4:20 p.m. ET: TSX closes higher, U.S. equity markets lose ground
The S&P/TSX Composite Index extended its rally Tuesday, rising 1.07 per cent while benchmark indices south of the border erased gains to close in the red. The broad market S&P 500 closed 0.52 per cent lower, the Dow Jones Industrial Average fell a modest 0.13 per cent and the tech-heavy Nasdaq Composite Index was the laggard with a 1.40 per cent drop.
It’s shaping up to be a busy week for the Nasdaq, with a slew of tech titans reporting earnings as investors digest the early fallout of the COVID-19 pandemic and economic lockdown.
In Toronto, eight of the eleven TSX subgroups closed in positive territory, led by energy, consumer discretionary and financials. Health care, consumer staples and information technology bucked the trend to end Tuesday’s trading session lower.
In all, 150 of the TSX’s 230 constituents finished in the green.
Lumber stocks were noticeable outperformers, with Canfor Corp., West Fraser Timber Ltd. and Norbord Inc. all notching double-digit gains to rank among the top-performing stocks on the TSX.
Global oil prices remained mixed, with the price for U.S. benchmark West Texas Intermediate for June delivery falling 0.8 per cent to US$12.70 per barrel, while the world benchmark Brent crude held on to a three per cent gain.
WTI has been roiled by a number of technical changes to the methodology of major oil funds, which hold large volumes of the futures contracts for American oil. Those funds have been rebalancing their holdings toward contracts for later delivery in an effort to avoid having their net asset value fall below zero, after contracts for May delivery plunged into negative territory shortly before their expiration last week.
While some of the movement in near-dated crude contracts is a result of technical trading mechanisms interfering with the organic supply and demand dynamics of crude pricing, concerns remain about global oversupply in the face of demand destruction resulting from the virus outbreak.
The Canadian dollar held near 71.46 cents U.S., up two-tenths of a cent against its American counterpart, though the greenback was broadly weaker against all of its major-market peers.
2:00 p.m. ET: North American equity markets retrace lost ground into mid-afternoon
North American equity markets bounced off the lows into the waning hours of Tuesday’s trade, with the S&P/TSX Composite Index rising 1.2 per cent, the S&P 500 and Dow Jones Industrial Average up a little more than a quarter of a per cent and the Nasdaq Composite Index shedding about half a per cent.
In Toronto, eight of the 11 TSX subgroups were higher, led by energy, consumer discretionary and financials. Health care, information technology and consumer staples remained in negative territory.
154 of the composite’s 230 constituents were in the green, led by Canfor Corp., Teck Resources Ltd. and NFI Group Inc.
Oil prices remained mixed, with U.S. benchmark West Texas Intermediate down about 2.5 per cent to trade at US$12.50 per barrel while the global Brent crude price was up about two per cent. Alberta’s Western Canadian Select was trading lower, down 29 per cent to trade at US$4.62 per barrel.
The Canadian dollar moderated gains, up two-tenths of a cent against its U.S. counterpart to trade at 71.45 cents U.S.
11:00 a.m. ET: North American markets give back early gains into late morning
North American equity markets traded near session lows into the late morning, with the S&P/TSX Composite clinging to a modest 0.3 per cent gain, and benchmark stock indices south of the border sliding into the red. The S&P 500 and Dow Jones Industrial Average both traded modestly lower, while the tech-heavy Nasdaq Composite Index fell about one per cent.
It’s a busy week for Nasdaq-listed stocks, with a slew of earnings from tech titans including Google parent company Alphabet Inc., Facebook Inc., Apple Inc., Amazon.com Inc. and Microsoft Corp. all reporting earnings in the coming days.
In Toronto, seven of the 11 TSX subgroups were trading in positive territory, with energy, consumer discretionary and financials notching the largest percentage gains. Health care, information technology and materials posted the largest losses.
U.S. benchmark oil prices moderated some losses, with WTI trading about four per cent lower at about US$12.25 per barrel.
9:40 a.m. ET: North American equity markets extend rally in risk-on trade
North American equity markets rallied into the opening trade Tuesday, extending Monday’s gains as a risk-on trade saw investors buy into assets like equities. The S&P/TSX Composite Index – now up more than 30 per cent from the March 23 trough – rose about one per cent out of the gate, the S&P 500 and Dow Jones Industrial Average gained about one-and-a-half per cent and the Nasdaq Composite Index was up one per cent.
Toronto’s benchmark index has now recouped about half of its losses from the February 20 peak to that March trough.
