The Globe and Mail - 06.11.2019

B10 O THEGLOBEANDMAIL| WEDNESDAY,NOVEMBER6,2019

GLOBEINVESTOR

| REPORTONBUSINESS

A

mong the ways to shame
people into paying more
attention to their money is
to question how much time they
spend on matters of personal fi-
nance.
This leads to comparisons of
how much time people spend on
their finances versus watching
TV, for example. In a recent sur-
vey done for a U.S. website, peo-
ple were found to spend more
than 85 hours a month watching
TV – almost 100 times as much as
the time spent on household fi-
nances.
To mark Canada’s Financial
Literacy Month in November, let’s
try something different. Instead
of questioning whether people
are spending enough time on
their finances, we’ll look at how
much time is actually required.
Preview: It’s not that much; plen-
ty of time for TV and such.

BANKINGANDCREDITCARDS

Check your accounts online daily,
or at least every few days. With cy-
berfraud an ever-present threat,

it makes sense to keep a close eye

on your accounts so you can no-

tice unauthorized activity and re-

port it immediately.

In your bank account, look for

debits or withdrawals that you

did not make. In your credit card,

ensure all charges were made by

you. Report any fraudulent activ-

ity to your banks and ask how

quickly your losses will be cov-

ered.

According to the Financial

Consumer Agency of Canada, fi-

nancial losses that result from

your card being using without

your permission will usually be

reimbursed as long as you took

reasonable care to keep your ac-

count number and PIN safe.

Frequent looks at your bank

and credit-card accounts may al-

so help make you more aware of

harmful spending patterns, espe-

cially now that more banks are of-

fering budgeting apps that work

in conjunction with your chequ-

ing account.

SAVINGS

Review your savings accounts ev-

ery few months to ensure the rate

you’re getting remains competi-

tive. For the sake of profitability,

banks may suddenly decide to be

less aggressive on rates for savers.

Switch banks as required to get a

competitive rate, which right

now would be at least 2 per cent.

If you’re fortunate enough to

receive annual pay increases, in-

crease your savings rate to reflect

the amount of your raise.

INVESTMENTS

Twice-yearly checks suffice for a

properly diversified portfolio that

mixes stocks and bonds in a

thoughtful way and has mea-

sured exposure to U.S. and global

stock markets as well as Canada.

If you have a balanced exchange-

traded fund or mutual fund–adi-

versified portfolio in a single

package – then annual reviews

are fine. What you’re checking for

mainly is to ensure the weighting

of your various portfolio compo-

nents is more or less in line with

your target. A bad run for stocks

could turn a portfolio with 60-

per-cent stocks and 40-per-cent

bonds into a 50-50 mix. That

means it’s time to rebalance by

selling some bond holdings and

buying more stocks.

Watch your year-by-year re-

turns to make sure you’re getting

satisfactory results from your

portfolio, but a much bigger em-

phasis should be placed on long-

er-term results. A portfolio with

solid five-year results and a weak

one-year result is nothing to get

upset about, but keep an eye on

things.

MORTGAGE

An annual review makes sense to

compare the rate you’re paying

and current rates. If rates have

fallen a lot, why not check with

your lender to see whether it

makes sense to break your mort-

gage and lock in a lower rate?

Brace yourself for a megasize

penalty if you deal with one of the

big banks, which tend to be

tougher on these charges than

non-bank lenders.

Whatever the term on your

mortgage, plan to start educating

yourself on interest-rate trends

about four months ahead of re-

newal date.

Lenders typically let you lock

in a rate 90 to 120 days ahead of

renewal or purchase.

IFYOUHAVEAFINANCIALPLAN

Review the document once a year

to see whether you’re on track in

terms of projected assets and lia-

bilities – what you own compared

with what you owe, in other

words.

Do, please, follow the plan. Fi-

nancial planners sometimes get

exasperated by clients who bury

their plans in a filing cabinet.

