For part-time investors, it can be difficult to stay on top of your portfolio holdings. This is especially true during times of significant volatility. It is why investors should choose which stocks to buy carefully.
If you don’t have the time to actively monitor your positions, owning over 50 stocks may not be the right approach. If you are holding a large portfolio in an effort to diversify, you may be over extending yourself.
The purpose of diversification is to reduce unsystematic risk. Research has shown that the benefits of diversification tops out at around 30 positions. The diversification benefits only inch up marginally for every position added afterwards.
Keeping all this in mind, what is the best approach for the part-time retail investors? Identify stocks to buy that can be held forever. These are best-in-class, blue chip stocks that will act as foundational stocks in a portfolio.
Railway stocks to buy
The railway industry is dominated by two players, Canadian Pacific Rail (TSX:CP)(NYSE:CP) and Canadian National Railway (TSX:CNR)(NYSE:CNI). They form a duopoly and as such, have some of the widest moats in the country.
Although both make excellent investments, the top stock to buy today is CN Rail. The railway is trading at 4.47 times book value, a steep discount to peer CP Rail (6.73). CN Rail’s debt burden is also much less, with a debt-to-equity ratio of 0.79. For its part, CP Rail’s D/E ratio is sitting at 1.28.
Similarly, CN Rail is a Canadian Dividend Aristocrat. It has a dividend growth streak that spans 24 years, the tenth longest in the country. At 1.94%, the yield is also double that of CP Rail (0.94%). Over the past decade, CN Rail has averaged 15.6% annual dividend growth.
Looking forward, analysts are expecting a down year in 2020 – not surprising given the current pandemic. Still, the company is only expected to see earnings dip by about 8% before rebounding in a big way (+17%) in 2021.
CN Rail is one of the safest stocks to buy. You can buy without having to check up on the company daily to see if the investment thesis has changed.
A top bank
In today’s environment, financial stocks are under pressure. Not even Canada’s Big Banks are immune, and most are sitting on significant losses. However, recent results are proving once again that Canada’s banks are resilient and are top stocks to buy — perhaps none more so than Royal Bank of Canada (TSX:RY)(NYSE:RY).
As Canada’s largest bank, it has the means to come out on the other side of this pandemic on solid footing. Just as it did during the Financial Crisis, it appears that RBC will escape the current pandemic with a dividend cut.
Now yielding 4.84%, investors can lock in a yield close to record highs. During this pandemic, Royal Bank has been the best-performing bank. Despite losing 13.06% of its value, it is far outpacing the majority of its peers.
Despite bouncing off March lows, Royal Bank is still trading at only 1.6 times book value and 11.44 times earnings. Both of which are below historical averages.
RBC is proving once again to be a top stock to buy and is one of the best hold forever options for investors. Unless the entire economy and banking system goes belly up, investors can sleep well knowing Royal Bank is anchoring their portfolios with stable and reliable returns.
If you are looking for other top stocks to buy today, check out the attractive investment opportunities.
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Fool contributor Mat Litalien owns shares of Canadian National Railway. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway. The Motley Fool recommends Canadian National Railway.
Additional warning about Vancouver’s No5 Orange following possible exposure of COVID-19 – News1130
VANCOUVER (NEWS 1130) – An expanded COVID-19 notification has been issued by Vancouver Coastal Health after an additional person who tested positive for the virus visited the site.
Anyone who visited the Vancouver club on July 1, 3, 4 and 7 may have been exposed to the virus and is being advised to monitor themselves for any symptoms of the virus.
Expanded notification for exposure to COVID-19 at the No5 Orange strip club in Vancouver. Those who visited on July 1st, 3rd, 4th or 7th are being notified by @VCHhealthcare to self monitor!
— Bruce Claggett (@BruceClaggett) July 9, 2020
On Tuesday Vancouver Coastal Health had warned about a possible exposure on July 1st but has learned about another person who attended several other times who contracted the virus.
The lounge has been closed down by VCH to review its safety plan.
