John Heinzl is the dividend investor for Globe Investor's Strategy Lab. Follow his contributions here. You can see his model portfolio here.
For some people, investing is all about the excitement of trying to score a quick profit.
For Norman Levine and Darren Sissons, it's more like watching paint dry.
The managing directors at Portfolio Management Corp. – which has more than $500-million invested on behalf of high net worth clients – look for companies that will deliver steady growth in earnings, dividends and share prices over many years.
"We're long-term global value investors and we like buying good-quality companies that pay dividends, and dividends that go up on a regular basis, and we like buying them generally when they're out of favour," says Mr. Levine, who focuses on North America.
A company might be experiencing a temporary setback, for example, or it might be overlooked by analysts and investors, causing its shares to be attractively valued.
"At any one point around the globe there's always somewhere where there's an opportunity," says Mr. Sissons, who focuses on international companies.
Here's a sample of the firm's holdings. Remember to do your own due diligence before purchasing any security, and be sure to research the tax consequences of investing in companies outside North America.
Power Financial (PWF-TSX)
Tuesday close: $37.40, up 6¢
Yield: 4 per cent
Power Financial used to raise its dividend twice a year. But then the financial crisis hit and the dividend didn't budge for six years. It wasn't until March that the company finally raised its dividend, after Canadian subsidiaries Great-West Lifeco Inc. and IGM Financial Inc. hiked their payments.
With the company's European operations also improving, Mr. Levine expects earnings growth to improve.
"This should allow Power Financial to resume its regular and frequent dividend increases," he says.
General Electric (GE-NYSE)
Close: $26.62 (U.S.), down 40¢
Yield: 3.5 per cent
General Electric plans to sell most of its finance operations to focus on its industrial businesses – a move that includes a share buyback of up to $50-billion (U.S.). "We believe the new GE will not only grow faster than the company has in the past, both organically and through acquisitions, but the market will, over time, put a higher value on GE's earnings as industrial earnings garner higher multiples than do financial services earnings," Mr. Levine says. The dividend has grown at an annualized 16 per cent over the past five years – having been cut by about two-thirds during the financial crisis – and it could grow even faster in the future, he says.
CCL Industries (CCL.B-TSX)
Close: $146.84, up 99¢
Yield: 1 per cent
CCL may not be a household name. But it makes the labels and containers for all sorts of household items – including beverages, foods and personal care products. The Toronto-based company has grown dramatically and is now the world's largest label maker. Yet only a handful of analysts follow the company, probably because it rarely issues shares, Mr. Levine says. "Labels worldwide is a highly fragmented business and we see CCL continuing to be the industry consolidator and to show additional sales and earnings growth through a series of accretive acquisitions," he says. He also expects the price-to-earnings multiple of 18 (based on 2016 estimates) to expand. The yield may be small, but the dividend should continue to grow, he says.
Jardine Matheson Holdings (JMHLY-OTC)
Close: $62.22 (U.S.), up 91¢
Yield: 3.4 per cent
Incorporated in Bermuda and operating out of Hong Kong, Jardine Matheson is a conglomerate with roots dating back to China in 1832. Its interests span a range of industries across Asia – including real estate, agriculture, construction, retailing, automobiles, financial services and mining. The company "is a way to play the pan-Asian wealth effect," Mr. Sissons says. The dividend has grown at a 4.2-per-cent annual pace over the past five years, and the company has an "excellent balance sheet and therefore expectations of continuing dividend growth exist." However, he says the company's Indonesian operations have struggled and a turnaround isn't priced into the stock, which has dropped about 8 per cent since January. The shares trade at a price-to-book value ratio of 1.12 – above the five-year low of 0.94, but well below the high of 1.31.
Prudential PLC (PUK-NYSE)
Close: $49.32 (U.S.), down 20¢
Yield: 2.3 per cent
Based in London, Prudential is an international insurance and asset management firm with operations in Asia, the United States and Britain. "The Asian business provides a platform to leverage the growing wealth of middle-class Asians," Mr. Sissons says. In the U.S. market, meanwhile, the company has built a strong presence in annuities. The dividend has grown at 9.1 per cent annualized over the past five years. "Underlying growth, a strong balance sheet and good risk management culture has and will continue to generate a growing stream of dividends," he says.
John Heinzl