Robert Hurdman, 33
Occupation: Investment adviser
Portfolio: Includes Data Group Income Fund, Canfor Pulp Income Fund, FP Newspapers Income Fund and Whiterock Real Estate Investment Trust.
Before he became a licensed stockbroker at Dundee Securities, Robert Hurdman traded stocks "with no understanding." Then he read the books of Benjamin Graham, Joel Greenblatt and Benj Gallander.
What Mr. Hurdman liked was that each author had a "thoroughly reasoned approach" they adhered to, through thick and thin.
He sees capital gains as an uncertain way to build retirement savings. Dividends and distributions, while not guaranteed, are more likely to be received.
The time to buy is when there are bargains. It was "emotionally more appealing" to buy equities with high yields during the depths of the crash. "This became my strategy: buying out-of-favour dividend payers."
"I prefer small- to mid-cap companies because they are less thoroughly researched by analysts and institutional investors, while having more room to grow. To mitigate some of the risk, I look for companies with low debt and good interest coverage [the ability of earnings to easily cover the interest payments on company debt]"
Why income trusts?
Many people see income trusts as too risky to own, but not Mr. Hurdman. He bought most of his holdings when yields climbed as high as 20 per cent during the crash - so even if distributions were cut in half, his yields would still be high. He also expected the market to recover and offset price declines caused by distribution cuts. "Fortunately, that is how it worked out."
Buying Whiterock REIT at a 22-per-cent yield during the crash.
Selling a chunk of Whiterock REIT after the price doubled and forgoing subsequent gains and distributions.
Income not only helps stabilize portfolio fluctuations but also prepares you for retirement because it's easy to see progress toward goals. "That is, retirement is realistic at the point when investment income provides for spending needs."
Special to The Globe and Mail
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