With Easter around the corner, some of you might partake in family dinners, where you will have to endure your brother-in-law raving about cryptocurrencies and marijuana stocks. Personally, I like to keep it simple when it comes to investing. I try to ignore trends that often vanish as quickly as they appeared. Some might even call my approach to investing boring.

Peter Lynch, one of the greatest investors of all time, actively sought boring. Here is what he said on the subject: “The perfect stock would be attached to the perfect company, and the perfect company has to be engaged in a perfectly simple business, and the perfectly simple business ought to have a perfectly boring name. The more boring it is, the better.“

Today, let’s look at a boring company and determine if it is worthy of a spot in your portfolio.

Cascades Inc. (TSX:CAS)

I can’t think of a more boring company than Cascades. It has been around since 1964 and produces, converts, and markets packaging and tissue products that are composed mainly of recycled fibres. The company employs 11,000 people who work in close to 90 production facilities located in North America and Europe. Yet, despite being boring, it has been on a nice growth trajectory over the last few years.

The company recently capped off another great year, as sales were up 11% compared to 2016. It also laid out its 2017-2022 strategic plan, and it appears to include measures that should be beneficial to the company’s growth going forward. These include growing its presence in the United States, increasing their profitability margin from 10% to 15%, and continuing to invest heavily in innovation.

In terms of valuation, Cascades trades at approximately three times trailing earnings. We have to keep in mind, however, that the ratio is affected by unusually high earnings posted by the company due to the sale of its stake in Boralex Inc. A more reliable ratio not distorted by fluctuating earnings is the price-to-book ratio, and good news: Cascades currently trades at book value!

Cascades provides great geographic diversification, as it derives 39% of its sales in both Canada and the United States, and the remaining 22% come from Europe and other regions. If you are environmentally conscious, you would be pleased to know that the company takes the environment to heart. It established a sustainable development plan, and 80% of its products are made with recycled fibres.

Cascades also pays out a steady dividend, which has been uninterrupted since 2003. However, the company has not rewarded shareholders with dividend increases during that period, and the current yield stands at a meagre 1.14%. Hopefully, the company will consider increasing the dividend over time as it continues to mature.

Foolish bottom line

Cascades might not get the same attention in conversations in cocktail parties as cryptocurrencies or marijuana stocks, but it’s a lot more stable and is a worthy pick for long-term investors. As boring as the company may be, its 354% return over the last five years is anything but boring.

The post Sometimes Boring Is Good appeared first on The Motley Fool Canada.

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Investopedia defines biases as human tendencies that lead us to follow a particular quasi-logical path, or form a certain perspective based on predetermined mental notions and beliefs. When investors exhibit biases, they fail to consider all the facts and can overlook evidence that goes against their initial opinion.

Cognitive biases are due primarily to faulty reasoning and could arise from a lack of understanding of proper statistical analysis techniques, information processing mistakes, or memory errors. Such errors can often be corrected or mitigated with better training or information.

In contrast, emotional biases are not related to conscious thought and stem from feelings, impulses, or intuition. Therefore, they are more difficult to overcome and may have to be accommodated.

Today, let’s look at two common cognitive biases and determine if there are ways to overcome or mitigate these biases.

Confirmation bias

It occurs when investors tend to look for and notice information that confirms their beliefs, and they overlook or underestimate information that contradicts their beliefs. For example, if you are overly attached to a particular holding in your portfolio, you might only be looking for information that’s favourable to that stock.

This can be dangerous for investors, as they can end up building a position in a bad investment by only focusing on positive news and ignoring negative information about the investment. This can also lead to the undesirable side effect of having a poorly diversified portfolio.

It is important to seek out contrary views and information to allow you to consider all the facts before making investment decisions.

Recency bias

This bias is the tendency to recall recent events more vividly and assign an outsized importance to these events. In other words, it takes place when you think that what’s been happening lately will keep happening. For example, some people avoid flying immediately after seeing news reports of an airplane crash, even though flying is statistically, by far, the safest way to travel.

An example in the investment world is when investors think that the stock market will continue to go down after a correction or that the stock market will keep on rising after a bull market.

This can potentially have disastrous results for investors as they find themselves selling undervalued securities and buying overvalued securities. This accomplishes the complete opposite of what the investing 101 mantra “buy low, sell high” dictates.

How to mitigate biases?

In my opinion, the best way to mitigate or even overcome biases is to create rules to follow, such as choosing to invest in solid companies and having a long-term focus. An example of a great company that investors could buy today and hold for a long time is Toronto-Dominion Bank (TSX:TD)(NYSE:TD).

It’s impossible to completely eliminate behavioural biases when we make investment decisions, but I find that being mindful of their existence makes me concentrate on making rational investment decisions. I challenge you to scrutinize your own process the next time you make an investment decision and to try to identify and mitigate, as much as possible, your own biases.

