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.
• Shopify and Brookfield Infrastructure to join TSX 60 index, two more pot stocks added to Composite
Why I’m rrrolling more of my dividends into this stock
I added Restaurant Brands to my model portfolio last August, John Heinzl writes, and since then the shares have delivered a total return of about 10 per cent. Much of that gain happened in January, when the owner of Tim Hortons, Burger King and Popeyes Louisiana Kitchen served up a juicy 11.1-per-cent dividend increase and announced that same-store sales grew at each of its chains during the fourth quarter ended Dec. 31. I believe Restaurant Brands has a lot more growth to offer, which is why I am buying additional shares. One reason I’m optimistic is that Tim Hortons is getting back in form as it puts a dispute with franchisees behind it. Same-store sales at Tim Hortons’s Canadian restaurants grew a solid 2.2 per cent in the fourth quarter, and new menu offerings and improved marketing should keep sales growing.
Related: John Heinzl’s model dividend growth portfolio as of Feb. 28, 2019
Shopify and Brookfield Infrastructure to join TSX 60 index, two more pot stocks added to Composite
Tech wunderkind Shopify and Brookfield Infrastructure Partners are set to join the big club of corporate Canada – the S&P/TSX 60 index of stocks – while Hudson’s Bay managed to keep its place in the broader index of Canadian equities, David Milstead writes. S&P Dow Jones Indices, manager of those two major Canadian stock indexes, announced its quarterly changes to their memberships late Friday. The additions and deletions will go into effect on March 18, before trading opens. To make room for Shopify and Brookfield Infrastructure Partners, S&P dropped ARC Resources and Crescent Point Energy, two energy companies whose shares have tumbled as the oil industry has hit a rough patch. Two cannabis companies, CannTrust Holdings and Hexo., are among the eight new members of the Composite.
Read more: Here’s what a portfolio built on sector outperformance looks like
This TSX bull-market run has been brought to you by the Big Five
On Day 1 of the recovery from the worst bear market since the Great Depression, the big Canadian banks led the charge on the Toronto Stock Exchange, Tim Shufelt writes. Royal Bank of Canada’s shares rose 14 per cent on March 10, 2009, as investors stormed back into the much-maligned financials sector. RBC’s fellow Big Five incumbents all posted double-digit gains of their own. In the 10 years since the market bottomed out, the Big Five together have contributed nearly half of the total returns generated by the S&P/TSX Composite Index. Just five stocks contributed 47 per cent of a decade’s worth of gains in an index that contains around 240 of the country’s largest companies. But the burdens from indebted households, a moderating economy and a slowing real estate boom mean the next decade in banking, and bank investing, is unlikely to have the same sheen as the gilded decade past.
Read more: How the search for the market bottom 10 years ago proved elusive for even top experts
What a VP of a $13-billion Canadian money manager is buying, selling and telling investors about building wealth
Murray Leith is often asked the same question: “Is now a good time to invest?” Regardless of what’s happening in the markets, his answer is: “It’s almost always a good time to own great businesses.” When it comes to generating wealth, the executive vice-president and director of investment research at Odlum Brown Ltd. says investors should think like business owners, not traders. “If you’re really serious about building wealth, you don’t want to have this attitude that you can time the market and jump in and out of it,” says Mr. Leith, whose Vancouver-based firm manages about $13-billion in assets. The Globe and Mail recently spoke to Mr. Leith about his take on the markets and stocks he’s been buying and trimming.
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‘If a recession is coming, should I just own some GICs?’
There are solid reasons to avoid the risk of investing in stocks and instead hold guaranteed investment certificates, Rob Carrick writes. Deking around the next recession is not one of them. The Canadian economy came close to stalling in the final three months of 2018, growing just 0.4 per cent on an annualized basis. Economists have been talking a lot about slowing growth and the Q4 report on GDP is bound to increase speculation. But making a drastic change in asset mix to respond to a potential downturn seems unwise. It’s just as likely the economy regains its equilibrium and continues along the slow-growth track it has been on for a while now. GIC rates simply aren’t high enough to satisfy investors who are used to long-term average annual stock market returns in the 6 per cent to 7 per cent range before fees.
More from Rob Carrick: Cars, houses, Facebook and stagnant incomes – why you’re so stressed about money
What investors need to know for the week ahead
British lawmakers are set to vote on Prime Minister Theresa May’s latest Brexit deal on Tuesday, with critics warning of a heavy defeat. Companies releasing their latest earnings in the week ahead include Linamar, Empire, Quebecor, Dorel Industries, Hexo, Premium Brands and Transat. Economic data on tap for the week: U.S. retail sales for January (Monday); U.S. inflation figures for February (Tuesday); U.S. construction spending for January (Wednesday); Canada’s new housing price index and U.S. new homes sales for January (Thursday); Canada’s existing home sales and MLS Home Price index for February (Friday).
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