пятница, 29 ноября 2019 г.
четверг, 28 ноября 2019 г.
Buy Northwest Healthcare Properties REIT (TSX:NWH.UN) for 2020 and Beyond
Timor Invest
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The popularity of real estate investment trusts (REITs) is soaring. A mix of near historically low interest rates, juicy yields, and defensive nature has made them popular investments among retirees and other income-hungry investors. A top REIT that has a long history of delivering value is Northwest Healthcare Properties REIT (TSX:NWH.UN). Since the start of 2019, it has gained a stunning 31% and appears poised for further strong growth as we head into 2020.
Improved outlook
The Fed’s interest rate cut at the end of October combined with growing optimism that there is an end in sight for the trade war between the U.S. and China has sparked optimism over the global economic outlook. This will drive greater demand for Northwest’s properties, thereby giving earnings a lift.
For the third quarter 2019, it finished with an impressive occupancy rate of 97.1%, whereas net operating income grew by 7% year over year while funds from operations shot up by 8% year over year. Northwest also reported a profit of $17.7 million compared to a loss of $28 million a year earlier.
Not only will earnings continue to grow because of an improved economic outlook, but also because of recent acquisitions, including the transformative $1.2 billion Healthscope deal, which added 11 freehold hospital properties to its portfolio. Northwest also recently acquired a German healthcare property, another in Canada, and is in the process of purchasing two medical office buildings in the Netherlands. Those deals, once bedded down, will give the REIT’s earnings a solid boost and allow it to unlock further synergies over time, further lifting net income.
The healthcare market is expected by analysts to experience solid long-term growth because of aging populations in developed nations and improved treatments and technology. This will act as a powerful tailwind for medical property REITs like Northwest.
The Fed’s rate cut also reduces financing costs, which is particularly beneficial for companies operating in capital-intensive industries like real estate. Northwest finished the third quarter with long-term liabilities, including bank loans, debentures, and financial instruments totalling around $3 billion. Such a significant amount of debt means that as the REIT refinances, it will be able to secure lower interest rates and substantially reduce its interest expense, further boosting profitability.
It should also be noted that for a REIT, Northwest has a conservative amount of leverage and is focused on strengthening its balance sheet. The REIT finished the third quarter with a debt to gross book value of just under 53% compared to 55.7% at the end of 2018.
Northwest also operates in an oligopolistic industry, which is heavily regulated and has steep barriers to entry, endowing it with a wide economic moat. When that is considered in conjunction with the relatively inelastic demand for healthcare, its earnings are shielded from economic slumps, making it an ideal defensive stock.
Foolish takeaway
It is very difficult to find a high-quality business such as Northwest, which offers a mix of solid growth potential and defensive characteristics. For the reasons discussed, the REIT is the ideal addition to any portfolio to bolster growth and resilience to a recession. Patient investors, while they wait for Northwest’s stock to appreciate, will be rewarded by its sustainable distribution yielding a very juicy 6.4%.
5 TSX Stocks for Building Wealth After 50
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Fool contributor Matt Smith has no position in any of the stocks mentioned. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.
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3 Best Performing Canadian Utility Stocks So Far This Year
Timor Invest
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Utility stocks can be a very boring group of equities as there isn’t much hype or oomph in their coverage. However, this class can generate outsized returns. The sector has outclassed the overhyped cannabis tickers and several tech names so far this year, with the best performing Canadian utility returning a staggering 114.6% in total investment gains so far this year.
Several names stand out for the year-to-date capital gains and income returns they have rewarded their investors with, but I will discuss the best three performers, in reverse order.
Number 3: TransAlta Corporation
In third place, so far, is power generation giant TransAlta Corp. (TSX:TA)(NYSE:TAC). The stock has returned 59.57% in capital gains while its dividend has topped the year-to-date total investment gains to nearly 62%.
TransAlta owns, operates, and develops a diverse fleet of electrical power generation assets in Canada, the U.S., and Australia, and the company is making good progress in moving away from predominantly coal-powered generation to cleaner, renewable sources.