Howmuchtimetospendonpersonalfinances

Itdoesn’ttakelongto

checkinonyourmoney,

butit’smoreimportant

thanevertodosoon

aconsistentbasis

ROB
CARRICK

OPINION

ISTOCK

D

ividend investing suits my
lazy personality. Rather
than trying to trade my
way to wealth – which takes time,
creates stress and doesn’t neces-
sarily even work – I just sit back
and collect my dividends.
Lately, however, I’ve been a lit-
tle too lazy. Instead of reinvesting
my dividends – one of the keys to
a successful investing plan – I’ve
been letting money build up for
months in my model Yield Hog
Dividend Growth Portfolio (view
it online at tgam.ca/dividend-
portfolio). Now that I’ve accumu-
lated more than $2,100 of virtual
cash, it’s time to go shopping.
Buying great companies
whose shares have suffered a set-
back is a proven investing strate-
gy, which is why today I’m using
more than half of my model port-
folio’s cash balance to purchase
an additional 15 shares ofRestau-
rant Brands International Inc.
(QSR), bringing my total to 70
shares.
Why has Restaurant Brands’
stock been plunging? Two words:
Tim Hortons. You wouldn’t know
it from the perennially long li-
neups at Canada’s favourite cof-
fee and doughnut chain, but
same-store sales slipped 1.4 per
cent in the third quarter from a

year earlier.

Softer-than-expected demand

for iced cappuccinos and lunch

wraps was one reason. Another

factor was Tims’ new loyalty pro-

gram, which hurt sales because

customers get their next coffee

or baked good for free after seven

visits.

But here’s the thing: Even as

Tims is struggling, Restaurant

Brands’ two other chains, Burger

King and Popeyes Louisiana

Kitchen, are killing it.

Burger King’s same-store sales

jumped 4.8 per cent in the third

quarter, driven by strong de-

mand for its new meatless offer-

ing, the Impossible Whopper.

Popeyes’s same-store sales

soared 9.7 per cent, thanks to its

new fried-chicken sandwich,

which was so popular the chain

initially couldn’t keep it in stock.

After taking the product off its

menu in late August to address

supply issues, Popeyes brought

the sandwich back to U.S. stores

on Nov. 3, triggering massive

lineups.

Restaurant Brands may not be

firing on all cylinders, but it’s still

a fast-food juggernaut. During

the third quarter, the company’s

total systemwide sales surged 8.9

per cent, helped by 5-per-cent

growth in the number of restau-

rants globally. And there’s plenty

of store growth to come.

Consider that, in 2010, Burger

King had just 800 restaurants in

the Asia-Pacific region. Now, it

has 3,000 – and counting. Restau-

rant Brands is hoping for a simi-

lar growth trajectory with Pop-

eyes.

“Today, the Popeyes brand has

fewer than 120 locations in Asia,

and we see enormous potential

to build our network there in the

coming years,” Restaurant

Brands chief executive Jose Cil

said on the third-quarter confer-

ence call. In addition to expand-

ing Popeyes’s Asian reach, Mr. Cil

also sees growth opportunities in

Brazil and Spain, “and right here

in the U.S.”

Yet, many investors are focus-

ing less on Restaurant Brands’

global growth potential and

more on the weakness at home

with Tims. To be sure, Tims has

lost momentum in recent years

as feuding between the company

and its franchisees and growing

competition from McDonald’s

and other fast-food players has

sapped its strength.

Some analysts are even sug-

gesting that the iconic chain

needs an infusion of new man-

agement. “Do you need to make

more fundamental changes there

with respect to ... maybe broad-

ening the team or who you have

in place running the brand?”

Sanford C. Bernstein analyst Sara

Senatore asked on the confer-

ence call.

Mr. Cil responded that he feels

“really good about the team that

we have in Canada,” but added

that the company “is constantly

looking for great talent.”

Adding to the intrigue, a few

days after the Oct. 28 conference

call, Alexandre Macedo, presi-

dent of Tim Hortons, sold more

than US$10-million of Restaurant

Brands shares held directly and

indirectly, according to The

Globe and Mail’s Insider Report.

All of this has taken a toll on

Restaurant Brands’ share price.

After touching a record high of

$105.93 in early September, the

shares have skidded about 18.5

per cent, closing Tuesday at

$86.37 on the Toronto Stock Ex-

change.

The silver lining here is that,

after such a sharp decline, fur-

ther downside in the stock may

be limited.

Another reason I like the stock

at current levels is that the yield,

which moves in the opposite di-

rection to the price, has climbed

to more than 3 per cent, from

about 2.5 per cent two months

ago. The yield is even more at-

tractive considering that, in re-

cent years, Restaurant Brands

has raised its dividend in January

or February. I expect to see an-

other increase early in 2020.

