company’s prospects will improve (especially after one more government bailout).

Still, our analysts rate this company a firm SELL.

Don’t miss out. Click here to see all three names right now.

More reading

Fool contributor Matt Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of Enbridge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Dividend aristocrats are those dividend stocks that have raised their dividends over many years, thereby creating a reliable dividend income stream that is growing within a framework that prioritizes this cash flow payment to shareholders.

RRSP investors who are usually looking for a reliable and growing stream of dividend income for their retirement should really value these stocks.

Without further ado, here are three dividend aristocrat stocks that you should consider buying for your RRSP today.

Alaris Royalty Corp (TSX:AD)

With a current dividend yield of 8.73%, Alaris Royalty stock certainly gives investors a great income stream for their investment.

But with such an elevated dividend yield, we naturally ask ourselves the question of whether there is a problem with this company.

Let’s see.

Alaris provides capital to private businesses and collects dividends from these investments (preferred shares) as well as participation in the potential profit and growth of these companies. It’s not without risk, and the company has had its struggles with underperforming investments, but the stock currently trades at a low valuation of 1.1 times price to book value while generating an ROE of north of 12% and an ROI of almost 10%.

The company has beaten expectations in the last three quarter with an improved payout ratio of approximately 90%, both of which usually result in stock price outperformance. Plus, we get a solid yield while we wait.

TransAlta Renewables Inc (TSX:RNW)

Since its IPO in 2013, the company has grown its dividends at a 6% compound annual growth rate. Its 80% to 90% payout ratio remains comfortably below 100%, and this, along with the company’s quality assets, many of which are under long-term contracts and partially indexed to inflation, ensures that this dividend is sustainable.

Currently yielding 6.84%, this stock is a great buy for exposure to the fast-growing renewables industry.

Enbridge Inc (TSX:ENB)(NYSE:ENB)

Enbridge stock is currently yielding 5.89%, as it too has a solid history of dividend growth and value creation.

In fact, since 1996, investors have enjoyed 22 years of dividend increases, with a 33% dividend increase in 2015, a 14% increase in 2016, a 15% increase in 2017, and a 10% increase in 2018.

And management expects the dividend to increase 10% next year and 5% to 7% thereafter.

Final thoughts

RRSP investors would do well in the long-term by investing in these three dividend aristocrats which are not only providing solid, growing dividends, but are also giving their shareholders exposure to growing businesses of the future.

Add these to your RRSP and reap the rewards today and in the future.

5 TSX Stocks for Building Wealth After 50

BRAND NEW! For a limited time, The Motley Fool Canada is giving away an urgent new investment report outlining our 5 favourite stocks for investors over 50.

So if you’re looking to get your finances on track and you’re in or near retirement – we’ve got you covered!

You’re invited. Simply click the link below to discover all 5 shares we’re expressly recommending for INVESTORS 50 and OVER. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a brief time only.

Click Here For Your Free Report!

More reading

Fool contributor Karen Thomas has no position in any of the stocks mentioned. The Motley Fool owns shares of Enbridge. Alaris Royalty Corp. is a recommendation of Stock Advisor Canada. Enbridge and Alaris are recommendations of Stock Advisor Canada.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Tech stocks have been leading the market for several years.

From trillion-dollar companies like Apple Inc. and Microsoft Corporation to data giants like Alphabet Inc and Facebook, Inc., going big has been a winning strategy. Numerous smaller companies, however, have just as much promise.

You’ll likely know some of the companies on this list, while others may be new. But all of them look to have strong finishes in 2019.

Shopify Inc (TSX:SHOP)(NYSE:SHOP)

By far the most popular stock on this list, Shopify currently sports a $40 billion market cap. A few years ago, the company was worth just a few billion dollars.

The world’s leading provider of e-commerce solutions for digital entrepreneurs, Shopify has redefined what it means to be an online merchant.

In minutes, anyone in the world can build a beautiful web storefront with seamlessly integrated inventory management and payment processing. Plug-ins allow users to automatically execute fulfillment, packaging, and delivery needs.

What used to take a team of dozens of people—not to mention hundreds of thousands of dollars—now takes just one person sitting at their computer.

With the leading platform in a rapidly growing market, Shopify has taken market share nearly every quarter. Now trading at 25 times sales, shares are wildly expensive. Yet, again and again, Shopify has proven that it’s worth the premium valuation.