Third-quarter earnings impressed as the company reported a 21% increase in free cash flow (FCF) as compared to last year and management increased the lower end of its full year FCF guidance by 11% to $300–$340 million. Operations, maintenance, and administration costs were 5% lower for the quarter and 7% down for the first nine months of 2019.
Now, that’s some good execution, but the 1.8% dividend yield today isn’t that attractive.
Number 2: Brookfield Renewable Partners
In second place is another power generation giant, Brookfield Renewable Partners L.P. (TSX:BEP.UN)(NYSE:BEP), which has a strong portfolio of hydroelectric, wind, solar, and storage facilities in North America, South America, Europe, and Asia with over 18,000 megawatts of installed capacity and a strong 8,000 megawatt development pipeline that could power cash flow growth.
The limited partnership has delivered a great 74.85% in share price gains and its respectable dividend increased the total return to 83.21% year to date.
This is yet another low beta stock, with a beta coefficient of 0.59. That may not be as volatile as the main TSX, so offers a relatively safe savings investment option. There’s also a juicy 4.12% dividend yield from the U.S. dollar denominated quarterly payout that management is keen to increase by a targeted 5% to 9% annually.
For your information, the LP is morphing into a traditional corporation, Brookfield Renewable Corporation, and shares could attract a new class of investors who were not comfortable holding partnership units.
Number 1: AltaGas Canada
The best utility stock on the TSX so far this year is AltaGas Canada (TSX:ACI) which spun out of parent AltaGas Ltd. ACI has been one of my favourite income plays in 2019 and I recommended it twice this year.
The recently listed utility has three natural gas distribution facilities serving Alberta, British Columbia, and Nova Scotia that provide about 88% of the company’s cash flows, with the balance coming from renewable energy assets.
Shares have returned 107% in capital gains so far and the increased dividend payout has topped the outperforming return to a staggering 114.6%.
This promises to be a long-term dividend growth play and management has already increased the quarterly dividend twice since shares were listed during the fourth quarter of last year. Some de-risking developments and a growing rate base supported by an upsized capital expenditure plan that is largely self-funded could help to propel free cash flow growth and power future dividend growth.
Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends ALTAGAS LTD. and Brookfield Renewable Partners.
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US Fed Weighs Up Potential CBDC as Countermove Against China
Timor Invest
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Where just a handful of years ago, the idea would have been immediately dismissed or even met with ridicule, the United States Federal Reserve is now taking the concept of an official dollar stablecoin seriously.
Markets have heard more frequent guidance from the Fed on cryptocurrencies in recent years, and thanks to two curious U.S. representatives — French Hill and Bill Foster — this guidance now includes an enlightening response from Fed Chairman Jay Powell to their letter on a central bank digital currency, or CBDC.
Evolving trends force regulators’ hands
The infiltration of blockchain into our global financial sector is nothing new, but a few trends have seen these experimental decentralized solutions tackled head-on by authorities. One of the most significant events to bring about this pivot is that the first major economy has emerged as a proponent of government-issued stablecoins.
China’s announcement that it will launch a digital currency reveals the country’s direction, and other federal banks must now consider doing the same, especially during the ongoing trade war that is testing the standalone strength of individual economies and their monetary policy.
Related: China Walks Back Hardline Media Rhetoric Toward Crypto and Blockchain
Facebook’s Libra is another sign that cannot go ignored, and though the Libra Foundation just experienced an exodus of backers, its underlying idea is enough to represent a bucket of cold water tossed on slumbering regulators and policymakers.
If governments don’t move first to permit immutable cryptocurrency transactions for their own digital coins, private corporations are ready to pounce. Likely on high alert thanks to China’s abrupt change in stance on cryptocurrencies, Powell provided fresh, tangible insights on how the U.S. regards this developing movement in his recent letter.
“The Fed has realized that cryptocurrencies, in one form or another, are here to stay,” says Saga’s chief economist, Barry Topf — a consultant for the International Monetary Fund and former central banker. He told Cointelegraph that Powell’s answer reveals there are “far-reaching implications for monetary policy, currency regimes and central banks themselves.” He went on to add that:
“Federal bankers have been slow on the uptake, but now realize they must evaluate and assess developments and possible implications. Otherwise, they risk being surprised and unprepared for a changing environment which may include China as a dominant force. A CBDC issued by China would be a major extension of China’s influence in the world economy.”
