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Three top stock picks from ScotiaMcLeod’s Greg Newman

Greg Newman is director, senior wealth adviser and associate portfolio manager at the Newman Group, ScotiaMcLeod. His focus is Canadian dividend stocks and protection strategies.

Top Picks:

Algonquin Power & Utilities Corp.

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Rising bond yields and other fears have driven the stock down since April. We believe the market is not paying attention to the fact that earnings could rise 45 per cent from 2012 to 2015. Earn a safe dividend of around 5.4 per cent while this thesis plays out.

Enerplus Corp.

Enerplus has beaten its earnings expectations for three quarters in a row on improved operational efficiencies and cost discipline. It is displaying similar growth to its peers yet trades at a wide discount. Given its improved balance sheet and dividend coverage, we see more upside from these levels and believe the 6.2-per-cent dividend looks sustainable at this time.

Vanguard FTSE Europe ETF

European purchasing manufacturing indexes are improving and European stocks still trade at a discount to the U.S. We believe the valuation gap between the U.S. and Europe will narrow. Enjoy a 3.25-per-cent dividend while this plays out.

Past Picks: Oct 1, 2012

TransCanada
Then: $44.67
Now: $45.13
Total return: +5.06 per cent

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Enbridge
Then: $38.62
Now: $42.58
Total return: +13.40 per cent

Pembina Pipeline
Then: $27.60
Now: $34.11
Total return: +30.31 per cent

Total return average: +16.29 per cent

Market outlook:

Uncertainty from Washington law makers will likely ultimately present another buying opportunity as the global economy continues to gradually improve over time. Buy dividend stocks that are well-positioned to benefit from global growth and dividend stocks that have become oversold due to overdone interest rate fears.

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