The post Are These Behavioural Biases Hurting Your Returns? appeared first on The Motley Fool Canada.

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According to Statistics Canada, the average tuition fee in 2015 was $6,191 per year, and that amount is projected to skyrocket to $17,200 by 2035. Some estimates put the total cost of a four-year degree in 2035 well over $100,000 when you factor in other costs like books and lodging.

The best way to meet this exorbitant future obligation can be summed up in four words: Registered Education Savings Plan (RESP). Read on to find out why you need to open an RESP today and to learn about a couple investment ideas for that account.

What’s an RESP?

In a nutshell, an RESP is an investment vehicle available to Canadian parents to save for their children’s post-secondary education. On the first $2,500 contributed annually for every child, the government will issue a Canada Education Savings Grant (CESG) equal to 20% of the contribution. There are no yearly contribution limits, but the lifetime maximum is $50,000 per child, and the CESG is capped at $7,200.

Families earning under a certain threshold may also qualify for a Canada Learning Bond on top of the CESG, and that lifetime limit is set at $2,000 per child.

The best part is that investments within an RESP grow tax-free. Let’s assume that you only qualify for the CESG and that you contribute $2,500 annually for 20 years. Let’s also assume that you earn a 6% annual return on your investments. The RESP would grow to $113,565!

How can we obtain a 6% annual return? Let’s look at a couple investment ideas that have the potential of generating this level of return over the next 20 years.

Types of investments to include in an RESP

You can hold a wide variety of investments within an RESP, including GICs, bonds, or equities. Given the 20% match offered by the government, it is not, in my opinion, necessary to take on a high level of risk when investing in an RESP. At the same time, the time horizon is usually long enough that you should be overweight in equities, especially in the early years.

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is an example of a suitable stock for an RESP. The company has delivered stellar results in the last decade, and I don’t see it slowing down anytime soon. TD targets a 7-10% adjusted EPS growth over the medium term and continues to expand its presence in the U.S.

Telus Corporation (TSX:T)(NYSE:TU) is another company that could be added to junior’s RESP today. In the most recent quarter, Telus added 152,000 new wireless, internet, and TELUS TV customers, which is up 41% over the previous year, and the average revenue per user was up 3%.

Both of these companies are also known for offering the best customer service in their respective industries, and between them you get a juicy dividend yield of 3.9%. That puts you two-thirds of the way to the 6% annual return used in the above assumption. It’s a good starting point, but investors should aim to continue adding solid companies over time to build a diversified portfolio.

Foolish bottom line

In my opinion, an RESP is by far the best vehicle to save for your kids’ education given the generous government match and the benefits derived from many years of tax-free growth. Even with these advantages, it’s mind boggling that nearly two-thirds of students today don’t have an RESP.

The great Warren Buffett once said that he wants to leave his kids “enough money so that they would feel they could do anything, but not so much that they could do nothing.” Open an RESP today to help your kids graduate debt-free, thus allowing them to feel like they can do anything.

The post Why You Need to Open an RESP Now appeared first on The Motley Fool Canada.

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The stock market has been on quite a run in the last few years. The longer the bull market persists, the more that investors will start fearing a correction or even a crash.

Deutsche Bank’s research shows that the stock market, on average, has a correction every 357 days. A correction is defined as a drop of at least 10% from its recent high. Unfortunately, I don’t have a crystal ball to tell you when the next correction will occur, but I can suggest a way to prepare for such an eventuality.

Spoiler alert: this piece of advice does not involve loading up on Bitcoin.

The case for utilities

One way that investors can prepare for a market meltdown is to add stocks to their portfolios that tend to hold up better in such situations. This is where utilities come in. These are companies that deliver essential services, such as electricity, and are therefore more resilient when the markets turn sour. In other words, they have a relatively low correlation with the broader markets.

Take Fortis Inc. (TSX:FTS)(NYSE:FTS) for instance, which has a beta of 0.01. A beta equal to one means that the stock moves with the market, so a beta less than one indicates that the stock is theoretically less volatile than the market. During the Financial Crisis of 2008, the S&P/TSX Composite Index was down approximately 50% during a 10-month stretch, but over that same period, Fortis was down only 20%.

Let’s have a closer look at Fortis.

Fortis Inc.

Fortis is a leader in the North American regulated electric and gas utility business, with total assets of approximately $47 billion and 2016 revenue of $6.8 billion.

Whether we are going through an economic expansion or a recession, Fortis just keeps chugging along, and this is not about to change. The company has announced a five-year $14.5 billion capital program from 2018 through 2022. The program should help Fortis grow its existing 3.2 million customers and as a result, the company should also see some growth on its top line in the years to come.

Dividend payments are discretionary, which means that companies can cut their dividends or even eliminate them all together at any time. However, dividend payments issued by utility companies have been very reliable historically.

