Thank God for Tim Hortons.
The stock market’s been worse that a big, fat doughnut hole this year, but Tim Hortons and several other members of bedrock corporate Canada are doing OK. This is something for we depressed, oppressed and otherwise beaten down investors to focus on as we wait for the global financial picture to improve.
It could be a while, so stay patient. Markets fear a return to recession, and there’s concern that debt defaults in Europe that could shake confidence in the global financial system. Nobody knows how or when this will end, but everyone knows it’s going to get ugly at times.
We will overcome. Eventually. For now, we can take comfort from the fact that, unlike in 2008, we have quite a number of big, blue-chip companies that are unbowed in the market turmoil of the moment.
Back in 2008, fear was so widespread that no one trusted anything except government bonds. As a result, there was really not a thing positive going on in the stock markets.
Today, we have a more traditional bear market in which sectors involved in the sale of basic products and services are doing just fine. Take Tim’s, for example. The stock was slightly lower in mid-day trading on Tuesday, but its year-to-date gain is around 17 per cent. Over the same timeframe, the S&P/TSX composite index fell almost the identical amount.
Close to 75 stocks listed on the TSX were up on the year before Tuesday’s fresh decline, and some of them are names you probably own either directly or through your mutual funds or exchange-traded funds. BCE Inc.’s up close to 10 per cent in 2011, and it offers a dividend yield of 5.3 per cent. TransCanada Corp. is also up on the year, with a dividend yield of just over 4 per cent. Enbridge Inc. shares are actually having a great year, and they yield around 3 per cent.
No, you don’t see much evidence of these gains at a time when the TSX is plunging by a few hundred points seemingly on a daily basis. That’s because the two market sectors getting hammered the hardest, energy and resources, account for 47 per cent of our market. Where they go, so goes the composite index.
This pattern will continue until the global economy stabilizes, which means more big declines to come for the Canadian stock market. But as BCE, TransCanada and Tim Hortons show, it’s not a complete loss.
Yes, this is a crumb-size dose of good news. But when you’re a long-term investor immersed in near-term pain, that’s what gets you through the night.