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Douglas Kee, Chief investment officer for Leon Frazer & Associates.Market Call

Douglas Kee is chief investment officer at Leon Frazer & Associates. His focus is Canadian dividend-paying stocks.

Top Picks:

Enbridge (ENB.TO)

The share price of Enbridge is down nearly 50 per cent from its 2015 high, reflecting the collapse in energy prices. The company has increased its dividend by 14 per cent for 2016, currently yielding 4.9 percent. We expect 10- to 12-per-cent dividend growth over the next few years, based on organic growth and a fully-secured capital investment program in excess of $20-billion.

Fortis (FTS.TO)

The share price of Fortis has held quite well given that the vast majority of its assets are regulated utilities. With rate base growth of about 5 per cent, we are forecasting a 2016 dividend increase of a similar amount. The stock currently yields 4.1 per cent.

TD Bank (TD-T)

TD shares are off about 10 per cent from 2015 highs, reflecting pressure on margins, slower loan growth, and its exposure to the energy sector. TD possesses a strong consumer brand, scale, relatively-low exposure to energy and large U.S. retail operations. The shares yield 4.1 per cent and we would expect a 3 to 5-per-cent dividend increase this year.

Past Picks: Feb. 27,2015

Pembina Pipeline (PPL-T)

Then: $39.98 Now: $27.51 -31.19% Total return: -28.27%

Royal Bank (RY-T)

Then: $78.31 Now: $65.62 -16.20% Total return: -13.63%

Cenovus Energy (CVE-T)

Then: $21.57 Now: $16.54 -23.32% Total return: -19.93%

Total Return Average: -20.61%

Market outlook:

North American equity markets are trading at or near significant support levels. Markets have been challenged by modest economic growth, the threat of higher-administered interest rates in the U.S., plunging oil prices, erratic policy responses from the Chinese government and a softening corporate earnings outlook.

Looking ahead, economic growth will remain modest with personal consumption offset by a slowdown in manufacturing. Europe continues quantitative easing, China is in stimulus mode, and the U.S. Federal Reserve will be more cautious on raising interest rates than previously expected. We believe that oil prices, while volatile, are in a bottoming process with demand still growing and high cost production cuts gaining momentum. Equity valuations have come down with earnings expectations and are now representing good value. We are cautiously optimistic on equity markets and remain committed to companies that provide a current yield and the potential for increased dividends in the future.

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