Fortis is no exception, as it has increased its dividend in 44 consecutive years and offers a yield slightly under 4% as of this writing. The payout ratio has been hovering around the 65-70% range in the last few years. This is an acceptable ratio for a utility company and leaves room for future increases. In fact, the company intends to grow dividends annually by an average of 6% through 2022.

It is also worth noting that the company has delivered an average annualized total shareholder return of 10.2% over the last five years, which easily surpasses the 8.6% return put up by the S&P/TSX Composite Index over that period.

Foolish bottom line

Let’s face it; this incredible bull market can’t last forever. A market pullback will inevitably happen—it’s just a question of when. Will you be ready when that time comes? Consider adding Fortis to your portfolio today to help you prepare.

The post Does Fortis Inc. Belong in Your Portfolio? appeared first on The Motley Fool Canada.

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The great Warren Buffett once proclaimed that his favourite holding period is “forever.” Are there any stocks in the Canadian market that could be bought today and held forever?

Let’s look at Toronto-Dominion Bank (TSX:TD)(NYSE:TD) to determine if it fits that mould. This financial juggernaut employs 83,000 people in offices around the world and is the second-largest Canadian bank by market capitalization and the sixth-largest in North America. The company reported another strong quarter to finish off 2017, but let’s dig a little deeper before pulling the trigger.

Great track record

Past performance is by no means a sure predictor of future results, but it’s certainly a good starting point when analyzing a potential investment.

Looking at TD’s total shareholder return over the last 10 years, it boasts a compounded annual growth rate (CAGR) of 11.5%, which easily surpasses its Canadian and North American peers, who have managed, on average, a CAGR of 8.8% and 5.1%, respectively. To put that in perspective, a $1,000 investment in TD 10 years ago would be worth $2,970 today.

Most recently, TD delivered a solid fourth quarter to finish off another great year. The company reported earnings of $2.7 billion and EPS of $1.42, both up 18% compared with the same quarter last year.

The company continues to provide great returns to shareholders in the form of buybacks and dividends. TD has managed to grow its dividend by an astonishing annualized rate of 10% over the last 20 years. At the time of this writing, the dividend yield comes in at a very respectable 3.27%.

Growth prospects going forward

A great track record is only part of the story when it comes to making sound investments. Since the markets are forward looking, we also need to look at what TD has in store down the road.

The company has been on a remarkable expansion trajectory in the United States. It now provides a full range of products and services to more than nine million customers at more than 1,200 convenient locations. As impressive as these stats are, it is worth noting that the company only operates in 15 states and Washington, D.C., so it appears like there is room to further expand south of the border.

TD has stated in its fourth-quarter earnings release that it targets a 7-10% adjusted EPS growth over the medium term. For a company that size, this represents a very acceptable growth rate. When combining a growing EPS with the current payout ratio of only 43%, future dividend payments appear to be fairly safe, and there is also room for dividend hikes.

Foolish bottom line

Given its past performance and growth prospects, TD is definitely worthy of investors’ consideration.

Investors have to keep in mind the risks associated with this investment. No equity investment is riskless, but a great way to mitigate at least some of that risk is to extend the holding period. One could even make the case for extending it to forever.

TD is currently trading above its peers with a trailing P/E ratio of 13.41 and a forward P/E ratio of 11.72. These metrics do not imply a screaming buy at today’s price, but I think that investors could do a lot worse than to add this fantastic company to their portfolios—forever.

The post Is Toronto-Dominion Bank a Forever Stock? appeared first on The Motley Fool Canada.

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According to a recent by Statistics Canada, only a small fraction of Canadians is covered by a defined-benefit pension plan. This leaves many Canadians scrambling to plan for retirement on their own.

Canadians too often rely on GICs and high interest savings accounts to grow their retirement savings. The problem is that these instruments barely keep up with the inflation rate. A much better alternative is to invest in growing assets, such as stocks, within a Registered Retirement Savings Plan (RRSP).

Today, let’s look at four stocks that could be held for decades, serving as cornerstones for an RRSP portfolio.

Alimentation Couche-Tard Inc. (TSX:ATD.B)

Couche-Tard is a world leader in the convenience store and road transportation fuel retail sector and is the largest independent convenience store operator in terms of number of company-operated stores in North America.

The company has managed to grow at a very impressive clip over the years, mainly through acquisitions. Its latest acquisition, Holiday, will add 522 locations across 10 U.S. states.

These acquisitions do not leave much room for dividend payments to shareholders but that small dividend has been growing annually on average by more than 20% in the last six years. Look for that dividend to keep increasing nicely over the years, as the company slows the pace of its acquisitions.

Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI)

Rogers is a diversified communications and media company and Canada’s largest provider of wireless communications services.

