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A trader works on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, Aug. 9, 2016. (LUCAS JACKSON/REUTERS)
A trader works on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, Aug. 9, 2016. (LUCAS JACKSON/REUTERS)

Investor Newsletter

How to invest for the 'Centennials', an attractively priced dividend growth stock, and our new robo-adviser guide Add to ...

We've all heard about the importance of the Millennial generation, also known as Gen Y - a group of about 2-billion people worldwide. But now we need to turn our attention to the Centennials, or Gen Z, those currently ages 0-18, who will total 2.4-billion and will likely live for 100 years, says Sarbjit Nahal, an equity strategist with Bank of America Merrill Lynch.

"They are embracing diversity, sustainability, globalization, disruptive technology, 'peak stuff,' new business models, and entrepreneurialism like no generation before them – and they are economically optimistic to boot," he writes in a report issued Tuesday. It's estimated that together Gen Y and Gen Z will account for 59 per cent of the global workforce by 2020.

So, with these facts in mind, how do you adjust your investments?

These generations have had technology integrated into their lives from birth. It's the new normal to them. Smartphones are their device of choice and they use social network apps constantly, such as Facebook Messenger and WhatsApp. They want to improve the world and see a strong desire for change. They also see that business and investing can have an impact beyond profits. They consider "impact investing" to be an important factor when they make investment decisions. And they are upbeat that companies can do good.

These generations like to buy fast fashions, they want to be physically active, eat right, and travel. They do want to own a home, but are happy to do the renovations themselves. They want mobile payments, low banking and investing fees, and are happy to use a robo-adviser, the report says.

So, a few of the big sectors that will benefit from this generation include technology, media and entertainment; consumer goods; stocks related to household formation; education; and financials.

-- Gillian Livingston

 

Stocks to ponder

Richelieu Hardware Ltd. Quebec-based Richelieu manufacturers and distributes specialty hardware and complementary products such as kitchen and bathroom cabinets and it has shown impressive organic growth of 7.9 per cent in its third quarter of 2016. It has a strong management team, has posted consistent, strong long-term growth in sales, solid profitability and a strong balance sheet, writes Jennifer Dowty. It has a quarterly dividend of 5.33 cents for a dividend yield of less than 1 per cent, but dividends have been gradually increasing. She thinks now is a good time to buy.

Westshore Terminals Investment Corp. Insiders continue to scoop up stock in this strong stock performer, writes Jennifer Dowty. Vancouver-based Westshore operates a coal storage and loading terminal at Roberts Bank, British Columbia. After trimming its dividend last December, the company now pays a dividend of 64 cents per share for a yield of 2.6 per cent. According to Bloomberg, there are two ‘buy’ recommendations, and three ‘hold’ recommendations, with an average one-year target price is $22.60, which implies the shares are fully valued. However, several analysts have recently raised their target prices.

 

The Rundown

Dividend stocks headed into stormy stretch
A confluence of monumental catalysts should make for a raucous post-Thanksgiving home stretch that may well have investors longing for a quieter, warmer time, writes Tim Shufelt. The placid summer trading season was but a brief respite in an otherwise erratic year, which yet has its biggest scores to settle. Chief among them, as far as the market is concerned, is the election of the next U.S. president, a pivotal earnings season that could bring an official end to the longest profits recession since the global financial crisis and a potential U.S. rate hike.

‘Flash crash’ perils – and how investors can protect themselves
You have likely heard the phrase “flash crash” in recent years. Last Thursday night (Friday morning in Tokyo), we saw a flash crash in the British pound. A flash crash is generally defined as a very rapid, deep and volatile fall in security prices occurring within an extremely short time period. A flash crash frequently stems from trades executed by “black-box trading,” combined with high-frequency trading, whose speed and interconnectedness can result in the loss and recovery of billions of dollars in a matter of minutes and second, writes Larry Berman. For individual investors, expect that these types of events will continue to happen with increasing frequency and that there is little you can do to forecast when they might happen. But he gives some tips on how to manage them, including using stop limit orders.

Why one prominent investor avoids technology stocks
Investing is not about making money. At its root, investing is more about controlling risk, according to prominent investor and author Howard Marks.The co-founder of the world’s largest distressed debt investment firm spoke at the CFA Society Toronto's annual investment dinner last week. Oaktree Capital Management’s approach, Mr. Marks said, emphasizes building in a margin of safety to the investment process. That means buying securities with good assets behind them, rather than “ephemeral” assets. “We don’t do technology,” he said.

Why are RRSPs so bad for low-income people?
Rob Carrick speaks with John Stapleton from the Metcalf Foundation about why people in a low income bracket don't benefit from registered retirement saving plans.

Everything you need to know about robo-advisers
Rob Carrick took a deep dive into Canada's robo-advisers in his second annual guide to the online investing tools to explain who they are, and show what they can do. There are 11 firms with robo-advisers this year, up from nine a year ago. And competition is rising, which is great for investors and the fees they pay.

Why this retiree is replacing his bonds with annuities
Retiree Jean Lesperance has moved to replace his bond holdings with annuities as it gives him a strong return than what he got from bonds in this low interest environment. That stability has allowed him to take a few more risks on the equity side of his portfolio to boost his returns, writes Larry MacDonald in this week's Me and My Money column.

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What’s up in the days ahead

Our John Heinzl identifies three stocks that are poised to raise dividends in the next three months, Scott Barlow explains why oil bulls may be getting ahead of themselves, and John Reese will give us some investment ideas to play on the latest trend of cyclical stocks doing well.

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Gillian Livingston

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