Who would buy stocks that are growing just 8-10% annually when you have tech options that are doubling every year? Millennial investors might ask this question. However, a return should not be the only criteria while investing for the long term. You want to have an all-weather portfolio that should provide passive income and stability, too.
Why utility stocks?
Many investors overlook utility stocks, as they lack superior growth. However, when it comes to hedging broad market volatility and reliable dividends, even the biggest fund managers turn to utilities. In the 2008 financial crisis, utility stocks notably outperformed growth stocks and even the S&P 500.
Utilities operate in a highly regulated environment and generate a specific rate of return. For example, Canada’s top utility Fortis (TSX:FTS)(NYSE:FTS) generates almost the entire of its earnings from regulated operations. They provide earnings and dividend stability, which notably reduces the risk for investors.
That’s why Fortis has managed to increase dividends for the last 47 consecutive years. You would rarely see such a long dividend-growth streak in high-growth tech stocks. Fortis yields 4% at the moment. The stock has returned more than 180% in the last decade, including dividends, outperforming Canadian stocks at large.
Interest rates and utility stocks
Interest rates across the globe have hit record lows this year amid the pandemic. Investors should note that utility stocks and interest rates usually trade inversely to each other. Income-seeking investors shift to utility stocks amid lower interest rates in search of higher yields. This further gives a push to utilities.
Utilities bear a large amount of debt on their books, and lower interest rates lower their debt-servicing costs, eventually improving their profitability.
If you are looking for reasonably higher growth along with safety, consider Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN). The stock has returned almost 700% in the last decade, absolutely thrashing Canadian utility stocks and broader markets.
Algonquin’s high-growth renewables operations provided a necessary push to its earnings growth in this period. It is trading at a dividend yield of 4%, marginally higher than TSX stocks at large.
Utilities do not have a swanky business model or a striking growth that doubles your money every few years. However, they stand tall when markets at large take an ugly turn. Regardless of the economic conditions, people use electricity and gas, which facilitates stable cash flows for utility companies.
Algonquin aims to increase dividends by 7% per year, while Fortis is aiming for a 6% increase for the next few years. While that may seem ordinary against some dividend aristocrats, their stable, visible payout increase certainly stands tall in these volatile times.
The Foolish takeaway
Utility stocks generally are less correlated with broader markets. That’s why they outperform in bearish markets.
Thus, irrespective of your risk appetite, you should park around 10-20% of your portfolio in utility stocks. The passive income generated by such a modest allocation will take care of your expenses in your sunset years.
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Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned. The Motley Fool recommends FORTIS INC.
How to tell if you're flying on a Boeing Max 737 – Boing Boing
I’m a nervous flyer to begin with, so the news that Boeing is putting its crash-prone Max 737 jet back into service fills me with Lovecraftian dread.
I would rather ride a goddamn burro across the continental United States that get on one of those things. “Don’t worry, we updated the software.” There is no modern statement less reassuring.
But, how can you tell if you’ve been slated to fly on one?
As Jalopnik notes, Reuters reports that some airlines may stop using the “Max” name, so all you’ll know is that you’re flying on some sort of 737. So maybe you could just check your booking to see what sort of plane you’re on? But airlines’ methods of ID vary, and of course, sometimes at the last second they need to swap out jets for unanticipated reasons of maintenance or weather-related delays.
The upshot is that, as Jalopnik notes, you might have to simply figure it out by looking at the jet you’re about to board. This assessment would come rather late to be of any prophylactic use, mind you, unless you’re willing to skip the flight at the last second when you discover you’re about to step onto the creditScore_xxbin32_init.exe of airplanes.
If your booking information doesn’t note what kind of 737 you’ll be flying, you may be able to spot the naming on the nose, tail or landing gear doors. Some airlines with a high number of 737 MAX aircraft orders, like Southwest, have no prominent markings at all.
At the airport, you can also check the winglets at the end of the wings. The 737 MAX will often have winglets that extend both up and down. Other versions of the 737 often have winglets that extend only upward. However, as some airlines — like United — have upgraded older planes to use the newer winglets, this isn’t always a surefire way to determine 737 type, either.
If all else fails, look at the engines. The 737 MAX uses CFM International LEAP-1B engines.
These are physically larger and pushed forward compared with the CFM International CFM56-7 engines of the older 737NG. The LEAP-1B engines will also have serrated edges at the rear of the engines.
(That CC-2.0-licensed photo of a Max 737, by Edward Russell, comes courtesy Wikimedia)
Trudeau warns COVID-19 vaccine will come later to Canada than other countries – National Post
Article content continued
“The issue of domestic vaccine manufacturing supply was identified as an issue after the H1N1 pandemic,” she said. “This issue in and of itself should not have come as a surprise to the Prime Minister or to the Health Minister or to the Procurement Minister when looking at a COVID vaccine rollout plan.”
Andrew Casey, president and CEO of Biotech Canada an industry association, said the prime minister is partially right, especially with the leading candidates.
