Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
BMO chief investment strategist Brian Belski provided an update on his popular North American Dividend Growth portfolio,
“The portfolio is an actively traded model designed to encapsulate our dividend growth methodologies, with a particular focus on companies that offer attractive and quantifiable income and dividend growth characteristics. Decision-making inputs: US and Canadian publicly traded companies that pay a dividend and that are actively listed within the S&P 500 and/or S&P/TSX Indices. 60-70% of portfolio made up of core dividend names, 10-30% tactical weighting in high yield focus names, and 10-30% tactical weighting in dividend growth names. Time frame: 12-24 months Benchmark: 60% S&P 500 Dividend Aristocrats & 40% S&P TSX Dividend Aristocrats”
The five largest holdings are Enbridge Inc., Bank of America Corp., Royal Bank of Canada, TD Bank and TC Energy Corp.
The top five performers for the third quarter were Brookfield Infrastructure Corp. (27.5 per cent for the quarter), Capital Power Corp. (26.1), Lockheed Martin Corp (25.1), TC Energy (24.0) and Brookfield Asset Management (22.8).
The worst five performers were Merck & Co. (-8.3), Suncor Energy Inc. (-4.3), Microsoft Corp. (-3.7), Waste management Inc. (-2.7) and Canadian National Railway (-2.0).
The full portfolio is BCE Inc., Comcast Corporation, TELUS Corporation, Verizon Communications Inc., Canadian Tire Corporation, McDonald’s Corporation, Restaurant Brands International Inc., PepsiCo Inc., Target Corporation, Enbridge Inc., Suncor Enerqy Inc., TC Energy Corporation, Ameriprise Financial Inc., Bank of America Corp., Brookfield Asset Management, BlackRock Inc, Goldman Sachs Group Inc., Intact Financial Corporation, JPMorgan Chase Co., Manulife Financial Corporation, Morgan Stanley, National Bank of Canada, Power Corporation of Canada, Royal Bank of Canada, TD Bank, Amgen Inc., Gilead Sciences Inc., Johnson & Johnson, Merck & Co., UnitedHealth Group Incorporated, Canadian National Railway Company, General Dynamics Corporation, Lockheed Martin Corporation, Waste Management. Inc., Apple Inc, Cisco Systems, Microsoft Corporation, Texas Instruments Inc, Eastman Chemical Company, Lyondell Basell Industries NV, Brookfield Infrastructure Corp., Capital Power Corp and Emera Incorporated.
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Scotiabank analyst Robert Hope finds considerable optimism in the domestic pipeline sector,
“The growth outlook for natural gas infrastructure levered names turned notably more positive in 2024. In Canada, the ramp-up of LNG Canada is just around the corner, which we expect will drive both natural gas and natural gas liquids (NGLs) volume growth in 2025 and beyond. This should improve returns for existing infrastructure as well as provide incremental investment opportunities. This is despite the weakness in AECO gas pricing in 2024, which has caused some volumes to shut in, though we expect these to return in 2025. More broadly, across the continent, we see electricity demand inflecting higher. While renewable generation will have a part to play, it is increasingly clear that natural gas power demand will move higher. This, in addition to increasing LNG demand, should drive continued high utilization of the North American pipeline network and provide investment opportunities to debottleneck and enhance the system. We continue to expect crude oil infrastructure will be highly utilized, but see fewer significant upside growth opportunities. Overall, we maintain our bias for natural gas levered infrastructure names (KEY-T, PPL-T, TRP-T)”
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A Canadian stock has moved into the top decile of global attractiveness according to Citi’s world radar screening method,
“Our model uses a globally consistent framework to measure relative Value and Momentum for a large number of stocks across global developed and emerging markets. Each month our model produces relative Value and Momentum rankings which are equally weighted to arrive at a global attractiveness score for each stock … We measure relative Value using one of two metrics. The primary metric is the ratio of the stock’s P/E to its theoretical fair value. If we cannot calculate such a value due to missing data then we use the ratio of the stock’s P/B to its theoretical value instead … Stocks moving into the top decile of the MSCI World screen include Broadcom (US), AIA Group (HK), AXA SA (FR), CIBC (CN) and Lloyds Banking Group (UK), these are the top 5 by market capitalization”
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Diversion: “Canadians win prestigious Wildlife Photographer of Year award” – CBC