In my opinion the Canadian stock market and the Canadian economy present a unique opportunity. We can build the Canadian stock portfolio by focusing on a few key sectors. Canada is home to many wide moat or oligopoly sectors that includes the Canadian banks, telcos, railways, grocers, pipelines and utilities.
For Million Dollar Journey, here’s my post – investing in the Canadian bank stocks.
In a recent post for MoneySense I touched on the moat or wide moat sectors and stocks as described by Morningstar Canada. In that post Morningstar had identified Canadian stocks with a moat that are also offering incredible value. Those stocks are on sale.
From that list, I own Enbridge, Scotiabank, TD Bank and TC Energy. They are part of my concentrated Canadian wide moat portfolio. That portfolio also includes Royal Bank of Canada, Bell And Telus. And certainly this is not advice aka “Don’t try this at home”. There is concentration risk. I had addressed that risk and suggested that Canadian investors also look at other additions in the wider moat portfolio.
That article showed how adding more stocks and more sectors would have been beneficial with respect to risk and total returns. That said, I have embraced that wide moat 7 for the generous and growing dividends at the core. The dividends have held up in 2020. There have been no dividend cuts, and I’ve experienced a few dividend increases. I certainly hope to enjoy continued capital gains as well.
The wider moat Canadian portfolio.
In the above article for the wider moat portfolio I looked at the returns of the individual stocks vs ‘the market’ from January of 2015 to the end of April. Of course that period includes the worst of the stock market correction in 2020.
The best performing sectors in order.
And what is more than interesting is that all of these sectors out perform the market in the last decade and more. There’s nothing like business lines with limited or no competition. The wider moat portfolio also held up much better than the TSX Composite in the correction. Investing success can come by way of losing less in market corrections.
That is one of the keys to success in the BMO Low Volatility ETF.
Add that growth kicker.
That said, I am also a big fan of that growth kicker that can come by way of the technology sector. The tech sector is a growth driver for Horizons Dividend ETF – HAL. That fund employs Artificial Intelligence (AI) to try and stay out of trouble. It looks for quality and stability. That is Canada’s best performing dividend ETF.
Here are the top holdings of HAL in September.
You might start with Shopify (not on their list – it does not pay a dividend) and then have a look at Enghouse, Constellation Software and Open Text.
Of course you could simply use iShares Canadian tech ETF. That index ETF is up over 38% year to date. Canada is developing a more robust and balanced tech sector. And of course Shopify is leading the way.
Do your own research, but for a Canadian stock portfolio I like the idea of the moat sectors and a tech growth kicker. Of course employ that US and International diversification as well.
On Seeking Alpha I recently reported on our US Dividend Achievers that beat the S&P 500 by some 5% in 2020. I’ll be back soon with a post that looks at that index and approach. In ETF form you can find those by way of Vanguard Canada.
More ideas for Canadian stocks.
Mark Seed at My Own Advisor sets a wonderful example. He essentially skims enough of the Canadian market to create his own index – likely quite close to replicating the TSX 60. Mark slants more toward some generous dividends and he’ll find more of those wide moats.
Here’s Mark’s September Dividend Income report.
For reco’s and evaluation services, have a look at Dividend Stocks Rock from Mike The Dividend Guy who is no stranger to this site.
You might also have a look at John Heinzl’s wonderful Canadian dividend portfolio on the Globe and Mail.
On MoneySense Jason Heath goes over the potential tax changes thanks to COVID-19. The government agencies will have to find the monies from ‘somewhere’, eventually.
On Findependencehub Jonathan Chevreau looks at locking in to fixed rate mortgages in today’s low interest environment.
And I think you’ll like the most ambitious effort yet for my weekly MoneySense column. We are about to enter this first pandemic holiday season. The pandemic is certainly going to shape our spirit and shopping habits. That post looks at surveys for Canadians and Americans. Bitcoin makes an appearance in that post as PayPal unveils a cryptocurrency payment and money transfer platform.
Canada’s top-ranked discount brokerage.
Cut The Crap Investing readers can sign up with Questrade (Canada’s top-ranked discount brokerage) through this partnership link. You can buy ETFs for free.
And check out EQ Bank for those who want to make their cash work a lot harder. The current high interest savings account rate is 1.5%.
While I do not accept monies for feature blog posts please click here on the mission and ‘how I might get paid’ disclosures. Those affiliate partnerships help me pay the bills for this site.
Thanks for reading, have a great Sunday.