Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.
Two years in, John Heinzl’s dividend portfolio is crushing it
It’s been two years since John Heinzl started his model Yield Hog Dividend Growth Portfolio, and here he takes a detailed look at how the portfolio has performed. “I think you’ll agree that the results have been rather divi-licious,” he writes. The money he uses in the model portfolio isn’t real, but he follows the same strategy in his real-life accounts. He focuses on dividend growth for a couple of reasons: It puts more money in his pocket, and it’s a sign of a healthy business.
How much has the portfolio’s dividend income grown? Well, at inception it was churning out a projected $4,094 of cash annually, based on dividend rates at the time. The annual income has since grown to $5,131 – an increase of 25.3 per cent. Here’s the complete list of securities in the Yield Hog dividend growth portfolio along with performance as of the end of September.
This Canadian dividend-paying giant may have fallen off investors’ radar. It’s time to put it back on
Should investors approach Nutrien as a beaten-up buying opportunity? Although a 2018 merger united Potash Corp.’s world-leading potash production with Agrium’s massive retail business, creating a $37-billion global agricultural powerhouse, returns have been disappointing. Since its debut, Nutrien’s share price is down 6.1 per cent (not including dividends), lagging the S&P/TSX Composite Index by nearly seven percentage points over the same period.
While there’s a lot of gloom, the upside is compelling, David Berman writes. For one, even with a less than ideal backdrop, Nutrien is wildly profitable. And it raised its quarterly dividend with its second-quarter results, to 45 US cents a share, up from 43 US cents previously. The dividend yield is now 3.7 per cent, offering investors a good payout while they wait for a rally.
More from David Berman: Will free stock trading ever come to Canada? It may be better if it doesn’t
Why Brookfield Infrastructure’s unit split is good for investors
A reader asks John Heinzl to explain Brookfield Infrastructure’s recently announced “unit split.” He responds: The global operator of infrastructure assets – including utilities, toll roads, ports, railways, pipelines and communications towers – has been a great long-term investment, and I believe the unit split can only help in that regard.
Basically, Brookfield Infrastructure Partners (which I’ll hereinafter refer to as BIP or, when I’m referring to its Canadian-listed units, as BIP.UN) wants to appeal to a broader base of investors. To do that, it plans to create a publicly traded Canadian corporation that will exist alongside the current Bermuda-based limited partnership.
BIP plans to distribute one BIPC class A share on a tax-free basis for every nine units of BIP.UN owned. A key point to understand is that, after the split, you will still own your original 100 units of BIP.UN. However, the market price of your BIP.UN units will drop. That’s because the total value of your BIP investment will now be spread across a total of 100 BIP.UN units units and 11 BIPC shares, instead of just 100 BIP.UN units.
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Recession-resistant stocks, plus more from Gordon Pape’s mailbag
A reader asks Gordon Pape to suggest some ETFs or conservative stocks that will help to resist to an eventual recession. He replies: For starters, let me be very clear. In a recession, all stocks and equity-based funds are vulnerable, even the bluest of the blue chips. It’s a matter of degree.
Regulated utilities, like Fortis, would normally suffer less because much of their revenue is guaranteed, and the dividend acts as a floor under the share price. Apartment REITs would tend to be less exposed to a shrinking economy than office or mall REITs because people always need a place to live. Consumer staples stocks, which have been out of favour recently, also tend to hold up better when the economy tanks. Read more from his mailbag here.
How this $925-million fund manager has been beating the market and what he’s buying and selling right now
Some portfolio managers talk about getting more defensive when markets are volatile and threats of recession loom. But Daniel Goodman, chief executive at GFI Investment Counsel Ltd., believes he’s already in a good place. “We like to think of ourselves as defensive through the ownership of high-quality businesses,” says Mr. Goodman, whose Toronto-based firm oversees about $925-million in assets under management.
GFI invests in about 15 to 20 stocks at one time, exclusively in North America, with a 50-50 split between the United States and Canada. He describes high-quality businesses as the type that “allocate their shareholder capital well and will take advantage of some sort of blip in the marketplace to either buy back stock, or possibly acquire a competitor.” Read more here about some of GFI’s key holdings, Mr. Goodman’s investing style and what he’s been buying and selling.
What investors need to know for the week ahead
In the week ahead, observers will be focused on what U.S. Federal Reserve chairman Jerome Powell may indicate about future rate moves as he gives speeches Tuesday and Wednesday. Economic data on tap include: U.S. consumer credit for August (Monday); Canadian housing starts for September and building permits for August as well as U.S. producer price index for September (Tuesday); U.S. wholesale trade for August (Wednesday); Canada’s new housing price index for August and U.S. consumer price index for September (Thursday); Canadian employment numbers for September (Friday). Companies releasing their latest earnings include Levi Strauss, Yum Brands and MTY Food Group.
Read more: World market themes for the week ahead
Looking for more money ideas and opinions?
- Sorry millennials, but you’ll need to put aside twice as much each week than the baby boomers did for a solid retirement
- A defensive stock yielding 4.7% with a targeted return of 17%
- Canadian tax law isn’t always kind to spouses and common-law partners
- Snowbirds, here’s how to avoid a probate on U.S. Sunbelt properties
- How to deke around the $100,000 coverage limit for CDIC deposit insurance
- Canadian dividend growers for the value and safety-focused investor
- A dividend stock in correction territory with a 40% return forecast
- Is your ETF portfolio packing gun-related stocks? The answer might surprise you