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.
Gordon Pape: My High-Yield Portfolio has posted strong gains since the spring’s market turmoil
I created the High-Yield Portfolio in March, 2012, for income investors looking for above-average cash flow and who could handle a higher level of risk, Gordon Pape writes. This portfolio invests entirely in stocks, so it is best suited for non-registered accounts where any capital losses can be deducted from taxable capital gains. Also, a high percentage of the payments will receive favourable tax treatment as eligible dividends or return of capital.
Since the most recent update in May, the portfolio recovered well from last spring’s 4-per-cent loss, gaining 9.8 per cent in the latest review period ended Sept. 18. Big advances for Sun Life, Canadian Imperial Bank of Commerce, and North West Co. were the main drivers. Find the full portfolio here, along with how each stock has fared.
Read more: The highest yielding stocks on the TSX, plus risk data
This dividend-growing utility is an antidote to market uncertainty
If you’re looking for a predictable investment, consider Fortis, John Heinzl writes: I’ve owned the stock personally for years and also hold in my model Yield Hog Dividend Growth Portfolio. Fortis doesn’t provide exhilarating gains or terrifying drops; it just chugs along, rewarding investors with growing dividends and a share price that slowly marches higher.
For the 10 years through Sept. 30, the owner of regulated gas and electric utilities in Canada, the United States and the Caribbean has posted an annualized total return – including dividends – of 9.4 per cent. Sure, that pales next to the returns of some high-flying tech stocks, but it handily beats the annualized total return – also including dividends – of 5.8 per cent for the S&P/TSX Composite Index over the same period.
And we can expect more where that came from. Here’s why I believe Fortis deserves a place in every well-balanced dividend portfolio.
More from John Heinzl: Yield Hog model dividend growth portfolio as of Sept. 30, 2020
Read more: Boston Pizza reinstates payout, plus more investing stars and dogs for the week
Here’s how much Canadian content the pros are putting in their portfolios
There’s lots to think about as we pivot from summer to a fall where a second wave of COVID-19 looms, including the level of commitment a Canadian investor should have to Canadian stocks, Rob Carrick writes. For some answers to this question, let’s look at what the investment industry is doing.
A mid-month survey of mutual fund, exchange-traded fund and robo-adviser portfolios for balanced investors (roughly a 60-40 mix of stocks and bonds) found an average portfolio weighting of 14.5 per cent for Canadian stocks, 19.5 per cent for U.S. stocks and 23.8 per cent for developed international stocks, or those from outside North America, plus emerging markets in some cases.
If you have 60 per cent of a portfolio in stocks and 60 per cent of that allotment in Canadian stocks, you have a total portfolio weighting of 36 per cent in the domestic market. That’s well above what we see in the survey of how balanced ETFs and robo-portfolios are diversified globally. Read more here.
More from Rob Carrick: What are the costs, benefits of using two different TFSAs for investing?
The outlook for preferred shares appears to be a lot brighter
There’s finally something to base a bullish case for preferred shares on, Rob Carrick writes. Preferred shares have been on an upswing in the past few months because there’s an expectation the market will shrink in the years ahead, creating a scarcity that drives prices higher.
Preferred shares are designed to pay a reliable flow of investment income, which they have done with rare exceptions in the case of financially weak companies. But over the past 10 years, preferreds have earned a reputation as one of the most volatile investments around in terms of price, with most of that volatility on the down side. Now, finally, there’s a brighter outlook for frustrated preferred share investors. Read more here.
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The pandemic ended the winning streak for low-volatility funds. Is a comeback in the cards?
Lost in the pandemic is one of the best shortcuts in investing, Tim Shufelt writes. For nearly a decade, low-volatility investing has consistently delivered returns equal to the market or better, and with considerably less risk attached.
But most low-volatility funds were poorly positioned for the unique market conditions brought on by the COVID-19 crisis, and are trailing the broader market as a result. For a trade predicated in part on relative stability in unstable times, this poor showing is a big deviation from well-established market patterns. Read more here.
What investors need to know for the week ahead
In the week ahead, skittish markets will be watching any developments in the health of Donald Trump, after the U.S. President was hospitalized with COVID-19. Also, central bankers speak: U.S. Fed chairman Jerome Powell gives an outlook to the National Association for Business Economics on Tuesday; Bank of Canada Governor Tiff Macklem addresses the Global Risk Institute on Thursday.
Economic data on tap for the week include: Canada’s merchandise trade deficit as well as U.S. goods and services trade deficit for August (Tuesday); U.S. consumer credit for August (Wednesday); Canadian housing starts for September (Thursday); Canadian employment numbers for September and U.S. wholesale trade for August (Friday). Companies releasing their latest earnings include Delta Air Lines, Domino’s Pizza, Richelieu Hardware and Aphria.
Read more: Trump’s COVID-19 adds another big twist for markets ahead of uncertain U.S. election
Looking for more money ideas and opinions?
- Scotiabank’s top 30 Canadian stock ideas
- Insider Report: CEO invests millions in this high-yielding stock with 27 years of dividend hikes
- Short sales on the TSX: What bearish investors are betting against
- A top-performing dividend stock that jumped last week on higher earnings expectations
- Introducing a new bank account that looks like it was designed for pandemic life