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Markets. Opportunities for value stocks are harder to come by but he is still finding a number of them, always looking for those that are out of favour with lots of upside. High-yield bond functioned really well in 2012 and totally focused on the corporate bond market. Spreads have come in, but are still well within the long-term averages. The risk is rising interest rates so prudence dictates a shorter term bond portfolio. Doesn’t touch emerging-market bonds at the present time.

Doesn’t like old income trusts that still pay out too high dividends. This one pays way too much at $0.48 a share, 170% of the cash flow they are taking in. Sustaining it by selling assets, which is not a sustainable business model.

Dividend in the 4% range but easily covered by earnings with still lots of room for growth. Earning well in excess of their dividend. No debt issue and they still have room for growth.

Dividend is in the 5.5% range but is easily covered by earnings with still lots of room for growth. Earning well in excess of their dividend. No debt issue and they still have room for growth.

Spreads on high-yield bonds. High-yield spreads are currently around 452 to 500 basis point range, which is well within long time averages. Defaults have been almost at historic lows over the last few years so there is still reasonable value in high yields, though certainly not as much as a year ago. Spreads have come in about 200 basis points in the last 12 months. Thinks spreads will continue to come in by about another 150 basis points in 2013 so it is still going to be a good market for high yields. However, if you hold a lot of long-term high-yield bonds, that is where the real risk is. If rates back up faster than anticipated, especially going out 5-10 years, those investors can get caught. His own portfolios average about 2 years.

Been in a tough business for a long, long time. Margins remain very tight because of so much competition. Doesn’t see it as being an attractive industry. Prefers companies that have branded products that have been beaten up, but the brand is solid and the business model works as opposed to contract manufacturing.

In a difficult space. Reality of the grocery business in North America is that there is more square footage growth than there is population growth, from the likes of Walmart (WMT-N), discounts and even Dollar stores. Very levered company with over $5 billion of debt and no top line growth presently. Earnings are not growing. About 4.5% dividend.

Seniors long term care facilities. Has done a very good job of managing, in what can be a difficult business because, surprisingly, there has been increased capacity. Feels 7% yield is safe. Expects management will be able to pull a little bit more yield out of the business and increase the dividend marginally over the next couple of years.

Portfolio consists partly of long-term corporate bonds, 6-10 years, BBB high and better. What is the risk? Big risk is rising interest rates. We’ve been locked in this declining interest-rate world for the last 30 years and people are getting used to 10 year Canada bonds in the 2% range or so. That is not the way the world will remain for the next 5-10 years. Would be very cautious. He would be selling longer-term bonds and if you want high-quality bonds, live with a lower yield and hold shorter-term bonds.

All Pharmas have drugs coming off patent and have trouble coming up with new drugs. This company has done a great job over the last couple of years with some successes, but they too are facing patent expiries. Pays a decent dividend but thinks they are going to have a tough fight for the next few years because pipeline is looking rather meagre and he doesn’t think there is much room for capital appreciation at all.

In the early stages of a recovery. Stock has performed reasonably well in the last little while. From an earnings standpoint, have really re-engineered its business and gotten out of some of the riskier areas and focused again on growing in Asia and the US. Will return to some normal level of profitability this year, which more than covers the dividend and leaves room for growth. If interest rates start to rise, as he expects it will in 2014, all the lifecos will be huge beneficiaries.

Extremely well run company. Biggest headwinds they may face are 1) declining new issuance in the mining and oil/gas sectors and 2) trading volumes softening up. Feels this has run its course for the short term for the next year or 2. If there was a pull back, he would be looking to buy this.

(A Top Pick Feb 8/12. Up 11.18%.) Financial company that transformed itself after getting crushed in the financial crisis. Reduced their risk profile and focused a lot more on wealth management. Earnings growth is being driven higher. Feels it is poised for a dividend increase in 2013.

(A Top Pick Feb 8/12. Up 48.74%.)

(A Top Pick Feb 8/12. Down 13.22%.) (Japanese Exchange.)