Constellation Software Inc. (TSX:CSU)

Perhaps the least-known stock on this list, Constellation Software flies under the radar on purpose. As I wrote previously, the company needs to ensure secrecy to reduce competition for potential deals.

Constellation Software’s business is particularly hyper-focused.

While larger peers like Microsoft focus on applications that appeal to a huge number of people, Constellation Software has revenue streams that span just a handful of customers. Its entire business strategy relies on offering niche software for incredibly specific industries or markets.

Offering mission critical software for niche industries has resulted in high profit margins and impressive contract renewal rates.

In order to grow, Constellation Software frequently acquires small competitors, sometimes for as little as $5 million. It then plugs this acquisition into its massive network, multiplying its value several fold overnight.

Despite rising more than 6,000% over the past decade, Constellation Software remains a market secret. To reduce others emulating its model, the company likely prefers to stay hidden.

The stock seems pricey at 50 times trailing earnings, but the free cash flow this business generates is enormous over the lifetime value of a contract.

TMX Group (TSX:X)

You’ve heard of TMX Group even if you think you haven’t. The company runs the Toronto Stock Exchange, the ninth-largest stock exchange in the world.

TMX Group is the cheapest stock on this list in terms of valuation. According to many metrics, it trades at a cheaper valuation than the S&P/TSX Composite Index. However, this stock is no slouch.

Since 2006, TMX Group shares are up more than 90% versus a 40% gain for the TSX overall. Compared to many of its peers, this stock looks like a bargain.

While TMX Group stock trades at 18 times trailing earnings, larger peers like Intercontinental Exchange Inc and Nasdaq Inc trade at 23 to 29 times trailing earnings. Yet, TMX Group has the highest dividend yield and arguably the tightest stranglehold on its domestic market.

The entire stock exchange industry continues to experience rapid consolidation, and due to its discounted price, don’t be surprised if TMX Group is bought out by the aforementioned rivals this year.

Forget Apple! Buy This TSX Stock Instead…

There’s something crucial you need to know about Apple’s stock today, especially if you already own it, know someone who does, or have even thought about buying it.

This revolutionary new technology involved in “Project Titan” should make any investor’s ears perk up.

But you may want to consider investing in a TSX-traded company that’s poised to have a drastically larger role in this new tech, and yet is less than 1% the size of Apple.

Discover why we’re especially excited about this tech opportunity for Canadian investors like yourself.

Click here to learn more!

More reading

Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Intercontinental Exchange. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool owns shares of Alphabet (A shares), Alphabet (C shares), Apple, Facebook, Microsoft, Shopify, and Shopify and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple.

Fool contributor Ryan Vanzo has no position in any stocks mentioned.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

As retirement approaches, investors would be well advised to start positioning their portfolios with an increasing weighting of lower-risk stocks that have the benefit of strong visibility and predictability and economically insensitive businesses.

This is all with the goal of reducing the volatility of your portfolio, because when the time comes to start withdrawing your money, you don’t want to have to take or monetize losses.

With TC Energy (TSX:TRP)(NYSE:TRP), RRSP investors get solid, growing, and reliable dividend income, as well as growth.

After an 8.7% dividend increase in February 2019, the company has guided to 8-10% annual dividend growth through to 2021.

In terms of growth, TC Energy stock has more than doubled in the last 10 years, all while delivering yearly dividend increases, which has brought the dividend per share from $1.52 to $3. And its stock has more than doubled.

First-quarter results

First-quarter 2019 EPS came in at $1.07 per share — better than expectations, which were calling for $1 per share in earnings — and 9.2% higher than the same quarter last year, driven by the completion of new projects in the U.S. natural gas pipeline segment as well as strong liquids results.

Funds from operations increased 12% to $1.8 billion, and distributable cash flow increased 13%. With this continued strong cash flow generation, TC Energy continues to expect that the majority of its capital project funding needs will be taken care of from cash flow generated.

Growth

TC Energy is advancing $30 billion of secured growth projects and over $20 billion of projects are under development.

The company is well capitalized and well positioned to pursue its growth opportunities, all while keeping its debt-to-EBITDA ratio below five times. It is currently at 4.6 times.

Since 2016, EBITDA has increased 29% to $8.6 billion. In the next two year, it is expected to increase another 18% to more than $10 billion.