It’s no secret that the company has been losing cable subscribers, but it continues to grow its top line thanks to its wireless segment. Rogers is poised to keep growing that segment, as it is well positioned to take advantage of the increase in mobile data consumption, which has grown 40% annually in Canada over the last six years.

The company has not rewarded investors with dividend increases in the last three years, but it still pays a steady and respectable 3% dividend. The stock has pulled back by 10% in the last couple of months, providing a good entry point for long-term investors.

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

Next up we have the global energy infrastructure leader Enbridge.

The company had a tough year in 2017 with the stock finishing the year down about 14%. On the bright side, this price decrease, combined with a recent 15% dividend hike, has boosted the dividend yield to a whopping 5.47% as of this writing.

The year 2017 was also the year that Enbridge became the largest energy infrastructure firm in North America after acquiring Houston-based Spectra Energy in an all-share $37.5 billion deal.

The integration of Spectra comes with its challenges, but over the long term the combined asset base and expanded geographic footprint should provide many future growth opportunities for the company.

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS)

Finally, we have Bank of Nova Scotia, one of Canada’s big banks. The bank calls itself Canada’s international bank, as it derives 42% of its income from offices located abroad. This provides great international exposure to investors.

Total shareholder returns over the last 20 years has been 12.6% annually. Is this good? Consider this: $1,000 invested 20 years ago would be worth $10,734 today provided that the dividends were reinvested along the way.

Speaking of dividends, Bank of Nova Scotia is as reliable as they come when it comes to paying out dividends. The company has paid a dividend to shareholders every year since its foundation in 1832. Also, it has increased its dividend in 43 of the last 45 years.

Past performance is by no means a sure predictor of future results, but I’m not willing to bet against it. Are you?

Foolish bottom line

These companies provide investors with industry and geographic diversification, as they operate in different sectors, and most of them conduct a significant amount of business beyond the Canadian boarders.

None of these stocks will double overnight, but they should continue to grow at a steady pace for decades to come and provide a solid foundation for retirement portfolios.

The post 4 Cornerstone Stocks for Your RRSP appeared first on The Motley Fool Canada.

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Some might argue that with interest rates currently on the rise (both the Federal Reserve and the Bank of Canada have hiked the key interest rate in 2017, and more increases are expected in 2018), dividend-paying stocks are not as appealing, but I disagree, and I have history to back me up.

According to data compiled by Professors Fama & French, dividend-paying stocks have outperformed non-dividend payers, averaging 10.4% annual growth vs. 8.5% from 1927 to 2014 and have also exhibited lower volatility. You can bet against that long-term trend if you wish, but I think every portfolio should include at least some dividend-paying stocks. Today, let’s take a closer look at three stocks that are worthy of consideration to invest your fresh TFSA capital in 2018.

Genworth MI Canada (TSX:MI)

The company is the largest private residential mortgage insurer in Canada and is a dividend-paying machine. In 2017, the company hiked its dividend for an eighth consecutive year since its IPO in 2009 and currently yields over 4.3%. With a current payout ratio of only 35%, the dividend appears sustainable, and future increases are also a possibility.

The company is up over 28% year to date, but it still looks relatively cheap, trading very close to book value (1.03) and at 7.42 times earnings.

Killam Apartment REIT (TSX:KMP.UN)

Our next contestant is one of Canada’s largest residential landlords, owning and operating 184 apartment properties and 35 manufactured home communities.

Owning shares of a real estate investment trust (REIT) is a great way to gain exposure to real estate and offers some advantages over direct real estate investing. These advantages include greater liquidity (you can sell your shares almost instantly and at a very low fee) and the ability to collect your income (dividends) without having to deal directly with bad tenants.

This REIT offers a yield of 4.36% and hands out distributions on a monthly basis.

BCE Inc. (TSX:BCE)(NYSE:BCE)

Finally, we have Canada’s largest communications company, the well-known BCE.

This is by no means what you might call an exciting company in terms of growth, and it won’t make you rich overnight, but it’s as steady as it gets when it comes to paying out dividends. The company has increased its dividend every year since 2009, sometimes more than once a year, and it has a yield of 4.75% as of this writing.

The telecommunications industry might seem saturated, but BCE keeps finding ways to add to its top line. One such example is its recent acquisition of Manitoba Telecom Services.

The payout ratio of 86% is a little high, but it’s not unusual for a mature company and is also in line with its peers in the industry. The dividend should remain sustainable, as long as BCE maintains or increases its market share and continues to increase its yearly revenue. It has done a remarkable job on both counts in recent years.

Foolish bottom line

These three companies currently yield over 4% and provide diversification benefits for investors, given that they operate in three different sectors. Do yourself a favour in 2018: add those solid companies to your TFSA and collect fat dividend cheques for years to come.

The post Supercharge Your TFSA With These 3 Dividend-Paying Stocks appeared first on The Motley Fool Canada.

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