The investment scene is peppered with uncertainty as the year begins.
Investors hate uncertainty, preferring predictability and stability.
Investment risk becomes much higher when uncertainty reigns in the field — from wars, a faltering Chinese economy that can reduce commodity prices to India’s changed attitudes to an unpredictable U.S. president to the federal Canadian scene.
What is an investor to do? Keeping a lot of cash in portfolios to buy bargains is one option.
This Bizworld column has sifted through a number of top-notch companies looking for good bets that should hold value in the long term and offer good sustainable returns.
The choices: BMO, Pembina Pipelines, Gibson Energy International, Power Corporation, Suncor, Sun Life Insurance and for a kicker, Iamgold
All but Iamgold pay a nice dividend with low risk of dividend cuts and potential for dividend growth as well as share price growth.
Some stocks pay higher dividends than these but the higher the dividend payout, the less chance of stock growth.
BMO, $139.11 with a 4.52 per cent dividend yield, should benefit from the Bank of the West acquisition in the southwestern U.S.A. and lower interest rates.
Petroleum transporter and midstream operator Pembina Pipelines, $53.65 yielding 5.2 per cent, should benefit from the new Liquid Natural Gas (LNG) plant in B.C., continued drilling in the west, and new investments.
Financial conglomerate Power Corporation, majority owner of Great West Life and IG (Investors Group), with interests in a Belgian banking outfit and other fields, yields 4.36 per cent at a $43.36 price.
Gibson Energy International, $24.58 yielding 6.67 per cent, will benefit from transport and storage facilities, the Moose Jaw refinery, and newly acquired storage in the southern U.S.A.
Oilsands giant Suncor, $50.61 yielding 4.5 per cent, has the best of both worlds in the oil industry. Synthetic oil production from oilsands mines and oil refineries make up the business.
If oil prices decline, increased refinery profits offset the decline in revenues.
Iamgold, $7,44 and no dividend is another option. When the rest of the market hits a drought or overgrowth spell, gold mines tend to hold value, even increase value.
Iamgold operates three mines, Cote in Quebec, Essakane in West Africa and Westwood in Quebec. The company is on track to produce 700,000 ounces this year with two mines increasing output in 2025.
All seven of these companies are well-managed yet still carry risks. In the oil producer and oil infrastructure operations, the chief risk stems from lower oil prices.
Most analysts agree current oil prices are expected to stay. But Saudi Arabia, upset at OPEC countries cheating on quotas, threatens to flood the market possibly driving the price to $50 a barrel. Action has been postponed twice with a new review in early 2015
The two financial companies face risk of interest rates climbing again. The benchmark 10-year U.S. bond price hints at increased rates.
A new round of tariff-driven inflation would leave no choice but higher interest rates.
Iamgold’s main risks are the political uncertainty in West Africa and the possibility of falling gold prices.
CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.
Ron Walter can be reached at [email protected]
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
