The Canadian tech sector has been delivering stellar returns for Canadian investors. It’s certainly a shame that the sector is underrepresented in the main indices. That said, an investor can shade to tech by way of a sector ETF. For those who hold individual stocks, they can skim a few from the top holdings. And it’s certainly wonderful news that the Canadian tech sector continues to grow and shine.
As you may have heard, Shopify is now the most valuable company in Canada. It overtook RBC on May 6. And CEO Tobias Lutke is on his way to becoming the richest Canadian.
Here’s a recent headline from the Globe and Mail.
It is an incredible made in Canada success story. And it’s a story that is likely to be repeated in many shapes and forms in the coming years and decades. Canada needs more of these success stories. Shopify is now worth almost $12 billion.
And German-Canadian Tobias Lutke is a Canadian cheerleader.
Tech leaders and innovators, come to Canada.
Yes Canada is certainly awesome.
From that Globe article …
Shopify Inc. was the best-performing stock on the S&P/TSX Composite Index in the first half of the year as investors came to believe that COVID-19 will damage many legacy retailers and make e-commerce supreme. The shares are up nearly 160 per cent in 2020, with much of the gain coming since the March 23 Canadian market low.
It’s a world that relies on technology and is driven by technology. Any successful modern economy will need a thriving tech sector. Canada is making great strides and has an impressive growth rate.
From a government of Canada report.
We can see that the majority of companies are very small. Few make it to the size of a Shopify that now employs some 5,000 Canadians in several tech hubs.
There are only 10 ‘larger’ companies that make up the Canadian tech index. We see that Shopify now dominates iShares tech ETF XIT.
And again the Canadian tech sector returns have been stellar.
As I had pointed out in the recent post on Canadian Dividend ETFs, Shopify has driven the returns of the total market ETFs. It was impossible for the dividend funds to keep up. While Shopify is the most valuable Canadian company, it has no profits, yet. It’s a pure growth story. No profits, no dividend.
Tech and dividend growth.
But if you’re looking for dividend growth, that is available in the Canadian tech space. In this week’s post on Horizons Dividend ETF, we saw a small tech basket leading the charge. Canada’s best performing dividend ETF has seen returns driven by that basket of Enghouse Systems, Constellation Software and Open Text. If you’re an index skimmer, you can throw in Shopify and another name or three.
Or again, investors can buy that tech ETF offering from iShares. You might add that Horizons ETF to your portfolio.
Cut The Crap Investing will keep an eye on the sector. Hopefully we’ll continue to see the tech sector become more of a driver of the Canadian economy; and of the total market returns. Here’s the exposure breakdown for iShares Composite XIC.
The Weekend Reads.
On MoneySense Jason Heath looks at the superficial loss rule in the answer this reader question.
Jonathan Chevreau looks at when do pension buybacks make sense?
On that pension front I’d encourage readers to check out one of the most-read posts on Cut The Crap Investing, from Alexandra Macqueen …
In that post we learned that bad advice could cost you your retirement.
Ready to retire?
How much will you need to ‘retire’? On myownadvisor Mark Seed looks at – Determining your financial independence number.
And on that same theme the Retirement Manifesto blog looks at the 5 milestones you must reach before you retire. Great post, once again.
On Canadian Passive Income Bob Ciura of Sure Dividend looks at 3 Canadian Bank stocks.
Here’s a Sure Dividend guest post on Cut The Crap Investing from July of 2019. That post offered 3 Canadian picks. One of them has certainly been a wipe out …
I continue to avoid energy producers.
On that Canadian banking front, Ellen Roseman had looked at COVID-19 and how that might prick the Canadian housing market bubble.
On The Evidence Based Investor – why are so many young people trading stocks? Crazy things happen when you close the casinos.
On All About The Dividends Matt was adding more to pipelines, telco’s and Go Easy.
Milliondollarjourney looks at call and puts options.
And this is an interesting company and service. Savvynewcanadians looks at the KOHO Visa card and app.
KOHO is not another bank. No, they don’t want any of that complication. Having to pay fees at every turn? Yuck! That’s neither trendy or geeky, and it’s definitely not financially savvy, which is what KOHO is all about.
And as many investors pile into the can’t miss stocks of today and the future, A Wealth of Common Sense looks back at the story of The Nifty Fifty from the 1970’s.
And on The Reformed Broker large dominant companies is nothing new.
Thanks for reading. Have a great Sunday. Please share this post and don’t forget to follow Cut The Crap Investing.
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