In this same time frame, EPS has increased 38% to $3.86 and is expected to increase another 8% to more than $4.15.

Final thoughts

TC Energy is currently trading at a dividend yield of 4.57% and is still trading at historically low valuations. But the problems that the lack of oil and gas infrastructure in Canada have created are being increasingly recognized and it looks like change is coming.

LNG projects have been approved, the Trans Mountain pipeline expansion approval is looming, oil prices remain strong and rising, and natural gas prices have at least bottomed and may be setting up for a rally as LNG projects progress.

5 TSX Stocks for Building Wealth After 50

BRAND NEW! For a limited time, The Motley Fool Canada is giving away an urgent new investment report outlining our 5 favourite stocks for investors over 50.

So if you’re looking to get your finances on track and you’re in or near retirement – we’ve got you covered!

You’re invited. Simply click the link below to discover all 5 shares we’re expressly recommending for INVESTORS 50 and OVER. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a brief time only.

Click Here For Your Free Report!

More reading

Fool contributor Karen Thomas owns shares of TRANSCANADA CORP.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

DREAM Unlimited (TSX:DRM) is a real estate operating company and asset management firm. Significant business activities include real estate development and asset management for the Dream subsidiaries of TSX-listed real estate investment trusts (DIR.UN and DRG.UN) and investments in Canadian renewable energy infrastructure and commercial property companies.

Dream has looked to expand its land inventory with numerous land purchases in Saskatoon and Regina. It’s also developing multi-family housing in Alberta and developing retail operations throughout Canada. Dream also has grown its asset management business by using investment vehicles that provide income and long-term capital appreciation.

Important to note that Dream is the largest homebuilder in Saskatchewan and directly owns ~12,000 condo units and ~3.7 million sq. ft. of commercial space in the Greater Toronto region. Further, it owns ~10,000 acres of land in the Prairies. Much of its land is at approval stages for residential and commercial development. The company has also completed over $25 billion in commercial real estate transactions over the past 21 years, equipped with a team of real estate experts.

Dream reported a great start to the year, with book value per share increasing ~8% on a year-over-year basis. Recently, the company also reached an agreement with Dream Office, where Dream agreed to earn fees on Dream Office’s future development projects (i.e., 3.75% of total net revenues), while Dream Office will earn property management fees on Dream’s current and future income properties in Canada (i.e., 3.5% of gross revenues on assets). Dream has also increased its stake in Dream Alternatives by purchasing 2.2 million units in Dream Alternatives for $15 million in Q1 2019. Its ownership of Dream Alternatives now totals ~20%.

There are several catalysts on the horizon that could lead to Dream’s stock moving to fair value. Some of these include higher EPS growth that could be driven by asset management growth and Alberta lot land sales that could attract institutional buyers. At this point, a former link of CEO Michael Cooper with Dundee appears to be holding the stock from re-rating. Dream has been taking advantage of the weakness in its stock price by aggressively buying back shares and has recently started paying a small dividend.

Dream appears to be one of the cheapest stocks trading on the TSX. The fair value of the Dream’s holdings in the publicly traded Dream subsidiaries amounted to about 60% of Dream’s market value at end of Q1 2019 — implying that its asset management platform is trading for free!

Further, Dream has undeveloped land carried on the balance sheet at historical cost basis. Shares trade at a 60% discount to estimated NAV. Dream’s shares have been closely correlated with oil prices historically, and the recent run up in oil prices should bode well for share price appreciation.

The current valuation could be a great entry point for patient long-term value investors. Although, shares of Dream have been very volatile over the short term, CEO Mr. Cooper has an excellent track record, owns over 35% of the company through his private company, and has been buying shares hand over fist in the recent past.

Expect significant returns from this stock over the next decade!

5 TSX Stocks for Building Wealth After 50

BRAND NEW! For a limited time, The Motley Fool Canada is giving away an urgent new investment report outlining our 5 favourite stocks for investors over 50.

So if you’re looking to get your finances on track and you’re in or near retirement – we’ve got you covered!

You’re invited. Simply click the link below to discover all 5 shares we’re expressly recommending for INVESTORS 50 and OVER. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a brief time only.

Click Here For Your Free Report!

