John O'Connell is chairman and CEO of Davis Rea. His focus is on North American large caps.
Good dividend growth will be supported as the company continues to add to their cash flows as new power projects and recent acquisitions come on stream over the next number of years. Dividend returns of 4.25 per cent plus anticipated capital appreciation of 6 per cent should handily outperform on a risk adjusted basis the performance of most Canadian equities.
The transaction is anticipated to pass all regulatory and parliamentary hurdles. We see no reason why Canada would draw a line in the sand over a non-strategic asset like Nexen. 30 per cent annualized returns are expected to be realized by December.
Morguard North American Residential REIT
Morguard North American Residential REIT. Outstanding income growth potential as one of Canada’s savviest entrepreneurs pursues growth opportunities in the recovery of the US residential housing market. The REIT yields 5.25 per cent and is anticipated to increase this as accretive acquisitions are made south of the border.
Past picks: Nov. 2, 2011
Total return: +16.93 per cent
Western Energy Services
Total return: -8.55 per cent
Savanna Energy Services 7% 05/25/2018
Total return: +9.50 per cent
Total return average: +5.96 per cent
Equity markets have rallied strongly on the heels of additional financial engineering by the central banks of Europe and America. The underlying structural problems have been left unaffected and political leadership is scarce. Earnings growth has moderated and economic activity continues to decelerate. Our base case is for continued economic distress to roll across the globe. We have used recent strength to trim equities and focus on defensive positions with a view to purchasing good quality American multinational companies once investors begin to more adequately discount the downside risks that seem to be growing.
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