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.
Rob Carrick: The exclusive club of dividend stocks that at least doubled their payouts in the past 10 years
One of the benefits of dividend income, Rob Carrick writes, is that when you hold stocks with a record of consistently increasing their cash payouts to shareholders, you get a flow of income that grows by amounts that can easily exceed the inflation rate.
He dips into a list of Canadian-listed stocks to find those with a 10-year annualized dividend growth rate of 7.2 per cent or more. Under the Rule of 72, you divide 72 by your rate of growth to see how long it will take to double your money. With a 7.2-per-cent growth rate in dividends, you have a double on your hands in 10 years. Read more here.
- Canadian Tire Corp. Ltd. (CTC.A-T): Dividend compound annual growth rate of 18.4 per cent.
- Canadian National Railway Co. (CNR-T): 15.6 per cent
- Metro Inc. (MRU-T): 14.6 per cent
- Enbridge Inc. (ENB-T): 14.3 per cent
- Atco Ltd. (ACO.X-T): 12.6 per cent
- Toronto-Dominion Bank (TD-T): 9.8 per cent
- Intact Financial Corp. (IFC-T): 9.4 per cent
- Telus Corp. (T-T): 9 per cent
- Canadian Utilities Ltd. (CU-T): 8.6 per cent
- National Bank of Canada (NA-T): 8.5 per cent
- Manulife Financial Corp. (MFC-T): 8 per cent
- Royal Bank of Canada (RY-T): 7.9 per cent
- Emera Inc. (EMA-T): 7.9 per cent
- Imperial Oil Ltd. (IMO-T): 7.4 per cent
- TC Energy Corp. (TRP-T): 7.4 per cent
Three top stock picks from Scotia Wealth’s $300-million portfolio manager Stan Wong
While many investors were riding out the market volatility in recent months, Stan Wong was actively buying and selling, including in some of the hardest-hit sectors such as travel and leisure, Brenda Bouw writes. The portfolio manager at Scotia Wealth Management in Toronto who oversees about $300-million in assets says he looks for “high-quality names with strong long-term secular growth characteristics,” while avoiding stocks with “unreasonable valuations.”
Here he outlines why Simon Property Group, Mastercard and the XLF ETF are his latest picks.
Why I’m not giving up on dividends - and you shouldn’t, either
A reader writes: I am a lifelong dividend investor, but 2020 was the third year in a row I have badly underperformed the Canadian and U.S. indexes. Now, I am questioning my strategy.
John Heinzl responds: Rather than give up on dividend investing, consider adopting a hybrid strategy. You could, for example, hold a core group of dividend stocks including Canadian banks, utilities, power producers and telecoms. These stocks are on the conservative end of the risk spectrum, pay above-average yields and raise their dividends regularly, providing you with a growing income stream.
To add some diversification, consider investing in one or more index ETFs. Information technology stocks have been a huge driver of the S&P 500′s performance, but many of these stocks pay no dividends, which is one reason dividend strategies have lagged in recent years. Read more here, including answers to other reader questions.
More from John Heinzl: Yield Hog model dividend growth portfolio as of Dec. 31, 2020
Noted money manager Jeremy Grantham says stocks are in an ‘epic bubble’
U.S. stocks are now “a fully fledged epic bubble,” according to Jeremy Grantham, the bearish money manager who has earned a reputation for his timely forecasts of impending market plunges, Ian McGugan writes. The co-founder of GMO LLC in Boston wrote in a note on Tuesday “it is highly probable that we are in a major bubble event in the U.S. market, of the type we typically have every several decades and last had in the late 1990s.”
His warning highlights the potential risk that goes along with the extreme monetary policies put into place to deal with the pandemic. Read more here.
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Gordon Pape: Why I see muted upside for investors in 2021
I’d like to join the broad chorus of optimists and predict a terrific year for stocks in 2021 as we pull out of the pandemic, Gordon Pape writes. But I think the markets have already priced in a broad economic recovery. With valuations so stretched, I see a more muted upside for 2021. Uncertainty in Washington as the Biden administration takes hold will contribute to investor caution.
Here is his outlook for the year, including why he sees tech slowing, bond prices weakening and green energy companies continuing to prosper.
What investors need to know for the week ahead
In the week ahead, companies releasing their latest earnings include Citigroup, JPMorgan Chase, Wells Fargo, BlackRock, Shaw Communications, Cogeco, Score Media and Gaming, Corus Entertainment, Aritzia and Aphria.
Economic data on tap include U.S. inflation figures for December (Wednesday); Canadian new motor vehicle sales for November, Canadian existing home sales, average prices and MLS Home Price Index for December as well as U.S. retail sales for December (Friday).
Looking for more investing ideas and opinions?
- Insider Report: Bill Gates trims his position in this large-cap Canadian dividend stock
- Scotia’s top Canadian stock picks dominated by value names
- Goldman proclaims the dawn of a new commodity supercycle
- A 2021 vision: What every fund manager is buying (or selling)
- Opinion: Why are real interest rates and inflation on the way up?
- The week’s most oversold and overbought stocks on the TSX