More reading

Fool contributor Nikhil Kumar has no position in the companies mentioned.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 
The Motley Fool by Vishesh Raisinghani - 4h ago

Consistency is the key to great investing. When it comes to long-term returns, what’s more important than potential growth or groundbreaking innovation is the predictability of earnings and the stability of profits?

A company with long-term visibility of earnings can make serious investments in its business, raise capital based on tangible predictions, and allocate cash more confidently. With this in mind, investors should seek out companies with business models based on recurring revenue and customer retention.

Here are the top five stocks with high recurring income, hefty margins, and impressive customer retention ratios:

Absolute Software (TSX:ABT)

The endpoint security and monitoring software provider has an extensive network of original equipment manufacturers who integrate the company’s solutions with their hardware. The firm managed to generate US$24.4 million in the second quarter of 2019. US$23.4 million, which is 95.9% of the total quarterly revenue, was classified as “commercial recurring.”

In fact, more than 95% of revenue has been recurring for the past few years. This year, management expects cash flow from operations to reach 10% and 14% of annual revenue. This robust outlook allows the company to pay a hefty dividend to shareholders — with the forward dividend yield currently standing at 3.6%.

Kinaxis (TSX:KXS)

Kinaxis (TSX:KXS) offers specialized cloud-based, software-as-a-service (SaaS) solutions for supply chain planning. This makes the company an integral part of the international trade ecosystem, allowing it to sign long-term contracts with mega corporations worldwide.

In 2018, the company generated US$155 million in revenue, 78% of which was subscription-based. Combined with its 26% EBITDA margin and $200 million cash balance, the company has enough stability to assure investors steady expansion and capital appreciation for years to come.

Descartes (TSX:DSG)(NASDAQ:DSGX)

Logistics management software provider Descartes (TSX:DSG)(NASDAQ:DSGX) has a similar business model to Kinaxis with a differentiated clientele. Over 1,600 ground carriers, 90 airlines, 30 ocean carriers, 900 freight forwarders and hundreds of manufacturers, retailers, distributors, private fleet owners and regulatory agencies rely on this company’s solutions every day.

During fiscal 2019, the firm generated US$275 million in revenue, 88% of which was derived from services which are highly recurring. Descartes also makes recurring revenue from its licensing business, which contributed 2% of the total annual sales last year.

Shopify (TSX:SHOP)(NYSE:SHOP)

Everyone’s favourite technology company Shopify (TSX:SHOP)(NYSE:SHOP) is built on a solid base of recurring revenue derived from its expanding network of online sellers. In its latest quarter, the company reported $44.20 million in monthly recurring revenue (MRR). This implies that nearly 45% of total annual revenue is recurring. Given the size of the e-commerce market, Shopify is a potential millionaire-maker.

Open Text (TSX:OTEX)(NASDAQ:OTEX)

Open Text (TSX:OTEX)(NASDAQ:OTEX) refers to itself as The Information Company. The good thing about information is that it’s needed on a recurring basis. The tech giant’s Enterprise Information Management (EIM) solutions are deployed by some of the largest companies in the world.

This expanding base of enterprise customers helps the firm generate over US$2 billion in annual recurring revenue, 75% of which is total annual sales.

Bottom line

A solid base of recurring revenue allows companies to make long-term decisions and improves visibility for investors. The five stocks listed here have incredible track records of sustaining and growing their recurring revenue streams. They probably deserve a prime spot on your watch list.

Free investor brief: Our 3 top SELL recommendations for 2019

Just one ticking time bomb in your portfolio can set you back months – or years – when it comes to achieving your financial goals. There’s almost nothing worse than watching your hard-earned nest egg dwindle!

That’s why The Motley Fool Canada’s analyst team has put together this FREE investor brief, including the names and tickers of 3 TSX stocks they believe are set to LOSE you money.

Stock #1 is a household name – a one-time TSX blue chip that too many investors have left sitting idly in their accounts, hoping the company’s prospects will improve (especially after one more government bailout).

Still, our analysts rate this company a firm SELL.

Don’t miss out. Click here to see all three names right now.

More reading

Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool owns shares of Shopify and Shopify. Shopify, Open Text and Kinaxis are recommendations of Stock Advisor Canada.

Read Full Article

Read for later

Articles marked as Favorite are saved for later viewing.
close
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Separate tags by commas
To access this feature, please upgrade your account.
Start your free month
Free Preview