Safety of your investment is, of course, another important factor to consider. You want to make sure the company you invest in is financially strong. This will enable it to maintain its dividend. The following companies provide relatively high dividend yields along with safety of investment.

RioCan REIT

RioCan (TSX:REI.UN) is one of Canada’s largest REITs, with a market capitalization of approximately $8 billion. The company’s portfolio comprises 230 properties, with a total net leasable area of approximately 39 million square feet.

The company owns, manages, and develops retail-focused properties located in prime and high-density locations across Canada. RioCan’s property portfolio includes grocery-anchored, urban retail, mixed-use and non-grocery-anchored centres.

Dealing with the e-commerce effect

Management is implementing a strategy to combat the e-commerce effect that has negatively impacted retail REITs over the past few years. One of the components of the strategy is to transition its tenant mix to those retail areas that are less impacted by the e-commerce trend.

The areas include personal services, food and restaurants, value retailing, and lifestyle and fitness offerings. Currently, 73% of the company’s rent comes from these necessity-based and service-oriented tenants.

Another component of the strategy is to shift part of its portfolio to residential properties from retail properties. In March 2018, RioCan announced its residential brand, RioCan LivingTM: its entry into the residential market. Currently, 2,100 residential units are under construction with an additional 2,200 residential units to begin by 2021.

Strengthening the quality of the portfolio

RioCan is committed to improving the quality of its portfolio. Management is concentrating on properties within fast-growing, highly populated and high-income areas, while divesting properties in secondary markets. In 2018, the company divested about $1 billion of secondary market properties.

In 2019, management expects that 90% of the company’s revenue will be generated from Canada’s six-largest markets, while 50% of revenue will be generated from the GTA.

Solid financial performance

For the year ended December 31, 2018, FFO per unit was $1.85, up 3.3% from 2017.  The company is moderately leveraged, with debt to total assets at about 42%, at June 30, 2019. In addition, RioCan maintains an investment-grade credit rating.

RioCan pays a very attractive dividend. The dividend currently has a forward yield of 5.5%. In addition, over the company’s 25-year history, it has returned 15.7% to investors compared with 8.2% for the S&P/TSX index.

H&R REIT

H&R (TSX:HR.UN) is also one of Canada’s largest REITs, with a market capitalization of approximately $6.5 billion. The company’s portfolio comprises around 465 properties, with a total net leasable area of approximately 43 million square feet.

Diversified portfolio of properties types

Management has implemented a diversification strategy to minimize risk. The company invests in four different real estate asset classes. They comprise office (49%), retail (31%), residential (13%), and industrial (7%). Properties are also geographically diversified across Canada (67%) and the United States (33%).

Predictable and stable income

H&R owns a long list of creditworthy tenants such as Bell Canada and Hess Corporation. These tenants are locked into long-term leases, with contractual rent escalations. The average remaining lease term is 9.8 years — one of the longest in the industry. This, along with high occupancy rates, provides predictable and stable income.

Improving the quality of the portfolio

H&R is pursuing a capital-reallocation program. In 2018, the company sold about $1 billion of lower-growth assets, including all of its U.S. retail portfolio. At the same time, investments were made into development projects and its U.S. residential rental portfolio. This has significantly improved the growth profile of the company.

High investor return

H&R provides a very appealing dividend. It currently has forward yield of just over 6%. Moreover, the average annual return for investors has been 13% since its inception in 1997. The company is moderately leveraged, with debt to total assets at around 45% at March 31, 2019. In addition, H&R maintains an investment-grade rating.

Final thoughts

RioCan and H&R both boast attractive dividend yields and solid long-term returns, which make them ideal for the TSFA investor. In addition, both companies offer safety of investment by maintaining solid business strategies and moderate leverage. Now is a good time to consider investing in them.

The post 2 High-Yielding REITs to Buy Now for Your TSFA appeared first on The Motley Fool Canada.

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This is important because markets are forward looking, so when economic indicators turn lower, markets can react quickly and erase price gains on your stock before the company actually experiences a meaningful slowdown.

