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bnn market call

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

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

Top picks:

Toronto-Dominion Bank

TD is our favourite bank at this time based upon its strength in Canadian retail banking and Canadian wealth management. In the United States, TD has attained scale and regional market depth. The bank's strong deposit base provides good upside potential for margins as the economy improves and interest rates rise. TD increased its dividend twice in fiscal 2013 by a total of 10 per cent; further increases should be seen in 2014.

Crescent Point Energy

Crescent Point is primarily a light oil producer concentrated in Saskatchewan, with other interests in Alberta, Manitoba, North Dakota and Utah. Crescent Point has a disciplined management team that maintains a conservative balance sheet, employs forward hedging and focuses on returning significant cash to shareholders. The $2.76 per share dividend is maintainable and the stock yields 6.8 per cent.

AltaGas Ltd.

AltaGas is an energy infrastructure services company involved in natural gas gathering, processing, liquids extraction, and transmission. The various businesses give the company many opportunities to add value to the energy molecule. On the power side, AltaGas has hydro and gas generation facilities as well as distribution. The company will benefit from B.C. hydro projects in 2014/2015 and potential LNG/LPG projects thereafter. The current dividend of $1.53 yields 3.9 per cent, it was increased 6 per cent this year and we would expect a similar rise in 2014.

Past Picks: October 25, 2012

Goldcorp Inc.
Then: $43.60
Now: $24.51
Total Return: -42.58%

CN Rail
Then: $86.45
Now: $117.77
Total Return: +38.53%

BCE Inc.
Then: $42.78
Now: $46.69
Total Return: +14.99%

Total Return Average: +3.65%

Market outlook:

The S&P/TSX Total Return Index is up 11 per cent year-to-date and is trading near the top of our 11,500 to 13,500 trading range. In the summer we moved to a fully invested position in portfolios given our outlook for a moderately improving economy, rising corporate profits and good dividend growth. Our client portfolios have seen 74 to 80 per cent of companies increase their dividends by an average of 5.3 to 7.7 per cent this year.

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