Topf continued by saying that the implications of such a move by China must be carefully weighed, “Mark Zuckerberg told Congress this directly when he said, ‘While we debate these issues, the rest of the world isn’t waiting.’”
The Powell letter is revealing
Compelled by concerned lawmakers to indicate which way the Fed is leaning when it comes to its own stablecoin, Powell underlined that the agency currently has no plans to develop a central bank digital currency. However, it has discussed the idea at length and continues to assess potential pros and cons of such an idea. According to Powell:
“Issuing a central bank digital currency for general use would raise important legal, monetary policy, payments policy, financial stability, supervision and operational questions that need to be considered more carefully.”
A Fed-backed digital currency could bring significant advantages to the way money is settled currently, offering consumers a way to transact without fees and without middlemen such as smaller banks, but this would have several implications that Powell considers in his letter.
By operating a digital ledger, the Fed would technically be responsible for transaction metadata, and it is not outfitted to protect personal information — nor does it want to be. Interestingly enough, the chairman also seems to indicate that the current system’s illiquidity and cost inefficiency are preferable due to the way it obstructs capital flight and “runs from private markets” during stress episodes.
Other documents from the Fed published in November also claim that market runs could occur if stablecoin operations were to break it down, causing a loss of faith.
Stablecoins support Powell’s theories
The logic contained in Powell’s letter rings true if one is familiar with the fundamental concept of stablecoins. A national stablecoin would be a token based on a blockchain, where each once would be backed by $1 from the Fed.
The theory goes that eventually, other assets and currencies will be “tokenized” as well, reducing speed and cost as variables in any transaction. However, there are some weak claims made in the letter, such as the notion that, “To date, our observation is that many of the challenges they [CBDCs] hope to address do not apply to the U.S.” Powell is arguably correct that if the U.S. economy did switch to dollar tokens overnight, there would be issues.
Unpredictable market dynamics would cause turbulence, and if unaddressed beforehand, they would indeed be an enormous risk. For example, one will be able to convert their entire savings account from a dollar stablecoin to a euro stablecoin, without the settlement costs imposed in today’s ecosystem. Once people are allowed to mobilize their dollars without the obstacles they’re used to, this nimbleness could boost volatility and impact general economic health.
However, another notion cleverly hidden in the letter is that the Fed considers terms and conditions like interest rates (and likely fees) as something to be imposed on its hypothetical digital money. How this would work was left unsaid in the letter.
Economies step into the great unknown
Clearly, regulators are still juggling multiple fundamental problems and technical realities that are involved in the provision of stablecoins, but they’re now doing so at odds with competitors like China, which has already entered the “race.”
The winning prize and whether the race is even worth entering is still unknown. There are some guesses, and the fact that some governments are willing to try regardless of potential chaos has lit a fire under noncompetitors.
Many are falling over themselves in the race to be the first “de-facto government-backed stablecoin for traders around the world,” as head of operations at the OKEx exchange, Andy Cheung, told Cointelegraph:
“If the US were to issue a digital dollar, it would certainly have far-reaching impacts on the global markets.”
Cheng believes that crypto exchanges need to prepare for this to meet the needs of new and old users alike, but that the overall impact from such a move would be positive for both crypto and traditional economies:
“The issuance of a digital dollar by the government would actually prompt the growth of both ecosystems and spur other participants to be more innovative and compliant with a global standard. Competition brings out excellence. Whoever executes it properly, would ultimately earn the same type of digital faith and volume that exists for the US dollar in its fiat form.”
Samuel Lim, chief compliance officer at Binance, also sees this as a positive beacon for adoption of cryptocurrencies as a concept, telling Cointelegraph that it would grant greater legitimacy to the crypto space and increase the level of interest form institutions:
“This would likely directly or indirectly have a positive impact on trading volumes with the entry of the big monies. This would also allow more people (the public) to learn about digital assets/currencies which is a positive thing altogether. We do believe that there is certainly sufficient room for public and private digital assets to co-exist.”