Global oil prices were mixed, with international benchmark Brent up nearly five per cent while American West Texas Intermediate for June delivery was essentially unchanged at US$12.75 per barrel. WTI has been notably volatile due to changes in the methodology of some major oil funds, as they shift their holdings away from futures for first-month delivery into longer-dated contracts.
The moves have been made in an effort to prevent the funds from having negative net asset values after last week’s historic plunge in the expiring May contract, which traded at negative US$40 per barrel ahead of expiration.
Alberta’s Western Canadian Select fell nearly 16 per cent to trade at US$5.48 per barrel, though Canadian crude is only priced a handful of times per day.
The Canadian dollar gained four-tenths of a cent against its U.S. counterpart to trade at 71.68 cents U.S. However, the greenback was showing noticeable weakness against all its global peers as investors took a more risk-on tone and sold traditional safe-haven assets.
3 Canadian Dividend Stocks that Haven’t Missed a Payout for 100+ Years
Local dividend investors are lucky. They have a good selection of Canada’s finest companies to choose from – stocks that haven’t missed a dividend payment in decades. In fact, a small number of companies have paid uninterrupted dividends for a century or longer.
That’s a pretty impressive track record.
There’s just one problem. Instead of sticking with these excellent long-term dividend kings, investors get a little cute. They load up on lesser stocks, enticed by a succulent yield, deep value opportunity, or better growth potential. Sometimes these investments work out, but often they don’t.
There’s nothing wrong with that approach. After all, diversification is a good thing. But I still think the bedrock of the average Canadian investment portfolio should consist of these dividend kings, the kinds of companies you can count on no matter what.
This is doubly important in a COVID-19 world.
Let’s take a closer look at three of Canada’s top dividend kings, shares that have paid investors consistently for at least the past 100 years.
Bank of Montreal
We might as well start at the top. Bank of Montreal (TSX:BMO)(NYSE:BMO) has the longest dividend streak in Canada. It started paying a dividend back in 1829 and hasn’t missed a payment since. That’s a remarkable record.
BMO is hardly the largest bank in Canada. It’s only the fourth-largest. But it’s still a formidable company with a market cap exceeding $45 billion. The company has retail, commercial, and capital markets operations across both Canada and the United States. It’s also a big wealth manager on both sides of the border and is a major player in the exchange-traded fund market. In fact, BMO was the first major Canadian bank to expand into the United States.
Today is an excellent opportunity to pick up BMO shares on the cheap. Despite rallying significantly earlier in the week, this dividend king trades at just 8 times trailing earnings and slightly below book value. That’s the cheapest shares have been since 2009. BMO also pays a succulent 6% dividend yield, which is about 50% higher than normal.
Imperial Oil (TSX:IMO)(NYSEMKT:IMO) has been a stalwart in the Canadian energy sector for more than a century with history dating back to John D. Rockefeller and Standard Oil. The company has paid consistent dividends for virtually its entire history, since the 1880s.
This dividend king has been undoubtedly hurt by the recent collapse in oil prices, but it easily has the balance sheet strength to survive. Its oil sands operations are among the best in the business, producing some 400,000 barrels of bitumen each day. Long-term reserves are also excellent, exceeding 6 billion barrels. And investors have to like the company’s downstream operations, which include several refineries and an fleet of Esso gas stations. It also provides fuel for Mobil branded stations in Canada.
Imperial Oil hasn’t just paid consistent dividends lately. It has increased its payout for 25 consecutive years. That’s an excellent record. Combine that with the current 3.9% yield and it’s an interesting opportunity.
BCE Inc. (TSX:BCE)(NYSE:BCE) was founded in 1880, just a few years after Alexander Graham Bell invented the telephone. It paid its first dividend to investors the next year and hasn’t looked back since. That’s a dividend streak of nearly 140 consecutive years for this dividend king.
BCE today looks stronger than ever. The company is the leading telecom provider in Canada, connecting more than 13 million customers to wireless data, cable television, internet, and home phone services. It has customers from coast to coast, too. It also owns a smattering of interesting media assets including top television stations, a collection of radio stations, video streaming service Crave, and pieces of several top sports franchises.
This dividend king also offers an excellent payout today. The current yield is 5.9%, a payout that is supported by earnings. BCE is a mature company today, meaning it can easily afford to pay out most of its cash flow back to investors.
The bottom line on these dividend kings
Don’t try and reinvent the wheel. The smart move is to load up on dividend kings like Bank of Montreal, Imperial Oil, and BCE for your income needs. It’s worked for the last century, and it sure looks good for the next century too.