“For two of the three vaccines that we now know about, the Pfizer and the Moderna vaccines, those are mRNA vaccines, which there is no manufacturing for that in Canada,” he said. “In fact, it’s very limited around the world because it’s such a novel vaccine.”
The prime minister told the House that Canadians would be first in line to receive the vaccine
Casey said there is plenty of manufacturing capacity in Canada for making vaccines, but it uses different types of technology and can’t be easily switched to something different.
“One type of vaccine is like making wine and the other one is like making coke. Yes, they’re both put in bottles, and you can drink them with straws, but they’re very different processes.”
He said the manufacturers in Canada also have other orders they are processing for the flu and for childhood vaccinations and couldn’t just scrap that production for COVID even if the technology was interchangeable. Given Canada’s limitations, Casey said, buying access to as many doses as possible from other countries was a good move.
Casey said for large pharmaceutical companies it will take more than just money to build facilities in Canada and the government will have to think about investments in research, drug pricing and regulations structures and other issues.
1 in 3 Toronto schools, nearly half of Brampton schools, have active COVID-19 cases – CityNews Toronto
One in three Toronto public schools have an active case of COVID-19 – more than double the provincial average being touted by Ontario’s education minister as he promotes the government’s school safety strategy and the picture worsens at other boards in pandemic hot spots.
In Toronto’s public board, 35 per cent of schools, some 206 facilities, have at least one student or staff member who are reported as actively sick with COVID-19. Of Toronto’s Catholic schools, 40 per cent – or 79 institutions — have active cases. In Brampton, 48 per cent of all schools, both public and Catholic, have active cases.
Toronto and Peel are in lockdown so it’s no surprise they have more cases than the provincial average, but the premier has acknowledged it’s concerning.
“It is definitely setting off alarm bells,” Premier Doug Ford said at a press conference Tuesday.
The government has consistently said it is safer for students to be in school, and that the priority is to keep them open. It has never mentioned that cases in locked-down regions are significantly higher than the provincial average, which is 14.6 percent. Four schools are currently closed due to outbreaks.
Education Minister Stephen Lecce stood in the legislature Monday and insisted schools were safe.
“Parents want the facts. Here’s a fact that I think would instill a level of confidence: if they knew that 99.95% of students are COVID-19-free, that 99.92% of staff are COVID-19-free, that 99.7% of staff have never had COVID-19,” said Lecce. “Our leadership in public health and our school boards are working together to flatten this curve, to reduce the risk and to keep our kids safe, and that is a good thing we should celebrate in this province”
In Brampton, 61 public schools and 28 Catholic schools are reporting 122 and 89 cases, respectively. In the public board, 51 schools beyond Brampton are reporting a further 78 cases. Of those, 46 schools are in Mississauga, four schools are in Caledon, and one is in Bolton.
In the Dufferin-Peel Catholic board, 37 schools outside of Brampton are reporting a total of 61 cases. All but one of those schools is in Mississauga, with the lone other location in Caledon.
Brampton’s percentage of schools with active COVID-19 cases exceeds the proportion in its school boards in large.
The rate across Dufferin-Peel Catholic School Board, which includes Mississauga, Caledon, Bolton and Orangeville, is 43 per cent, with a total 65 of its 151 elementary and secondary schools reporting active cases. In Peel’s public board, which serves Brampton, Mississauga and Caledon, the rate is 44 per cent, or 112 of the boards 257 schools.
CityNews has used the latest information posted on all the boards’ own websites to compile this data.
The premier said today that he was not downplaying cases at schools: “numbers don’t lie, they are out there.”
Ontario’s Chief Medical Officer of Health has said several times it is important to keep schools open for children’s mental health, and while students and staff are bringing COVID-19 into schools, it’s not being spread inside them. Provincial Minister of Health Christine Elliott echoed that today, adding she would re-evaluate the situation if needed.
“If the circumstances change and there’s a huge increase in the number of cases in schools, we might have to take another look at it,” Elliott said.
Ontario has started deploying rapid testing in long-term care homes and rural communities. Ford called it a game-changer and suggested if schools needed testing, it could happen. University of Toronto epidemiologist Colin Furness says he doesn’t believe schools need to close, but he says those inside should be tested regularly.
“We should be doing surveillance testing broadly in the province, we should have been doing that since April. By surveillance testing, I mean you don’t test people who show up at hospital looking sick, that’s diagnostic testing. Surveillance testing means you go and test people at risk,” he explained.
“We should be testing teachers because they are also in high-risk positions, and if want to know what’s going on with COVID in schools, test teachers,” he added, “But Ontario has been very resolutely committed to not doing surveillance testing. We are not trying to control transmission with testing, we are controlling with lockdowns. I think that’s unfortunate.”
iPhone 13 leak reveals bad news for Samsung Galaxy S21 – Tom's Guide
What Canada's hardest-hit provinces can learn from those that handled COVID-19 best – CBC.ca
How to tell if you're flying on a Boeing Max 737 – Boing Boing
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