Revealed: 3 Top Investing Tips From Canada’s Most Secretive Billionaires

Invest like Canada’s most secretive billionaires by loading up on Royal Bank of Canada (TSX:RY)(NYSE:RY) and Nutrien Ltd. (TSX:NTR)(NYSE:NTR) shares.

| More on:
Silhouette of businessman sit on chair and hold a cigar and looking at the city in night.

Image source: Getty Images

Most Canadians have never heard of James Richardson and Sons, a Winnipeg-based company that has grown to become one of Canada’s largest conglomerates since its founding in 1857.

The company owns an interesting array of assets. Its largest holdings by sector are in the agriculture space, and owns retail shops, and even grain transport infrastructure like terminals and shipping lines. The company also has a large oil and gas presence through its wholly-owned subsidiary Tundra Oil and Gas, as well as owning a big chunk of financial services brands Richardson GMP and GMP Capital. Finally, the company has large real estate holdings, primarily in Downtown Winnipeg.

Despite it being one of Canada’s largest privately held holding companies (comparable to Jim Pattison’s Vancouver-based Jim Pattison Group) and the family boasting an impressive net worth recently estimated at $6.55 billion, precious little is known about the clan and how they invest.

The secretive family doesn’t appear to be about to let investors in on their formula just yet. But we can gather some important tips from the company’s publicly available moves to make us all better at our craft. Let’s take a closer look at three of these strategies.

Bet on Canada’s farmers

The Richardson family has been involved in agriculture for all of the company’s 152 years in operation. It started as a grain merchandiser when James Richardson founded it in 1857. It has since grown to be one of North America’s largest agri-business concerns, boasting assets like canola oil processing plants, crop input facilities, and grain storage and transport. The division has some 2,500 employees across North America.

Canadian investors can get similar exposure by investing in Nutrien Ltd. (TSX:NTR)(NYSE:NTR), a vertically integrated manufacturer and seller of crop fertilizer, seeds, and crop protection products for North American farmers.

The bull thesis is simple. It’s incredibly expensive to farm in 2019. Equipment costs have skyrocketed, and land prices keep marching higher. A farmer who isn’t investing in the success of their crops will be left behind, which is good news for North America’s undisputed leader in fertilizer sales.

Since Nutrien also dominates fertilizer manufacturing, it can use sales information to better manage its supply. This will help avoid gluts of supply on the market, which pushes prices down.

Nutrien shares pay investors a generous — and recently increased — 3.4% dividend while the stock trades at a reasonable 17x expected forward earnings.

Diversification

Diversification has long been an integral part of the Richardson family dynasty.

The company is involved in at least four different businesses — and who knows how many additional under the radar investments the family has made over the years.

As much as investors might want to concentrate on their best ideas, the fact is diversification protects you just in case those best ideas don’t work out. Focusing your entire net worth on just a handful of ideas is silly.

Patience

After some 70 years in business, the previous financial services portion of Richardson and Sons was acquired by Royal Bank of Canada (TSX:RY)(NYSE:RY) in 1996. The deal, valued at $480 million, was paid for using a combination of cash and Royal Bank stock.

The Richardsons held onto the majority of the stock received in the deal and now own more than $1 billion worth of Royal Bank shares. That’s an impressive investment.

It’s easy to see why the company would hold shares in Canada’s largest bank for 20+ years. Royal Bank is a financial services behemoth, leading the Canadian banking sector in assets, deposits, mortgages outstanding, and wealth management. It also has large capital markets and insurance divisions. And remember that RBC is also big in both retail banking and wealth management in the United States.

One reason why the Canadian banking sector is such an attractive place to invest is because of mortgage default insurance, which protects the bank in case of a borrower not paying their mortgage. This has been around long enough Canadian investors forget about it, but it’s incredibly powerful to know the riskiest mortgages are backed by the Canadian government.

And remember, Royal Bank pays an attractive 3.8% yield. The Richardson family’s dividends alone from their Royal Bank stock likely exceed $40 million annually.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nelson Smith has no position in any of the stocks mentioned. Nutrien is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

thinking
Dividend Stocks

Should You Buy BCE Stock for its 8.6% Dividend Yield?

Down over 20% from all-time highs, BCE stock offers you a tasty dividend yield in 2024. But is the TSX…

Read more »

grow dividends
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how high-quality TSX dividend stocks and the power of compound interest can help grow your investments by 400% or…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

2 Soaring Stocks I’d Buy Now With No Hesitation

These two stocks may be the most expensive on the market, but they're high for a reason! And I'm still…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Invest $374.50 Each Month to Create Passive Income of $288 in 2024

Investing a specific amount each month to create passive income this year is possible with monthly dividend payers.

Read more »

Happy retirement
Dividend Stocks

2 Stocks to Help Turn $100,000 Into $1 Million

If you want to reach $1 million, $100,000 can certainly get you there. Even if you invest in some low…

Read more »

warning or alert
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

There's no shortage of companies that raised their dividends recently. Here's a trio of options to consider buying now.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally 

Three TSX stocks are in a downtrend amid headwinds. 2024 may be rocky for them, but they are poised for…

Read more »

protect, safe, trust
Dividend Stocks

3 Safe Dividend Stocks to Beat Inflation

These three dividend stocks are excellent buys to beat inflation, given their solid underlying businesses and high yields.

Read more »