To protect your portfolio from such occurrences while still putting your money to work, you should consider investing in recession-resistant growth companies such as goeasy (TSX:GSY).

goeasy offers lending and leasing services in the financial services market. The company is geographically diversified across Canada with over 400 branches and stores. The diversification minimizes vulnerability to a particular regional economy.

goeasy operates its business through two divisions: easyfinancial and easyhome. The easyfinancial division, with $368 million in annual revenue, offers installment loans to customers who don’t have access to bank financing, while the easyhome division, with $138 million in annual revenue, provides name-brand furniture, appliances, and electronics through leasing agreements.

High-margin business

The company operates a very high-margin business. goeasy’s operating margin was 23% over the last year. The company is able to achieve such high operating margins because of the extremely high interest rates it charges its customers. easyfinancial’s interest rates start at 19.99%, while easyhome’s products have a fixed annual interest rate of 29.99%.

Spectacular operating performance

The company’s operating performance has been consistently impressive. Since 2001, goeasy’s revenue grew at a CAGR of 12.7%, while net income grew at CAGR of 29% and EPS grew at a 22% CAGR. However, most impressive of all is that the company’s stock price returned 5,412% over the same period.

Recession-resistant business

The company’s business is relatively recession resistant. This is because when the economy slows and people lose their jobs, a whole new category of people are in need of goeasy’s services.

While it’s true that the company experiences a higher delinquency rate from its current customers in slower economic times, the losses are, for the most part, offset by the increase in new customers who require the company’s services.

Growth and income

The company’s stock price is trading at around $55.50, just slightly below its all-time high of $56.30. The stock price has soared 38% over the last year, and, as I previously stated, has gained 5,412% since 2001. Moreover, despite the stock’s impressive gains, its P/E ratio is only about 11 — significantly lower than the overall market.

goeasy began paying a quarterly dividend in 2004. The company is currently paying a quarterly dividend at the rate of $0.31 per share for a forward annual dividend yield of 2.6%. This is a very respectable dividend yield for a growth company.

Legislation risk

The company is governed by both federal and provincial law. There hasn’t been new federal legislation affecting interest rates since 1980. The risk the company faces is that new legislation could limit the interest rates on loans and leases the company currently charges. If this were to happen, it would undoubtedly lower the company’s operating margin.

At the same, new legislation could also remove a hanging cloud of uncertainty hanging over the company. This would make investors more comfortable with the stock and perhaps expand its P/E ratio.

Final thoughts

The company’s operating performance and stock have both performed exceedingly well, as evidenced by the numbers. Moreover, goeasy’s high-margin business and recession-resistant features make it a solid long-term investment.

Still, I would wait for a price pullback to buy the stock given that it’s trading near its 52-week high, driven by overall market strength rather than company news.

The post 1 Growth Stock to Own in Your TFSA Through Good and Bad Times appeared first on The Motley Fool Canada.

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Waste Connections

Waste Connections (TSX:WCN)(NYSE:WCN) is the third-largest solid waste company in North America, with about $6.7 billion in sales. This means it collects lots and lots of garbage. Geographically, the company earns 86% of its revenue in the U.S. and 14% in Canada.

Waste Connections targets secondary and exclusive markets rather than more competitive, large urban markets. This unique advantage allows the company to achieve higher operating margins than the competition. Operating in a recession-resistant industry is another benefit the company enjoys.

Revenue in the first quarter of 2019 rose by about 8.5% following a 6.3% increase in all of 2018. The gains were driven by price increases and acquisitions. A strong pricing environment and continued acquisition activity will continue to drive growth.  Management believes that 2019 could be another year of outsized acquisition activity.

Already this year, the company has signed or closed acquisitions with annualized revenue of about $100 million.

Skyrocketing stock price

The company’s stock price has been rapidly increasing. It has significantly outperformed the S&P/TSX index over the last 10 years. Over this period, the stock gained almost 600% compared with about 140% for the S&P/TSX index. Over the last year, the stock is up almost 30% and it recently hit a new 52-week high, approaching $129. Waste Connections pays a dividend yielding about 0.6%. The company’s forward P/E ratio is around 30.

CargoJet

CargoJet (TSX:CJT), with about $450 million in sales, is Canada’s leading provider of overnight air cargo services. The company has a dominant market position in Canada and is the only cargo carrier with a national network reaching 90% of Canadians. It has a large range of customers and has established over 50 alliances or partnerships with world-leading carriers.