Governments must be conscientious custodians
A big issue with a potential government-backed stablecoin is that if the Fed were to impose rules that infringed upon blockchain’s basest advantages, people may be more willing and able to put their money into decentralized blockchains instead.
A question would then be if the government could somehow shut those blockchains down for being a digital equivalent or a counterfeit. “Obviously, governments have to guarantee execution and enforcement and it goes without saying that there should be appropriate government institutions to do so,” Grigory Rybalchenko, co-founder and CEO of Emirex — a digital asset exchange based in the Middle East — told Cointelegraph.
Rybalchenko is of the opinion that it would be the job of the government to strike the right balance between the number of centralized and decentralized solutions in order to promote financial freedom and allow people to make a choice, adding that:
“The current operating model of governments doesn’t look compatible with decentralized blockchain nor have they given confidence in their ability to transition from centralized to decentralized. It must occur, however, because honestly speaking, centralized blockchains don’t seem to have value beyond mimicking a database.”
Alex Kravets, U.S. head of cryptocurrency exchange CEX.IO, also told Cointelegraph that any platform deemed capable of impacting government sovereignty and their national currencies is likely to see barriers put up against it:
“Having the federal reserve create a digital dollar could be a double edged sword. On one hand it would be the most dominant and secure stablecoin which could be the greatest catalyst to push mass adoption on a global scale. But on the other hand, the government would have control of the blockchain and perhaps could in real time determine which transactions are sanctioned or prohibited.”
CEO of trading platform StormGain Alex Althausen concurs, telling Cointelegraph that governments have never had any intention of letting concepts like decentralized governance get in the way of their total control, adding that:
“Governments will no doubt consider any pegged or backed stablecoins as centralized assets no different than the dollars they already have, just more agile. Accordingly, any decentralized exchange, cryptocurrency or blockchain project will be considered as a competitor and not a cooperator, and they’ll be treated as threats much like what’s happening with Libra and TON now.”
The race is on regardless
Managing director at Bithumb Global, Javier Sim, has already seen evidence of the worldwide governmental race toward blockchain, with both Sweden and Estonia having developed various plans to digitize assets and identity systems. Sim continued by saying:
“Blockchain’s use here is largely for fraud prevention, and it’s interesting to see how governments have dismissed the decentralized debate as nothing more than an argument on data storage.”
Related: China’s Dive Into Blockchain, Digital ID Spurs Rest of World to Action
The coming years will see central banks around the world make moves toward digital currency in close succession — if not for the immense opportunities the system provides, then simply because China and Libra have changed the aging perception that it cannot be attempted.
Some have seen this revolution as inevitable, even before China put itself in the ring. Mark Zuckerberg argued in his hearing before Congress that any hesitation would result in China beating them to the punch with a digital yuan — and in no time, he was proven right. The starting gun has been sounded, and it’s only a matter of time until we’re all racing toward our unidentified destination.
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Happy Thanksgiving From Great Stuff!
Timor Invest
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Happy Thanksgiving!
By the time you read this, I’ll be in a turkey coma.
The market is closed. There’s no trading. It’s the perfect time to sit back and relax with family. (Quiet, you, I can hear you snickering.)
Thanksgiving brings with it many traditions:
- Getting together with family, whomever they may be.
- Eating massive quantities of turkey (or ham, you heathens), stuffing and that can-shaped lump of cranberry sauce.
- Watching football on TV — go Bills! (Sorry, Cowboys fans. It’s a Cincinnati thing.)
My personal family traditions include fried oysters, Kentucky bourbon — I’ve got my eye on a bottle of Colonel E.H. Taylor Small Batch this year — and “Alice’s Restaurant.” After all, you can get anything you want at Alice’s restaurant … excepting Alice. (Another Cincinnati thing … don’t question it. Just let it happen.)
There are a multitude of traditions, but one thing stands at the center of everything: family.
Regardless of how you define it, family are the people who support you. They’re there for you through thick and thin. They’re likely one of the reasons you started investing in the first place, to ensure they’re well taken care of.
So, this year, while you’re looking around at all your loved ones gathered to share a meal at your table (or, if you’re gathered together at someone else’s table), remember whom you’re investing for.
