Tag Archives: TSX:FTS

3 Tips To Improve Your Stock Returns

Are you new to stock investing or an experienced investor who wants to improve their stock returns? Here are a few tips that should help.

  • Know yourself well.
  • Know your stocks well.
  • Know the stock market well.

I will include examples to illustrate the points. 

Know Yourself Well as an Investor

Don’t know what stocks to invest in? Seek stocks that suit you in terms of your temperament and risk tolerance. You might need to test the waters to find your group of stocks.

One way to do so is by investing in a virtual account so that you won’t lose any real money if they turn south. If you can’t raise your enthusiasm from that, consider investing tiny amounts to get a feel of stock investing.

If you’re an aggressive investor and want high growth, consider growth stocks like Amazon (NASDAQ:AMZN), Alibaba (NYSE:BABA), and Tencent (TCEHY).

Conservative dividend stocks

If you’re a conservative investor, think about sticking with proven businesses. Personally, I find it’s easier to get started with dividend and value investing, which focuses on getting safe dividends and paying fair or better valuations for stocks. 

One stock I bought earlier this month that falls in this category is TC Energy (TSX:TRP)(NYSE:TRP). It is a top 15 Canadian dividend growth stock with 19 consecutive years of dividend growth. Its 10-year dividend growth rate is 7%. TRP stock is already up close to 7% from when I bought it. However, it still offers a juicy yield of almost 5.4%, which is still attractive levels.

TC Energy operates a gas and liquids pipeline and power and storage portfolio. Buying the stock at discounted valuations (such as now!) has led to double-digit long-term returns. There’s no reason that this time will be any different.

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Fortis (TSX:FTS) Stock: Is It a Buy?

Fortis (TSX:FTS)(NYSE:FTS) stock is as stable as stocks go. It’s perfect for conservative and risk-averse investors. Its predictable profitability has allowed it to be one of two Canadian Dividend Aristocrats with continuous dividend increases for 46 years or longer.

Dividend Safety

Fortis stock has a 10-year dividend growth rate of about 6%. The top North American utility is so confident about its growth that it already announced its intention to continue increasing its dividend at an average annual growth rate of 6% through 2024.

Its payout ratio has been at about 70%, and that’s not about to change.

Predictable Business & Profitability

Fortis has 10 utility operations diversified across Canada, the U.S., and the Caribbean. It’s a regulated utility with a focus on electricity/natural gas transmission and distribution assets and highly predictable earnings.

Thanks to management’s excellent decisions in making strategic U.S. acquisitions: Central Hudson (in 2013), UNS Energy (in 2014), and ITC Holdings (in 2016), especially when the loonie was super strong against the greenback in 2013 and 2014, Fortis has greatly diversified its operations and now earns about 65% of its earnings from the U.S.

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How to Create a Passive Income Portfolio

To create a passive income portfolio, you can invest in bonds or stocks that generate interest or dividend income without you having to lift a finger. I prefer to invest in stocks which have outperformed bonds in the long run.

I also like the concept of investing in stocks because I’m owning stakes in businesses and benefiting from their profits (although I also take on their risks). This is markedly different from purchasing bonds for which you’re lending your money to governments or corporations for interests in return.

In fact, dividend investing is my favorite way to generate passive income. There are so many safe dividend stocks to choose from. Even in a booming stock market like today, you can still find quality businesses at good valuations.

Here’s how to create a passive dividend income portfolio:

  • Buy stocks that offer safe dividends at good valuations
  • Diversify but don’t di-worsify
  • Aim for a low-maintenance portfolio that’s replicable, scalable, and can be largely automated
grow a money tree

Buy stocks that offer safe dividends

The U.S. and Canadian stock markets offer yields of 1.8% and 2.8%, respectively. There are plenty of safe dividend stocks that offer higher yields of about 3-6%.

However, typically, the higher the yield of a stock, the slower its dividend growth will be. (Sometimes, high yielders don’t increase their dividends.) Similarly, low yield stocks tend to increase their dividends faster. Typically, dividend growth stocks are safer and better than stocks that simply maintain their dividends.

Buy stocks at good valuations to protect your invested capital and maximize your gains.

Here are a few examples.

A high yield example

NorthWest Healthcare Properties REIT (TSX:NWH.UN) owns a high quality portfolio of medical office buildings and hospital properties in major markets in Canada, Brazil, Germany, The Netherlands, Australia, and New Zealand.

The healthcare REIT generates stable cash flows from having a high occupancy of about 96% and a weighted average lease expiry of 13 years. Additionally, it gets organic growth from having more than 70% of its net operating income indexed to inflation. It also has CAD$370 million projects in its development pipeline that’ll also add to growth.

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