Kanwal Sarai spoke in a Friday, September 20, 2019 afternoon session. His talk was called “How Do You Find the Best Canadian Stocks to Invest In?”. He is the Founder of Simply Investing Inc. His company’s site is here.
You can earn more with less risk and spend less time investing. Don’t invest without knowledge. You should learn from the best, people like Benjamin Graham and Warren Buffett. So, you should (1) find good role models, (2) study their strategies and (3) copy their strategies.
If you invest by yourself, you should do value investing. Buy stocks that are undervalued (priced low). However, Nortel was undervalued before going bankrupt. So, what you need is good quality stocks that have dividends. Most stocks are undervalued or overvalued.
How do you know when they are priced low? You can look at the dividend and the dividend yield (dividend divided share price). It is better to buy at a high yield. When the price drops, the yield goes up. Yield and share price go in the opposite direction.
The 10 year average yield is 3%. If yield is 5%, stocks are undervalued. If yield is 1%, they would be overvalued. You can find the 10 year average yield on Morningstar. For example, for POW the current yield is 5.62% and the 10 year average is 3.42% so it is undervalued. PB has a current yield of 2.17% with a 10 year average of 6.30%, so it is overvalued.
Dividends are significant, but they are not guaranteed. What happens when the price goes down? Yield goes up. Why dividends are significant is because of dividend increases. He bought TC Energy in 2000and yield on original cost is 22% today. He invested $2,479 and dividends to date are $6,134.60. This lowers your risk. You can grow your passive income. CIBC, NA, POW and SLF have paid more in dividends than the cost of the stock.
It is true that dividends are not guaranteed. However, you can look at a stock’s history. CU had paid dividends for 47 years. BMO has paid dividends for 190 years. CNR has paid dividends for 23 years. Dividends are not paid from stock price but from earnings. So, if a company is profitable, dividends are paid.
Three awesome things about dividends are (1) they increase your return on your investment, (2) they are cash in your pocket, and (3) once given out they cannot be taken back. He has 12 rules of investing on his website.
He has a list of 92 Canadian stocks and 124 US stocks that he follows.
On my other blog I wrote yesterday about Stella-Jones Inc (TSX-SJ, OTC-STLJF) ... learn more. Next, I will write about Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF) ... learn more on Wednesday, December 11, 2019 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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