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COMMENT
The U.S. 30-year yield has dropped to its lowest point since January even as inflation has heated up. Growth peaked in April. Central banks are deliberately behind the curve, letting inflation run hot and allow this recovery to play out. That's happened. Now, the path of the pandemic has gotten uncertain in recent weeks, plus economic growth is poised in the first half of 2022 to cool off. So, altogether, it's likely interest rates will rise. It's too soon to tell the impact of the new variant. Compare this to Delta which emerged over the summer, and people were by then aware of the seasonality of the virus. How is the new variant effecting human behaviour? With new variants, populations are less and less effected, based on metrics like restaurant reservations and gas demand. The data says that each wave of the virus and its case counts effects people less. It's important to keep an eye on human behaviour. Also consider the long-term outlook of 5-10 years. Canadian dividend stocks are attractively valued on that basis.
Unknown
COMMENT
Do the Canadian banks still hold a competitive advantage over small fintechs? Yes and no. Yes, given banking regulations which limit competition. No, they're not as agile or forward-looking as the fintechs. These are two very different investments, two different risk-rewards. PE and PB both classes have hit the midpoint historically. As interest rates rise it will be positive for business, but negative to the amount of loans issued. Banks remain well-protected and necessary for society. Banks also pay solid dividends and are actively raising them--expect that for the next few quarters.
Unknown
BUY
Pembina, Transcanada and Enbridge as a dividend investment over 5 years? He owns all three. They all pay over a 6% dividend on average. ENB is down on the news that the Canadian regulator has rejected the tolling agreement on the main line. He doesn't see this as a huge deal for ENB though; obviously it would be nice to see at least of this contracted. Perhaps they went too hard on the amount of contracting they were seeking. But it's a mess, given the lack of pipeline capacity. Investors need to be focused on LNG in the middle/later part of this decade which will really boost demand for natural gas and its infrastructure; all three companies will participate in this, though ENB the least. ENB has new oil pipeline capacity with their Line 3 replacement strategy completed last month. Compounding the 6% dividend alone means the share doesn't need to perform much to deliver you a good return over 5-10 years.
oil / gas pipelines
DON'T BUY
it's underperformed the bank ETF since inception. So, the covered call isn't adding value, but rather generating fees.
E.T.F.'s
COMMENT
FSZ vs. ZWU Both pay around an 8% dividend, which at that level it's probably not pure dividend you're getting on a long-term basis. About 6.5% is the limit for a sustainable dividend level. Plus, you get worries about the future of hydrocarbon demand. He himself doesn't see this, but it's a scenario to consider. Both FSZ and ZWU, you're getting some of your capital back to fund their dividends--this is not sustainable. ZWU has underperformed the equal-weight bank ETF since inception. So, the covered call portion isn't adding value, but is an additional-fee generator. He's rather buy the underlying stocks. Fiera has done a ton of purchases, not all of them cheap or good. Their wealth management business has been positive in the last 18 months, but you risk a market correction and a major re-pricing of assets, more so than any Canadian bank.
Financial Services
BUY
In a non-registered, RRSP or TFSA over 10 years? It depends on your situation and the size of each account. Start with the TFSA--the more you grow tax-free, the more it benefits you. Remember, you can't claim a loss in a TFSA. TD is his largest bank holding and the best bank.
banks
STRONG BUY
They had a big run at end-2020, but have come off this year. Long term, NPI remains very attractive. They produce offshore wind power globally and are a potential take-out candidate given their scope. ESG is a strong tailwind. It's one of his largest holdings and he's buying at current levels.
Utilities