The stock market reflects a country’s economy, which is determined by what is produced and consumed in the nation. Canada is known for its oil and mining resources that it exports to America. Investing in something you are good at is like flowing with the tide. When you swim in the direction of the current, your speed increases and effort reduces. Canada’s prime investment opportunities flow with the tide, giving you higher dividend yields.
Canada’s dividend-yielding blue chips
The three biggest contributors to Canada’s gross domestic product (GDP) are real estate, manufacturing, oil and gas, and mining. Its biggest exports are oil and gas. The manufacturing sector is not a good dividend payer, but real estate and oil and gas are. And the combination of the two is energy infrastructure.
ATCO
A company that engages in constructing and leasing houses and commercial real estate, and producing and transmitting electricity and natural gas is ATCO (TSX:ACO.X). It is the parent company of Canadian Utilities and enjoys a 30-year track record of growing dividends annually. Its stock price has dipped to its pandemic low as the Canadian economy has slowed and is closer to a recession.
The current weakness in the real estate market, industrial production, and a dip in natural gas prices is putting pressure on ATCO’s stock price. But looking at the company’s history, it has survived the 2009 Financial Crisis, 2015 oil crisis, and pandemic without any dividend cuts because of its robust business model. While its $10.8 billion debt and a lower credit rating (BBB+) make investors skeptical in a weak economy, its blue-chip status gives it a cushion of scale and easy financing to withstand a recession.
ATCO is a stock to buy at the dip and expect a recovery because of its cyclical nature. Buying this stock during the economic weakness will help you lock in a higher dividend yield for decades and one that grows every year. In the last 10 years, it has increased dividends at an average annual growth rate of 10%, although the growth has slowed to 3% since 2020.
But once the economy starts recovering, the stock price could surge and so could its dividend growth rate, as ATCO is a resilient company that is in a sector which is a key contributor to Canada’s GDP.
Enbridge – a high dividend-yielding stock
Another blue-chip company that has become a prime investing opportunity in the bear market is Enbridge (TSX:ENB). The stock is facing the heat of weak GDP growth and will remain weak as fears of a recession loom.
Investors were unhappy with Enbridge’s decision to buy American gas utility companies as they felt the former was overpaying. But that does not dampen Enbridge’s long-term dividend prospects. If you aim to get a fixed amount every year, now is the time to buy this stock and lock in an 8.14% dividend yield.
Enbridge’s low-risk business model pays a comfortable 60-70% of its distributable cash flow (DCF) as dividends. This DCF is the cash flow left after capital spending and debt payments. The acquisition will increase Enbridge’s debt and outstanding shares. But it will also bring stable cash flows sufficient to maintain the current dividend.
The aim of acquiring gas utilities is not to grow dividends but to safeguard their dividends. As the energy industry transitions to greener alternatives, Enbridge is looking to increase its exposure to gas and greener sources.
RioCan REIT
Commercial real estate, another big contributor to Canada’s GDP, is currently declining amid high-interest rates. Once the interest rates come down, real estate will gather momentum. RioCan REIT (TSX:REI.UN) is at a sweet spot with a comfortable distribution payout ratio of 59% and a high presence in the Greater Toronto area retail space.
Unlike other retail REITs, its tenant base is highly diversified. No single tenant accounts for more than 5% of rental income. This diversification backfired during the pandemic, and RioCan slashed distributions. But this diversification could work in favour of an economic slowdown.
Before you consider Atco Ltd., you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2023… and Atco Ltd. wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points. And right now, they think there are 5 stocks that are better buys.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
