As much fun as this investing stuff is, it’s easy to overcomplicate things. A portfolio is like a bar of soap; the more it gets handled, the smaller it gets.
Which is why every portfolio should have core positions in some of Canada’s finest stocks. Not only do these companies have some really smart people in charge, but they also have the holy grail of stock market investing — a enduring competitive advantage. It’s what Warren Buffett looks for in an investment, and you should too.
Fortunately, there are dozens of solid Canadian companies that are dominant in their sectors, with the type of business that can only be replicated with years of patience and investments worth billions. And since these stocks tend to have predictable cash flows, investors are also paid a generous dividend just for being an owner. If you reinvest those dividends, you’re one step closer to really turbocharging your portfolio’s return.
Here are three stocks that would look great in your registered retirement savings plan (RRSP).
The company’s crown jewel is its wireless division. Its churn — which is a measure of how many customers it loses in a quarter — is insanely low, recently dipping below 1%. Add in its steady growth in both the number of subscribers and the average revenue per user, and Telus’s wireless business is head and shoulders above the competition.
The TV business isn’t bad either. Unlike competitors in the cable and satellite space, Telus is actually growing subscribers. Year-over-year growth was 14%, and that’s even with service being limited to mostly large cities. Telus has borrowed ideas from its wireless division, giving a free TV or an Xbox to anyone who will sign up for a three-year contract, and it appears to be working pretty well.
Plus, Telus has a great dividend. It currently pays a 3.8% yield and has pledged to increase the dividend twice in 2015.
When Fortis Inc. (TSX:FTS) raises its dividend in 2015, it will mark the 43rd consecutive year of giving investors an annual raise. That kind of record is as good as it gets in Canada.
Fortis owns a lot of great assets that aren’t very exciting, but deliver consistent cash flow. It owns power plants across Canada, as well as in New York state, Arizona, and the Caribbean. It owns natural gas assets in British Columbia and in two U.S. states. It also owns hotels and commercial real estate across eight provinces, but it has recently indicated it’s looking to get out of real estate to focus on being a utility.
Put them together, and you have a great set of assets. There’s also exposure to the U.S. dollar, which means a nice boost once profits are converted back to loonies.
The argument for owning Calloway Real Estate Investment Trust (TSX:CWT.UN) is a simple one. Out of the company’s 120 retail developments, Wal-Mart is the anchor tenant of 77 of them.
Investors have traditionally been wary of a company with approximately 25% of revenues from one customer, but with Calloway, I see it as a huge plus. Wal-Mart is the kind of tenant that will attract foot traffic on a consistent basis. This makes additional space easier to rent, and at a premium too. And since Wal-Mart is well known to prefer long-term leases, there’s little chance these two companies will fight. There’s too much at stake for both of them to not get along.
Calloway’s shares currently yield 5.3%, a dividend easily supported by funds from operations. The company’s payout ratio is just 84%, and current occupancy is the best in the sector, coming in at 99%. The balance sheet is in good shape, and the company has nearly 10 million square feet of growth projects coming online in the upcoming years.
Looking for more dividend stocks? Check out this dividend payer… It’s our TOP pick for 2015, 2016, and beyond.