Set the market aside and be thankful for everything and everyone in your life.
Personally, dear readers, I’m very thankful for you and your continued support of Great Stuff.
So, thank you and have a great Thanksgiving.
Until next time, good trading!
Regards,
Joseph Hargett
Great Stuff Managing Editor, Banyan Hill Publishing
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Beyond Turkey? Take Home Triple-Digit Gains This Holiday
Timor Invest
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Story Highlights:
- Meatless foods market: $4.2 million.
- Projected growth: $5.8 billion by 2022.
- Investment potential: See triple-digit gains in a year with this play on the meatless-food trend.
Happy Thanksgiving, Bold Profits Nation!
At the risk of offending my dear mother this Thanksgiving, I have a confession to make:
I don’t much care for turkey. I prefer the side dishes that accompany the traditional Turkey Day bird.
Garlic mashed potatoes. Asparagus amandine. Cornbread-and-chestnut stuffing. Candied yams.
These vegan staples are what really get my taste buds dancing at the Thanksgiving table. And, it turns out, I’m not the only one.
Market research shows that turkey has become the latest casualty of the growing meatless-food trend. Millions of Americans are turning to plant-based protein alternatives to poultry, as well as beef and pork.
Some are even predicting this year’s Thanksgiving will be the biggest ever for meatless alternatives.
A recent Nielsen report on plant-based food sales also found that meat substitutes for holiday meals grew 6% last year, to $555 million — and that figure is rising.
Even uber chefs like Martha Stewart are hopping on the meatless-holiday bandwagon. Stewart recently spotlighted “meatless Thanksgiving mains” on her website.
These developments are only the latest indication that millions are embracing meatless alternatives to burgers, steaks, pork chops and poultry.
As a result, Thanksgiving meals are changing in ways the Pilgrims and Native Americans could never have imagined.
And that’s phenomenal news for biotech investors who recognize the investment potential the mounting meatless market presents.
Today, I’m going to tell you two ways to leverage it with investments that could have you giving thanks for years to come — regardless of whether a turkey graces your holiday table today.
Serve Yourself a Portion of the Meatless Market’s 57% Boom
The Beyond Meat boom isn’t going anywhere.
Here are a few tasty statistics to share with your friends or family as you pass around the potatoes, stuffing and pumpkin pie this Thanksgiving:
- A recent Johns Hopkins survey found 64% are buying less meat, 42% are eating more meatless meals and 32% are choosing to have meatless days.
- The global meat-substitutes market will hit $5.8 billion by 2022 — a 57% rise since 2016 and up from $4.2 million last year, Grand View Research reports.
- Millennials are driving this trend, with 47% of Americans born between 1980 and 2000 more likely than the average U.S. consumer to incorporate plant-based foods into their diets, Nielson reports.
One dramatic example of the investment potential is the rise of Beyond Meat, one of the meatless industry’s biggest superstars.
The California-based producer of plant-based meat alternatives made from soy and pea protein ignited the industry when it went public in May. Within weeks, its stock price skyrocketed 800%.
Beyond Meat’s stock is still up from its IPO, but has been falling. So I’m not recommending you buy in right now.
A better way is to add an exchange-traded fund (ETF) to your portfolio. And today, I have two options for you:
- The Renaissance IPO ETF (NYSE: IPO) is a great play on IPOs that the Bold Profits team has identified as a terrific way to tap the white-hot market. It’s a basket of companies that recently went public and are listed on a U.S. exchange. The ETF holds assets of more than $30 million and is up more than 25% year to date.
- Another option is to buy into a new vegan-themed ETF that hit the New York Stock Exchange in September: U.S. Vegan Climate ETF (NYSE: VEGN). It holds shares of newly public protein-substitute makers, including Beyond Meat, and other vegan-market leaders. It also excludes companies that harm animals, are involved in animal testing or produce animal-derived products.
Both ETFs give you a relatively safe way to play the meatless market.
And maybe next year, our table will feature a Beyond Meat Turkey for our Thanksgiving dinner.
Until next week.
To your health and wealth,
Nick Tate
Senior Editorial Manager, Banyan Hill Publishing
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