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Energy sector dividend plays, bargain stock hunting and RioCan’s payout cut: What you need to know in investing this week

Energy sector dividend plays, bargain stock hunting and RioCan’s payout cut: What you need to know in investing this week

Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.

Three top dividend stock picks in the TSX energy sector from a Guardian $1.5-billion fund manager

It’s been a rough year for Canadian dividend investors as the pandemic hit some high-yield sectors such as energy, commercial real estate and banks particularly hard, Brenda Bouw writes. But dividend-focused Michele Robitaille, who manages about $1.5-billion in assets for Guardian Capital, believes the broader energy space presents an opportunity to find future gains. Three high-quality companies in the energy, pipeline and utilities space – Suncor Energy, Enbridge and Fortis – are looking attractive these days. Here’s why.

From Brenda Bouw and Sean Silcoff: Shares in this TSX media tech company are seen as ‘unique buying opportunity’ after falling since IPO

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Gordon Pape: In a period of historically low rates, these dividend-paying energy stocks are worth the risk

In these days of historically low interest rates, how do stocks that yields 7.4 per cent and 8.2 per cent sound to you? You can buy either or both right now, Gordon Pape writes. Both have investment-grade ratings from two bond rating agencies. Both insist the dividend is secure and will not be cut.

What’s the catch? The two companies are in the beaten-down energy sector. Neither is involved in exploration and production of oil and gas, but they provide services to the battered industry. That makes them high risk in the eyes of many investors. Are Pembina Pipeline and Keyera worth a shot, in light of their attractive yields? Yes, if you are willing to accept the risk that comes with them. Here’s why.

More from Gordon Pape: This balanced ETF is worth a look

‘We were quite surprised’: RioCan REIT slashes monthly payout, unit price drops

RioCan Real Estate Investment Trust announced after the close of trading on Thursday that it is cutting its monthly distribution by one-third amid growing uncertainty about some of its tenants’ futures. The move caught some analysts by surprise, Tim Kiladze writes, largely because management had been preaching the REIT’s stability amid the retail sector storm brought by the pandemic.

“We were quite surprised by RioCan REIT’s announcement of a distribution cut, the first in a very long time for a Canadian retail REIT,” BMO Nesbitt Burns Jenny Ma wrote in a note to clients. Separately, Canaccord Genuity analyst Mark Rothschild downgraded his recommendation on RioCan to “hold” from “buy” on Friday. RioCan’s units initially dropped 10 per cent in early Friday trading, before closing down 2 per cent at $17.65. Read more here.

After a rough patch, John Heinzl’s dividend portfolio is bouncing back

Like the rest of the market, my model Yield Hog Dividend Growth Portfolio suffered through some rocky months following the onset of the pandemic in March, John Heinzl writes. But I’m pleased to report that the portfolio has rebounded as encouraging vaccine results have raised hopes that the pandemic could begin to recede in 2021.

Through Nov. 30, the portfolio posted a total return – including dividends – of 24.8 per cent since inception on Oct. 1, 2017. Thanks to additional gains and dividends received this week, by Friday afternoon the portfolio’s total return had improved to 27.1 per cent. Read about the portfolio’s winners and losers here, plus more Yield Hog reader questions answered.

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More from John Heinzl: BlackBerry, Carnival and more investing stars and dogs for the week

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Seeking underperforming TSX stocks that may be due for a reversal

A horde of stocks escaped from the market’s bargain bin in November on news of the imminent arrival of COVID-19 vaccines, Norman Rothery writes. While the price surge is great for shareholders, it’s bad for buyers because it makes bottom fishing more difficult this tax-loss selling season.

Most investors know about momentum, the tendency of stocks that have performed well over the past year to continue to do so in the short term. But momentum reverses itself over the longer term and poor past performance can lead to good future performance. It’s called the long-term reversal effect and it’s typically seen from stocks that have performed poorly over the four-year period prior to the classic momentum period. But be careful when fishing for bargains because stocks that have fallen a great deal can, and sometimes do, continue to sink. Read more here.

Long-term reversal bargains for the tax-loss selling season

Company Ticker Recent price ($) 1-year total return (%) Prior 4-year total return (%) 5-year total return (%)
Trillium Therapeutics Inc. TRIL-T 26.35 5,958 -98 34
Crescent Point Energy CPG-T 2.33 -49 -70 -85
Bausch Health Cos. Inc. BHC-T 24.11 -34 -69 -79
New Gold Inc. NGD-T 2.39 110 -61 -19
Whitecap Resources Inc. WCP-T 3.92 6 -57 -54
ARC Resources Ltd. ARX-T 6.44 2 -56 -55
Seven Generations Energy VII-T 5.40 -25 -54 -66
MEG Energy Corp. MEG-T 3.65 -34 -51 -67
Tourmaline Oil Corp. TOU-T 18.08 52 -49 -23
Eldorado Gold Corp. ELD-T 15.25 47 -49 -25
Husky Energy Inc. HSE-T 5.27 -43 -43 -67
SNC-Lavalin Group Inc. SNC-T 23.84 0 -39 -40
Linamar Corp. LNR-T 59.82 35 -39 -17
PrairieSky Royalty Ltd. PSK-T 10.31 -22 -39 -52
Mullen Group Ltd. MTL-T 10.06 28 -38 -21
Cenovus Energy Inc. CVE-T 6.44 -44 -37 -65
Vermilion Energy Inc. VET-T 5.21 -71 -36 -81
Celestica Inc. CLS-T 9.78 -5 -31 -35
BlackBerry Ltd. BB-T 7.65 4 -31 -28
Hudbay Minerals Inc. HBM-T 8.22 91 -26 41
Canfor Corp. CFP-T 19.00 20 -24 -9
Stella-Jones Inc. SJ-T 44.18 18 -23 -9
Corus Entertainment Inc. CJR-B-T 4.29 -20 -21 -37
CI Financial Corp. CIX-T 17.02 -15 -21 -33
Transcontinental Inc. TCL-A-T 19.28 39 -21 11
Cameco Corp. CCO-T 12.99 8 -20 -13
Imperial Oil Ltd. IMO-T 22.48 -30 -18 -43
AltaGas Ltd. ALA-T 18.64 0 -17 -17
Osisko Gold Royalties Ltd. OR-T 14.11 23 -13 7
Element Fleet Mgt. Corp. EFN-T 13.21 17 -6 10
Onex Corp. ONEX-T 69.37 -12 -2 -14
Keyera Corp. KEY-T 22.41 -25 -2 -26
Gildan Activewear Inc. GIL-T 33.96 -12 -0.5 -13

Source: Norman Rothery; S&P Capital IQ data as of Nov. 30. Returns include dividends but are not annualized.

What investors need to know for the week ahead

In the week ahead, the Bank of Canada makes its latest policy announcement on Wednesday, and is expected to keep its key lending rate at 0.25 per cent. Economic data on tap include: U.S. consumer credit for October (Monday); U.S. productivity for the third quarter (Tuesday); U.S. wholesale trade for October (Wednesday); U.S. inflation figures for November (Thursday); Canada’s capacity utilization and balance sheet accounts for the third quarter, as well as U.S. PPI for November (Friday).

Companies releasing their latest results this week include Costco, Dollarama, Empire, Campbell Soup, Lululemon Athletica, Oracle, Transat AT and Transcontinental.

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Published at Sun, 06 Dec 2020 18:47:38 +0000

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Written by Riel Roussopoulos

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