In the world of investing there are active and index methods to choose from; however the core of both is constantly learning and looking in the correct direction. Recently some active portfolio managers were interviewed by Shirley Won who wrote about them in the article Come for the payout, stay for the growth. The idea being some stocks offer both attractive yields or payouts and a high degree of expectations their stock price will rise in the shorter term. From the universe of stocks to look at the following with give you an indication of what to look for:

Fortis – a utility company that has grown through acquisitions and recently bought ITC increasing its holdings to 60% US. The advantages are as a company that has grown through acquisitions, it should be able to manage the growth; the new company gives a greater revenue base or diversifies its revenue base. Utility companies are regulated and regulators tend to give predictable increases. The company has increased its dividend every year for the last 42 – more are expected in the future.

Telus – is a telecommunications company but has not diversified into the volatile media business similar to its rivals. Its turnover among its wireless customers is the lowest in the industry. Its bundles help keep its customers loyal.

Brookfield Infrastructure – owns ports, toll roads, electricity infrastructure and other investments around the world. 90% of the cash flow is regulated or contracted largely to inflation.

Cara Operations – owns restaurants and recently bought another chain of restaurants in a different province. The restaurants sell chicken. Most of the chain is franchises which produce a royalty fee and the new acquisition means the royalty fee should be more predictable.

CCL Industries – manufacturer of labels and packaging. Recently bought CheckPont Systems and has a proven management team to integrate the two companies to wring out the necessary synergies.

Linking to dividend producing stocks, all of the companies produce a dividend but the active portfolio managers believe the stock price with increase in value as the stocks are underpriced or trading at lower than normal multiples. There are reasons for it – expected integration does not always work, but if does not work the companies still produce enough profits to pay their dividends. It is hoped you looked for works such as regulated (it is tougher for outside companies to set up shop); proven management team in dealing with acquisitions (some serial acquirers run into cash flow problems – too much to the banks and not enough to pay off the banks) so there are always risks involved, the key is balance among the management team. Look for monopoly or monopoly like situations for they can raise prices and still make profits for the long term.

There are more questions than answers, till the next time – to raising questions.