Revenue growth has been extremely impressive. In the first quarter of 2019, revenue rose by 11.3% following a 18.8% increase in all of 2018. CargoJet has a very bright future ahead of it because it benefits from the growing e-commerce trend. In addition, there is lots of room for the company to expand its services internationally.

High-flying stock price

The company’s stock price has been on a tear. It has gained about 400% over the last five years. Over the last year the stock is up about 30%, compared with about 2% for the S&P/TSX index. CargoJet also pays a dividend yielding about 1%. The company’s forward P/E ratio is high at around 45.

What to buy and when

I recommend buying both Waste Connections and CargoJet on market weakness. Both of these stocks have had a phenomenal run, recently reaching news highs. However, they could have gotten ahead of themselves, as evidenced by their high P/E ratios. Renewed market weakness may soon provide a buying opportunity for these stocks.

The post 2 Top Growth Stocks to Buy for Beating the Market appeared first on The Motley Fool Canada.

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More growth is on the way

Management rolled out an ambitious growth plan at its recent investor day meeting in New York City. The company plans to significantly increase its global footprint by growing to more than 40,000 restaurants from about 26,000 restaurants over the next eight to 10 years. The expansion will certainly drive sales and profits. The news was greeted with enthusiasm by investors, lifting the company’s stock to a new high of $91.55 before closing at $89.67.

Its franchise business model makes it all possible

The new store expansion will be driven by Restaurant Brands’s network of master franchise partners and franchisees who have committed to opening a certain number of units per year. The company’s franchise business model, rather than a company-owned store model, allows it to pursue aggressive unit growth with minimal capital investment. This is because the franchisees pay the bill for the new restaurant construction.

Success for Tim Hortons in China is key

For many years, the Tim Hortons brand has struggled to expand outside Canada in a meaningful way. In fact, most of its U.S. stores are located near the Canadian border.

Management is betting that expanding in China will change all of that. The company believes it can capitalize on China’s $6 billion coffee market, which is growing by 15% annually. In my opinion, if the company is successful in China, it will go a long way in boosting its stock price. This is because the company will have demonstrated that the Tim Hortons brand is not just a Canadian icon, but an international brand with lots of growth potential.

New sales initiatives to drive same-store sales growth

Management is keeping up with the competition and changing tastes and lifestyles by introducing new sales initiatives. New initiatives include plant-based burgers and sausages at Burger King and Tim Hortons, respectively, an all-day breakfast menu, a loyalty program at Tim Hortons, and more home delivery options at all of its brands. I expect at least some of these undertakings to boost same-store sales in the future.

Commitment to growing its dividend

Management is committed to growing the company’s dividend. It recently announced that it is targeting an 11% increase in dividends in 2019, resulting in a current dividend yield of just above 3%.

The bottom line

Restaurant Brands. is a growing company with built-in unit growth that is driven by its franchisees. In addition, it has a solid 3% dividend yield that is growing. These factors make it an excellent investment for your TSFA. Moreover, if the company is successful in growing the Tim Hortons brand internationally, I believe the stock will trade significantly higher.

The post 1 Solid Dividend Stock With Great Growth Potential for Your TFSA appeared first on The Motley Fool Canada.

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Limited long-term store growth potential

Historically, Dollarama’s primary growth engine has been new store openings. However, the company has already opened over 70% of its 1,700 target store count in Canada, limiting its potential to open new stores in the future. In addition, as its store base moves towards maturity, revenue growth associated with new store openings will comprise a smaller percentage of total revenue.

Slowing same-store sales

Another driver of growth for the Dollarama has been rising same-store sales. Still, the company’s rate of same-store sales growth slowed to 2.7% in fiscal 2019 from 5.2% in fiscal 2018. A closer look at the numbers shows even more cause for concern. The 2.7% increase in 2019 consisted of a 3% increase in average transaction size, partially offset by 0.3% decrease in traffic. This followed a 5.2% increase in average transaction size and flat traffic in fiscal 2018.

In short, over the last two years management has been unable to boost the number of customers shopping in its stores. In addition, increasing transaction size is an unsustainable way of driving growth when operating a dollar store.

International expansion still up in the air

Dollarama currently provides consulting and services to Dollar City, a Latin American value retailer with about 170 stores. The company has the option to buy 50.1% of Dollar City in 2020. Until Dollarama actually buys a controlling interest in Dollar City, it’s growth potential in Latin America is mere speculation.

