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The investing world has changed almost overnight. Some securities are holding up well during the COVID-19 crisis, but others that seemed rock solid a few weeks ago are being battered.

Given these dramatically changed circumstances, we need to review our portfolios and get rid of positions that are likely to drag down our returns for months and even years to come. In the words of the Kenny Rogers hit, The Gambler, we have "to know when to hold ’em, know when to fold ’em.”

With that in mind, here are some of the recommendations in my Income Investor newsletter. Keep in mind there are no guarantees that dividends will continue at current levels, but the stocks in our “Hold ‘em” category should be reasonably safe.

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Hold ‘em

BCE Inc. (BCE-T). Like the rest of the market, BCE plunged in March, but the stock has since rallied and was trading at $57.67 in Toronto in early trading on Wednesday. The company will likely see some revenue and profit loss as the COVID-19 recession deepens, but the dividend looks secure. As a result of a 5-per-cent hike effective with the April payment, investors are now receiving 83.25 cents quarterly ($3.33 annually) for a yield of 5.9 per cent.

Fortis Inc. (FTS-T). Fortis is an electricity and natural gas utility based in St. John’s. It has more than three million customers in Canada, the United States and the Caribbean. The shutdown of small businesses and manufacturing will affect power demand this year, so I expect revenue and profit to decline. But Fortis’ share price, which dropped to about $42 in March, is back up to $55.53. The quarterly dividend of 47.75 cents ($1.91 a year) yields 3.6 per cent.

North West Co. Inc. (NWC-T). NWC operates general stores, mainly across Northern Canada and Alaska. In some small communities, it is the only source of needed supplies. The company has been designated as an essential service. On March 30, it issued a statement to shareholders on how it is coping with COVID-19.

On the financial side, North West has approximately $190-million of available capacity on existing loan facilities. “This capacity combined with an anticipated 38-per-cent reduction in capital investments from $104-million in 2019 to $65-million in 2020 and previously announced $17-million in annualized administrative cost savings, are expected to provide growth in operating cash flow in 2020,” the company said. The share price has recovered to $26.55 after falling to near $16 in mid-March. The quarterly dividend is 33 cents a share ($1.32 a year) to yield 4.9 per cent.

Brookfield Renewable Partners LP (BEP.UN-T). Renewable energy companies are holding up quite well, despite the stock market turmoil. Brookfield Renewable units traded at $66.59 early on Wednesday, up slightly for the year. That’s off the record high of $76.35, reached in February, but that price looked inflated at the time. The units pay 54.25 US cents quarterly (US$2.17 a year) to yield 4.9 per cent.

Fold ’em

Sienna Senior Living Inc. (SIA-T). COVID-19 has hit retirement residences and long-term care facilities especially hard. So far, Sienna has succeeded in avoiding outbreaks at its B.C. properties, but Ontario is a different story. As of April 19, the company reported that most infections at its residences in that province had been contained, but a serious situation had developed at its Altamont Care Community in Scarborough, where several residents and a personal support worker have died.

The share price has fallen to $13.52 from a high of more than $20. The stock pays a quarterly dividend of 7.8 cents (94 cents a year) to yield 8.2 per cent. In March, the company issued a news release stating its “strong balance sheet, ample liquidity and healthy payout ratio are expected to continue to support the dividend payments to our shareholders.”

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However, long-term care facilities will almost certainly face tougher regulations after the COVID-19 crisis is over. A report released last week by the Canadian Centre for Policy Alternatives found that homes run on a for-profit basis tend to have lower staffing levels, more verified complaints, more transfers to hospitals and higher rates for ulcers and morbidity than non-profit or publicly-run facilities. Changes to the system for the care of elderly residents are likely to increase costs and put pressure on the bottom line of these companies.

Extendicare Inc. (EXE-T). Extendicare is another national operator of retirement residences and long-term care facilities. According to Family Councils Ontario, as of April 24, seven of the company’s homes in Ontario had reported cases of COVID-19 among residents or staff. Extendicare is working with authorities to control the situation, but as we are seeing, long-term care residences are a breeding ground for the disease. The company has maintained its dividend so far, but its share price has fallen to $6.28. At that level, the annual yield on the 4-cent monthly payment is 7.2 per cent. That’s very attractive if it can be maintained, but this is not a business I want to be invested in at this time, for the reasons mentioned above.

Prairie Sky Royalty Ltd. (PSK-T). As if COVID-19 weren’t enough, the oil and gas sector has been hammered by low prices caused by shrinking demand and overproduction. Many companies have slashed their dividends, including Prairie Sky, which is now paying 6 cents a quarter (24 cents a year), to yield 2.5 per cent. That’s a two-thirds cut from 6.5 cents a month previously. It’s the same story across the entire oil and gas sector.

It’s going to be a long time before this sector recovers, and we may never again see the lofty dividends of years past. As with the nursing-homes business, it’s time to fold these positions.

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters.

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