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Edited By Harry Miller
The close: TSX ends lower, crude has best month on record – The Globe and Mail
Canada’s main stock index ended a strong May a little weaker while crude oil prices enjoyed their best ever month, surging 88 per cent.
The S&P/TSX composite index closed down 69.90 points at 15,192.83. Sectors were mixed, with financials leading decliners with a 2% drop, as investors absorbed a week of earnings reports that featured massive loan loss provisions. Laurentian Bank lost 9.1% after cutting its dividend – the first such move by a major lender in almost three decades.
U.S. stocks finished mostly higher after President Donald Trump announced measures against China in response to new security legislation that were less threatening to the U.S. economy than investors had feared.
The Dow ended the session slightly lower, but all three indexes registered gains for the month and the week.
The S&P 500 initially extended losses after Trump said he was directing his administration to begin the process of eliminating special treatment for Hong Kong in response to China’s plans to impose new security legislation in the semi-autonomous territory.
But Trump made no mention of any action that could undermine the Phase One trade deal that Washington and Beijing struck early this year, a concern that had cast a cloud over the market throughout the week.
“He began speaking in a very tough tone,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina. “The market was worried he was going to announce something substantial, something detrimental to the U.S. economy. Then, as he spoke, it became clear the actions being taken were not going to be as dramatic as originally feared.”
Trump also said the United States is terminating its relationship with the World Health Organization, something he had threatened to do earlier this month.
S&P 500 technology shares gave the index its biggest boost, while financials were the biggest drag.
The latest confrontation between the U.S. and China has fueled concern that worsening tensions between the two world’s largest economies could derail the recent sharp gains in the stock market.
Expectations of a quick economic recovery from the coronavirus pandemic have driven the S&P 500 up more than 30% from its March lows.
The Dow Jones Industrial Average fell 17.53 points, or 0.07%, to 25,383.11, the S&P 500 gained 14.58 points, or 0.48%, to 3,044.31, and the Nasdaq Composite added 120.88 points, or 1.29%, to 9,489.87.
For the month, the Dow added 3.9%, the S&P 500 gained 4.5%, and the Nasdaq rose 6.8%. For the week, the Dow and S&P 500 each rose more than 3%, and the Nasdaq gained 1.8%.
New York Governor Andrew Cuomo said Friday that New York City is “on track” to enter phase one of reopening on June 8, and he said five upstate regions will now transition to phase two.
Federal Reserve Chair Jerome Powell, speaking in a webcast organized by Princeton University Friday, reiterated the U.S. central bank’s promise to use its tools to shore up the economy amid the coronavirus pandemic.
Twitter was down 2% and Facebook Inc shares slipped 0.2%, a day after Trump signed an order threatening social media firms with new regulations over free speech.
Upscale department store chain Nordstrom Inc slumped 11% after it reported a near 40% fall in quarterly sales due to pandemic-led store closures.
Salesforce.com Inc slipped 3.5% as the cloud-based business software maker cut its annual revenue and profit forecasts.
The July crude contract was up US$1.78 at US$35.49 per barrel and the July natural gas contract was up 2.2 cents at nearly US$1.85 per mmBTU. Futures closed out May with record monthly gains, on hopes that the U.S.-China trade deal would remain intact and on falling crude production.
The August gold contract was up US$23.40 at US$1,751.70 an ounce and the July copper contract was up 1.2 cents at nearly US$2.43 a pound.
Read more: Stocks seeing action Friday – and why
Reuters, The Canadian Press, Globe staff
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Laurentian Bank cuts dividend by 40%
Laurentian Bank slashed its dividend by 40 per cent on Friday, the first such move by a major Canadian lender in almost three decades.
The Montreal-based lender said Friday its profit fell by 79 per cent to $8.9 million, and its provisions for credit losses — the amount of money the bank is setting aside to cover loans that may go bad — soared to $54.9 million. That’s up from $9 million in the same period a year ago.
COVID-19 is throwing uncertainty to the bank’s outlook, so it cut its dividend to 40 cents a share as a precaution. Previously it was 67 cents a share.
“We have a strong capital and liquidity position, and disciplined risk management, but it is a time for prudence,” CEO François Desjardins said. “Although we believe that current earnings are not reflective of the future earnings power of the organisation, we have reduced the dividend to $0.40 per share which improves operational flexibility until we reap the anticipated benefits of our strategic plan.”
The last time a major Canadian bank slashed its dividend was 1992, when National Bank cut the payout to its shareholders.
Published By Magen Johnson
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