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Roger Conrad

Roger S. Conrad is editor of Utility Forecaster, the nation’s leading advisory on essential services stocks, bonds and preferred stocks. His proprietary safety rating system evaluates the prospects of every significant electric, natural gas, telecommunications and water company, including utility-based mutual funds and foreign utilities. Roger’s penchant for detailed research and his studied insights into utilities markets have garnered him a wide audience of subscribers—not to mention a bevy of industry awards for his perceptive reporting, commentary and investment advice.

He brings the same enthusiasm and intelligence to Roger Conrad’s Canadian Edge, an Internet-based publication devoted to uncovering lucrative investment opportunities in Canadian royalty trusts. Roger’s exhaustive coverage of how recent changes to Canada’s tax laws will affect these companies has earned him a reputation as one of the leading authorities on Canadian trusts. Subscribers and the national media often contact him for information on the latest economic developments and investment opportunities north of the border.

Roger is also associate editor of Personal Finance and co-editor of Vital Resource Investor, a subscription-based service that seeks opportunities for equity investors in the natural resource markets across the world.

He holds a bachelor’s degree from Emory University and a master’s degree in international management from the American Graduate School of International Management (Thunderbird). In addition, he is the author of Power Hungry: Strategic Investing in Telecommunications, Utilities and Other Essential Services and coauthor of The Agile Investor and Market Timing for the Nineties with Stephen Leeb. He is also an avid outdoorsman and baseball fan.

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GDP, China and Dividends

Our basic guidance is to focus on solid businesses with healthy balance sheets that have withstood historic stress since this recession got going in late 2007. We’re interested in companies that generate sustainable dividends.

In good times, it’s natural to seek investments that will grow the fastest. Conversely, tough times like these bring out investors’ impulse to flee to the safest bets. The trouble is, nothing is 100 percent safe under all circumstances. And even pinpointing the highest percentage investments can be a chore when the economy is apparently shrinking and credit markets are still recovering from their deepest freeze in decades.

There are in fact signs that the worst is over. But the worst was unlike anything most of us have ever seen. Bank of Canada Governor Mark Carney, in a public speech last week, advised his audience, “Just as you don’t count your chickens before they are hatched, we shouldn't presume that green shoots today guarantee a bumper crop tomorrow. It is a long, anxious time between the appearance of seedlings and the harvest.”

Cost and time remain major deterrents to would-be builders of nuclear plants. Two things, however, have changed dramatically to make the economics actually worthwhile, at least for a handful of players.

The Pace of Decline Is Slowing

Canada’s official data agency reported Wednesday that the pace of decline in its broad measure of economic activity slowed in May to 0.1 percent, the smallest in a series of nine consecutive declines. And the shift from a 0.9 percent drop in April is the largest month-to-month change in either direction since December 1965.

Before last year’s financial meltdown, China had already replaced the US as the world’s leading consumer of steel, copper and several other major commodities. At the beginning of the decade, for example, the US economy accounted for 25 percent of global demand for the red metal, while China consumed roughly 12 percent. By mid-2008, however, it was China consuming 27 percent, the US only around 12 percent.

Since the S&P 500, the S&P/TSX Composite Index and the S&P/TSX Income Trust Index bottomed on March 9, the two Canadian indexes have correlated more with the MSCI Asia All Country ex-Japan Index. In other words, Canada’s stocks have become more and more levered to the global economy, including areas in Asia where signs of economic recovery are easier to see.

Change is on the way. Hawaii is launching what it calls an “energy sovereignty plan,” under which it hopes to wean itself off at least most of its foreign oil needs. In a partnership with the US Dept of Energy, the goal is to obtain 70 percent of the state’s electricity from “clean energy” by 2030. That’s 40 percent renewable energy and 30 percent from energy efficiency measures that reduce demand.

The 170 billion barrels of recoverable reserves can help mitigate North American concerns about global security without causing extreme planetary degradation. The key is for US and Canadian policymakers to coordinate climate policy, combining efforts to regulate greenhouse gas emissions, for example, by at least linking their respective cap-and-trade proposals that are almost sure to be enacted within the next 12 months.

There are still plenty of ways to score outsized returns and high yields from income-producing stocks, even at higher tax rates. For one thing, we’re coming off a very low point here in the markets. Despite the sharp rally from the March 9 lows, even financially secure companies that are consistently raising dividends and operating in recession-resistant industries are yielding in the upper single-digits.

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