COMMENT
Financials under pressure.

They have been, as has anything that's selling as a yield stock. But that doesn't mean they should be ignored. If you're looking for yield, then banks, utilities and pipelines offer a relatively stable source of income. Despite the capital ups and downs, they're not a bad place to be looking at the moment. 

With the banks averaging 5-7% yields, that's pretty attractive. Any of them would be loathe to cut the dividend. Compare that with what you could get on a bond, and it's pretty good. You also get the dividend tax credit, and the prospect of the dividend growing. 

COMMENT
Haven't seen full damage from high cost of borrowing?

No, we haven't. Takes a while to filter through the system. With everything else that's going on in the world, we're going to see higher rates for quite a bit longer from here. 

What's happening is that since the financial crash, we've been living in an artificial world of very low rates. When rates get around 2% or lower, investors try to stretch to get yield and take higher risks than they might otherwise. We're seeing a bit of a reconciliation in all that as things change. 

With geopolitical uncertainty in the world right now, two wars going on, and a US presidential election coming up next year, it points to more uncertainty for the foreseeable future. It would be wise for investors to take more of a cautious, conservative approach to the market.

COMMENT
Own stocks that don't pay a dividend?

He does. In normal times, what you're trying to emphasize is total return, whether it's capital or dividends or a combination of the two. His clientele is such that a lot of them prefer the income side, so he tends to own more dividend-paying stocks than otherwise.

BUY

In the next month or so, CEO will discuss changes to strategic direction. Investors worried by lower returns from international operations. Gaining market share in Canada. Yield is around 7%, dividend is fairly secure and might go up in the next few years.

COMMENT

Does have global operations, but more domestically inclined. Gained a lot of market share in the mortgage market, and that's where we might see an uptick in provisions at these rates. Yield is 6.8%.

HOLD

Huge new facility is coming onstream, and fundamentals in containerboard are more solid than in the very competitive tissue market. Facility over budget, so will take a while to get a return. Focused on debt reduction.

BUY

Continues to execute M&A and current operations very well. Expects higher fuel margins and better merchandise sales next quarter, as we've just come off the summer. Headwinds in cost of goods due to inflation. Potential to charge EVs at home is not a threat.

BUY

Likes it here. Auto companies will depend more on outsourcing parts, especially with the labour settlements we're seeing. In a good position over the next few years. Tight margins will continue for a little while. Dominant player.

BUY

Likes the pipelines. As they increase their grid, rate base will go up. Greater need for nat gas distribution. Good yield. Higher costs will be reflected in renewed contracts. Good place to be in the current environment. Yield on TRP is 8.1%, and he sees it as an opportunity, but they may not raise dividend as quickly as in the past.

BUY

Likes the pipelines. As they increase their grid, rate base will go up. Greater need for nat gas distribution. Good yield. Higher costs will be reflected in renewed contracts. Good place to be in the current environment. Yield on TRP is 8.1%, and he sees it as an opportunity, but they may not raise dividend as quickly as in the past.

BUY

Purchase of 3 US gas utilities adds debt, but puts them in a good place for future growth. Issued equity to cover the purchase. Prospect to increase dividends over the years. Still talks about dividend raises of 5-6%, but remains to be seen. Beaten down as a yield stock, good time to look at it for income. Yield is 8.1%.

COMMENT
Covering the dividend.

With pipelines and utilities, it's determined more by cashflow than by EPS. But in normal circumstances, he likes to see earnings covering the dividend.

With utilities and pipelines, they all exist on the high leverage of borrowed money. In the current environment, that money is rolling over at higher and higher rates. For the most part, they are allowed a decent return on equity. They provide necessary services to customers.

BUY

Telus, BCE, and Rogers are all competing for market share. Telus and BCE are in a really good position in that race. People are loathe to give up cell phones. Telus has diversified. Repriced to the point where it's attractive. Well managed. Yield of 6.5% is not bad.

BUY

Telus, BCE, and Rogers are all competing for market share. Telus and BCE are in a really good position in that race. People are loathe to give up cell phones. Yield of 7.5%.

BUY ON WEAKNESS

Rails depend on overall economic activity. Rates will probably produce at least a temporary slowdown in economic growth. Price has come off. Next cycle could be 3-7 years from now. Starting to look attractive, good time to look at where you might pick it up. He hasn't jumped in yet. Kansas City acquisition makes it more competitive.