Fixing Tims won’t happen

overnight, but in the meantime, I

expect that Burger King and Pop-

eyes will continue to deliver solid

results. As long as Restaurant

Brands sends me a dividend ev-

ery quarter, and raises it once a

year, I’m content to wait for the

turnaround at Tims to gain trac-

tion.

Disclosure: The author also owns

shares of QSR personally.

Special to The Globe and Mail

WhyI’morderinganotherservingofthisfast-foodstock

JOHN
HEINZL

OPINION

YIELD HOG

I

n the wake of two years of dev-
astating wildfires in California,
Wall Street is incorporating a
new risk metric when evaluating
companies: climate resiliency.
Investors, analysts, research
firms and companies are putting
more emphasis on how climate
issues ranging from rising sea lev-
els to record heatwaveswill affect
profits and revenues in the Unit-
ed States and what companies are
doing to address those risks.
Companies located in areas
such as California, Florida and
Louisiana that put them at a high-
er risk of being affected by more
severe weather patterns are in-
creasingly being asked how they
will protect their businesses from
climate change.
Over all, more than 70 firms
have discussed the potential im-
pact of climate change on their
business on their quarterly re-
sults calls since the start of the

year, more than double that of

last year or any other year since

2014, according to a Reuters

analysis of Refinitiv data.

As a result, fund managers,

who typically do not incorporate

environmental attributes in their

analysis of a company, are taking

a closer look at whether the phys-

ical locations of their property

and equipment will put them at a

higher risk of being affected by

climate change.

“ESG” funds, which focus on a

company’s environmental, so-

cial, andgovernance attributes,

have been at the forefront of fo-

cusing on the physical risks of cli-

mate change.

But now fund managers such

as Mr. Hurley are finding that

companies in their portfolio,

such as Equity Lifestyle Proper-

ties Inc., are revealing to analysts

on their earnings call that they

are evaluating the potential for

rising water levels when it pur-

chases new marinas. Shares of the

company are up 43 per cent for

the year to date.

Mr. Hurley said he is actively

going into companies, such as Eq-

uity Lifestyle and Boston Proper-

ties Inc., that are pre-emptively

addressing potential climate ef-

fects, whether by focusing more

on the elevation of potential de-

velopments or incorporating

construction design elements

such as putting critical equip-

ment above floor grade.

Fund managers say the bank-

ruptcy of San Francisco-based

power company Pacific Gas &

Electric Co. in January prompted

them to put more emphasis on

climate risks.

Wildfires that broke out Oct. 23

could undermine California’s

largest utility’s US$14-billion plan

to finance its turnaround after fil-

ing in January for Chapter 11

bankruptcy protection anticipat-

ing its liabilities from massive

wildfires in 2017 and 2018 blamed

on its equipment could top

US$30-billion.

At the same time, there have

been 10 weather and climate di-

saster events that have caused

more than US$1-billion in damag-

es since the start of the year, al-

ready nearly double the average

of 6.3 events for each full-year be-

tween 1980 and 2018, according to

National Centers for Environ-

mental Information.

Insurance claims for what were

once considered secondary perils

• such as wildfires and hail – have
  accounted for US$13-billion out
  of US$15-billion in natural disas-
  ter claims through August, ac-
  cording to Swiss Re.
  The increase in wildfires has
  prompted underwriters such as
  Hiscox Ltd. to incorporate new
  risks models and stop insuring
  some clients in high-risk areas
  such as California.
  Over all, 10 per cent of insurers
  refused to renew policies in wild-
  fire-prone areas in California in
  2018, according to the California
  Department of Insurance.
  Research firms including S&P
  Global’s Trucost division are roll-

ing out more climate-risk analyt-

ics that are meant to help inves-

tors assess the specific climate

risks that each company faces.

The firm is publishing a report

in the next few weeks that will fo-

cus on companies that face the

highest physical risks of climate

change, a spokeswoman said.

In March, Silicon Valley startup

Jupiter Inc. announced that it had

completed a US$23-million Series

B funding round to expand its

analytics services that can pro-

vide investors and companies

with detailed short- and long-

term weather patterns for specific

locations.

“This is something that’s not

going away soon,” said Gregory

Peters, senior portfolio manager

at PGIM Fixed Income.

As a result, he has trimmed his

positions in some California util-

ities, while analysts on his real es-

tate team are increasingly focus-

ing on climate risk.

REUTERS

ExposuretoriskfromclimatechangegainsnewimportanceonWallStreet

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