Fed's Bostic reportedly says U.S. recovery may be 'leveling off' – CNBC
Raphael Bostic, president and chief executive officer of the Federal Reserve Bank of Atlanta
Christopher Dilts | Bloomberg | Getty Images
Atlanta Federal Reserve Bank President Raphael Bostic said the U.S. economic recovery is in danger of stalling due to the recent spike in coronavirus cases across many American states.
High-frequency data had shown a “leveling off” of economic activity both in terms of business openings and mobility, he told the Financial Times newspaper in an interview published on Tuesday.
“There are a couple of things that we are seeing and some of them are troubling and might suggest that the trajectory of this recovery is going to be a bit bumpier than it might otherwise,” he told the newspaper.
“And so we’re watching this very closely, trying to understand exactly what’s happening.”
California, Texas and Florida are all among two dozen U.S. states reporting high infection rates as a percentage of diagnostic tests conducted over the past week, an alarming sign of a virus still spreading largely unchecked throughout much of the country.
The U.S. death toll from the virus has topped 130,000, Reuters calculations show.
Via Rail to lay off 1,000 employees amid coronavirus disruptions – Globalnews.ca
Amid ongoing travel restrictions and concerns about the novel coronavirus, Via Rail is planning 1,000 temporary layoffs, according to an internal email sent to employees on Wednesday afternoon by the railway company’s CEO Cynthia Garneau.
The announcement comes at a time when the national passenger rail company continues to experience service disruptions across most of its regional and national routes, including cancellation of all trains between Montreal and Halifax, and Toronto and Vancouver until at least the beginning of November.
Garneau explained in her email that members of Via Rail’s management could also be affected by layoffs.
The company has cited uncertainty about COVID-19 as a reason for offering reduced booking options on some routes until at least the end of this year.
In her email, Garneau noted that Via Rail had previously reduced and suspended services in March, based on a ridership decrease of more than 95 per cent, and that the company doesn’t anticipate ridership to rebound in the foreseeable future.
“We have had to make difficult decisions to deal with the situation as we gain a better understanding of the impacts of the pandemic on our operations,” she wrote.
Garneau also noted that the company has attempted to mitigate impacts of the pandemic on its workforce by allowing some to work full-time, part-time or to get paid at home while their work was suspended.
“Via Rail is now forced to reconsider its approach in order to further adjust to the increasing financial impacts this crisis has had on the company. Therefore we need to make TEMPORARY layoffs that could affect all types of employees,” she wrote.
“Some measures will also affect management and professional employees. A few scenarios are under consideration and we will get back to you quickly, no later than the end of July.”
She said that the company would be sending 1,000 layoff notices, after giving written notice to unionized employees with Unifor who could exercise displacement rights under their collective agreement.
Via Rail banks survival on high frequency rail project
Global News also obtained a copy of some “key messages” prepared for Via Rail management to deliver to the employees in order to give them notice of the layoffs.
In the suggested messages, management was advised to tell some employees that they would only be temporarily affected and receive 70 per cent of their usual salary “to ensure a rapid return to service even if there is no need for them to be called back to work immediately.”
Garneau’s email and the internal messages both indicated that the layoffs would come into effect on July 24, following a formal notice that is required under the company’s collective agreement with its union.
The news comes at a time when many Canadians are wondering how long job losses and high unemployment rates due to COVID-19 will continue. It also comes amid growing concerns about increased deficits and the government’s ability to provide financial stimulus in the future.
“Via Rail will continue to work on progressing its service resumption plan as the situation evolves with the goal of reintegrating its employees as soon as the customer demand allows it,” Garneau said in her email.
“Until then, your managers are there for you if you have any questions or concerns. We are going to go through this difficult period, and, once passed, I am confident that we will be in a position to reacquaint ourselves with growth and opportunities.”
Global News contacted Via Rail for comment. A spokesperson replied with a statement that confirmed the layoffs along with a summary of the company’s reasons for taking this action.
Via Rail is owned by Canadian taxpayers but operates at arms length from the federal government.
The office of Transport Minister Marc Garneau said in an email that the government would “continue to work with Via Rail to find solutions and support workers and their families in these unprecedented times.”
© 2020 Global News, a division of Corus Entertainment Inc.
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