New online store initiative just getting off the ground

Dollarama recently launched its online store. It offers the company’s most popular products for sale by the case. In my opinion, it will be difficult for the company to get its price-conscious customer to purchase products by the case. Even if it does succeed, online sales are not likely to make a meaningful contribution to the company’s overall sales growth in the foreseeable future.

To sum it all up

It’s time to look for more sustainable and proven growth opportunities to invest your dollars. Dollarama has nowhere to grow in Canada over the longer term, and its international and other growth initiatives are currently unproven. Sure, the stock could bounce in the near term, but because its long-term growth prospects are limited, I would not buy the stock.

The post Should Dollarama (TSX:DOL) Be Part of Your Long-Term Investment Portfolio? appeared first on The Motley Fool Canada.

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Canada Goose products have become very popular—so popular that the company has been able to convince consumers to spend upwards of $1,000 on a winter coat, which is by no means an easy feat.

One reason people buy Canada Goose products is that they are very high quality. Another reason people want them is that they are trendy with the rich and famous.

High-flying performance 

The company’s sales have been surging higher over the last three years. Revenue increased to $591 million in fiscal 2018 from $290.8 million in fiscal 2016 for a compound annual growth rate of 42.6%. Now that’s impressive growth! This is especially true when you are dealing with numbers in the hundreds of millions.

Moreover, in the most recent quarter, its fiscal third quarter of 2019, the rapid growth trend continued. Revenue increased by 50.2% to $399.3 million and adjusted EPS grew by 65.5% to $0.96 per share. To add icing on the cake, management raised its estimates for fiscal 2019. It’s always comforting to see a company publicly raise its guidance, because it only does so if it is really confident about it.

Significant growth potential 

Canada Goose is well positioned for future growth. Although the oft-repeated phrase, “Past performance is no guarantee of future results” has credence, in the case of Canada Goose, there is good reason to believe the company will continue to provide impressive results.

In my opinion, the most important factor driving growth in the next year and beyond is its international expansion plans. For the year ended March 31, 2018, Canadian sales accounted for 39% of total sales, while U.S. sales accounted for about 31% of sales, and the rest of the world was 30%.

This translates into huge growth potential because Canada is a significantly smaller market than the U.S. (considering only the U.S. markets with cold weather) and the rest of the world. The company’s recent expansion into Greater China, the world’s largest luxury market, is an important achievement supporting international growth.

Follow the smart money

Canada Goose is currently controlled by Bain Capital, one of the world’s leading investment firms with over US$105 billion in assets under management. In December 2013, Bain Capital bought a 70% equity stake in Canada Goose.

As of March 31, 2018, Bain Capital controlled 64% of the voting power of the company. The company has significant experience in managing companies in general and specifically ones that are in a rapid growth phase. If you decide to buy Canada Goose stock, you will be in good company.

Attractive entry point 

The company’s stock price has recently dipped to around $62 from a 52-week high of around $95, approximately a 35% drop. Perhaps the stock price got ahead of itself. Still, this price drop occurred while the company’s growth prospects have remained promising. I believe the price decline has created a buying opportunity.

Long–term hold to mitigate price swings along the way

Any time you are holding a stock for the long term, you can expect bumps in the road. Economic downturns, changes in trade agreement, and stock market volatility are just some of the things that can negatively affect a company’s stock price. This is true even when the company is performing well.

Still, history has shown that over the long term, a company’s performance will reign supreme and its stock price will catch up with the company’s results. So, even if you are concerned about the world economy slowing, Canada Goose’s long-term performance will likely make an investment in its stock a rewarding choice.

Competition at lower price points a key risk

As I said before, the company sells winter coats for over $1,000. Simply stated, in order to sustain current growth levels, the company must continue to convince customers that they are getting value for their money compared with lower-priced offerings from other companies.

The bottom line

To sum it all up, now is a good time for investors to get in on the Canada Goose growth story as part of its long-term investment portfolio. The company has the potential to continue to rapidly grow over the next several years and provide investors with significant returns on their investment.

The post Buy Canada Goose Holdings Inc (TSX:GOOS) to Bump Your Portfolio appeared first on The Motley Fool Canada.

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