# Relatively Safe Income + Growth Ideas



## nalgene77 (Jan 16, 2012)

This is my first post, but I have been a long time lurker on this site.

It's so refreshing to find a Canadian perspective on money that's so candid and honest without the usual hype. Many thanks to all of the posters.

A little background..... I'm a married 41 year old, with two kids 4 and 8. My wife and I are both employed. After investing quite heavily in rental real estate in the late nineties, my wife and I saw our net worth explode over the next ten years. Good or bad, we sold all of our rental properties to lock in the enormous capital gains just as the multiple bids phenomenon was winding down. Unlike some of the larger cities our prices are down 15 - 20 % (still falling slowly) and the outlying areas can be a lot worse. 

We have been fairly conservative with our investments since then. Not fully understanding the markets, we decided to be ultra safe and invest in GIC's. 

Rather than gamble a good size seven figure nest egg, we would like to explore a balanced portfolio that is yield heavy. We're not the kind of investors that want to throw our money at some stocks in the hope that there will be a capital gain on it in 20 years. *My feeling is, "If you want to use my money and make me wait for a capital gain, you're going to have to pay me for the wait."* Financial advisers I have spoken to cringe when I say this, but are happy to get paid regularly while they are watching my investment go up or down.

I am considering investments in income trusts and closed end funds that have seemingly low payout ratios. Examples include: Noranda Income Fund 8.5% , Timbercreek Mortgage Investment Corp 7.7%, Aberdeen Asia Pacific 8.1%, Citadel Income Fund 9%, and Enervest Diversified Income 9.1%. These would be purchased on market pull backs.

I have a sneaky suspicion that there's more than meets the experienced eye when you consider these, please point out out the negatives and minuses.

I know this is a common dilemma in today's market. What are you doing to generate relatively safe income and growth?


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## Ethan (Aug 8, 2010)

nalgene77 said:


> What are you doing to generate relatively safe income and growth?


Our investment philosophies appear similar. While I typically read over the financial statements of the companies I am serious about investing in, I attempt to find companies that meet the following 3 criteria:

Trailing PE ratio < 10
Payout Ratio < 50%
(the above 2 imply a dividend yield over 5%)

I use this screener to search for investments. Companies that meet this criteria that I hold include Canadian Oil Sands and Diamond Offshore Drilling (another stock I own, Petrobakken, met this criteria when I purchased it).

There are other companies I own that don't fit the above criteria, but due to their position in the Canadian market I am comfortable owning them. I think anyone can do well buying into the following sectors:

Banks - I own TD
Rail - I own CN
Pipeline/Utility - I own Enbridge and Fortis

Another item you can use to increase your cash earnings is to sell covered calls against your positions. I do this periodically on my investments.


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## gibor365 (Apr 1, 2011)

Ethan said:


> I attempt to find companies that meet the following 3 criteria:
> 
> Trailing PE ratio < 10
> Payout Ratio < 50%
> (the above 2 imply a dividend yield over 5%)


Today was searching some investment blog and found interesting stock that meets your criteria...(never heard about this company before ): GH-T Gamehost (Core business is casinos and hotels in Calgary )

As per TDW : Payout 50%, P/E 6.6, yield 7.55%, beta 0.13!  , 52 weeks price range 10.10-11.93 , didn't reduce dividends for many years... looks like bond 

Are you familiar with this one?


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## Ethan (Aug 8, 2010)

gibor said:


> Today was searching some investment blog and found interesting stock that meets your criteria...(never heard about this company before ): GH-T Gamehost (Core business is casinos and hotels in Calgary )
> 
> As per TDW : Payout 50%, P/E 6.6, yield 7.55%, beta 0.13!  , 52 weeks price range 10.10-11.93 , didn't reduce dividends for many years... looks like bond
> 
> Are you familiar with this one?


I'm not familiar with that one, but love the numbers I'm seeing so far!


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## gibor365 (Apr 1, 2011)

Ethan said:


> I'm not familiar with that one, but love the numbers I'm seeing so far!


I like those numbers too . If you gonna do some research , please give your opinion


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## doctrine (Sep 30, 2011)

I have looked into Gamehost's financial reports and it's not as rosy as TDW suggests. Their yield though is entirely sustainable but not likely to grow significantly. Their dividend is closer to 100% of their net adjusted earnings over the last few years. I do like it and you will likely maintain 7-8% returns over multiple years.

The downside to high payout companies is that your capital can swing wildly. They are often smaller cap companies and they can get nailed to the wall extremely in market pullbacks - like easily lose 50% in a year, even if they sustain dividends. I would recommend diversifying amongst several companies.


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## nalgene77 (Jan 16, 2012)

I'm starting to feel as though I posted in the wrong thread.


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