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REITs. Tapering impacts fixed income the most. Thinks we will be range bound at 3% for some time. REITs are tightly bound to interest, although not as much as bonds. There is some risk to the REITs so he would prefer others. Industrial REITs are better than most. There will be tax loss selling in the REITs for those that got in too late. Wait until after tax loss selling if getting into REITs. Might consider Granit, who can grow their payout.
Markets. Themes working include yield, dividend growth. You want sectors that benefit from weaker growth. Consumer, technology, and health care. Thinks that did well so far are sectors that do well early. Tapering is just a news item. We’ve been seeing a sideways chop but he thinks the market will finish fairly well. He is shifting to growth names. He is moving from pipelines, REITs to things that pay less but with higher dividend growth, like financials. He thinks we are in a new secular bull market. We are in a market that is similar to themed 90’s. Consumer-related sectors will continue to do well going forward.
You are getting a bit of a pullback in Canadian banks. There are all different reasons. They had a good run and are consolidating their gains. National bank does not have good performance in developing markets, vs. TD. The US is the most attractive area for banking. But he would choose TD in Canada because they are doing a good job in the US.
Very well run bank. You want to own it for two reasons. When we are headed into a tough environment in lending, which we are not right now, and two, when you want to benefit from growth in South America, which right now they are not. In the short run that exposure is hurting them. In a decent market you want to own what people want to own today. Prefers US banks.
Strong shareholder relations. Is one he likes and owns. Almost made it a Top Pick today. They have a lot of north-south exposure. Benefit from improvement in the auto sector. Earnings per share should accelerate over the next couple of years. A well run railway. Operating ratio could improve.
Prefers JNJ-N. Likes health care as a sector. Thinks this sector is set to do very, very well. Concerns about patent cliff have come and gone. Should have some decent dividend growth going forward. Has been consolidating with the market and now there is room to the upside.
It is a big holding at his company. He really likes the auto industry going forward. Magna has lots of opportunity to improve margins, specifically in Europe. He believes there are legs in the auto cycle. Thinks there is only about 4.5% more for it to drop so buy it here.