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.
National Bank shakes up its Dividend All-Stars portfolio
National Bank of Canada released an update to its 2020 Dividend All-Stars portfolio this week, after its recommended list of high-yield securities to own published in February underperformed the S&P/TSX Composite Index. This underperformance resulted from a significant exposure to the real estate sector as well as the energy sector and a low exposure to the technology and materials sectors, Jennifer Dowty writes. Many of these companies do not pay a dividend or have low dividend yields.
In the shakeup, seven securities have been removed and five have been added. Additions include Alaris Realty, Brookfield Infrastructure Partners, Choice Properties REIT, Crombie REIT and TransAlta Renewables. Find out why, see which stocks were dropped and get the full all-stars list here.
Dividend-rich renewable energy stocks: Good under Trump, better under Biden?
Renewable energy stocks have performed superbly under the tenure of coal-loving U.S. President Donald Trump, David Berman writes. Now, some observers believe that if Joe Biden is elected, his administration will give the green sector – including a number of Canadian stocks – its next big push. Already, he has issued a climate plan, establishing bold targets for creating a green U.S. energy grid by 2035 and spending US$2-trillion on renewable energy infrastructure and clean-energy research and development over four years.
Companies that may stand to benefit, according to Ian de Verteuil, a strategist at CIBC World Markets, include Algonquin Power & Utilities – which he sees as a standout, Brookfield Renewable Partners, Innergex Renewable Energy, Boralex, Northland Power and TransAlta Renewables. Read more here.
More from David Berman: Power Corp.‘s biggest appeal is shares trading at a deep discount
Related: These Canadian companies are poised to benefit from Joe Biden’s $2-trillion green energy plan
Seeking a safe alternative to GICs
A reader asks Gordon Pape to recommend an investment that won’t lose money over a 10-year-plus period but delivers a better return than guaranteed investment certificates. He responds: If you take inflation risk into account, even GICs and high-interest savings accounts could lose purchasing power over that time. A 10-year Government of Canada bond is only yielding about 0.5 per cent, so you probably don’t want to go that route either.
With a 10-year time horizon, I suggest you consider taking on a small amount of risk with your money. If you don’t own them already, some good utility stocks or a fund that invests in them would be worth considering. These would include companies such as Fortis, Canadian Utilities and Emera. Because most of their income is regulated, the downside risk is minimal, and the dividends appear to be secure. Read more answers to reader questions here.
‘How safe is investing with Wealthsimple?’
Rob Carrick responds: All robo-advisers should be anticipating this question from prospective clients, particular in current market conditions. All robos should have something within a click of their homepage to definitively answer the question.
What does Wealthsimple say? I asked and got a helpful response that our reader should have been able to find for himself while researching Wealthsimple. Basically, Wealthsimple Inc. has an affiliate called Canadian ShareOwner Investments Inc., which is where money managed in a Wealthsimple account is kept. ShareOwner is a member of the Canadian Investor Protection Fund (CIPF), which protects up to $1-million in eligible account assets from investment dealer insolvency. Read more here.
More from Rob Carrick: Priced out of the big city? Here are seven housing markets young buyers can afford in COVID-19 times
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David Rosenberg: The most dangerous move for an investor right now? Counting on a stronger Canadian dollar
I can’t help but think that the Canadian dollar is an accident waiting to happen, David Rosenberg writes. The currency has managed to rally all the way to about 76 US cents and change, which seems surreal, but really all that has happened is that the loonie has moved in lockstep with all other currencies in the recent broadly based downdraft in the U.S. dollar.
Now it appears the Prime Minister is set to embark on a massive fiscal expedition (climate change, pharmacare, universal basic income – all financed off the central bank balance sheet) at a time when the federal debt-to-GDP ratio has already soared, in short order, to nearly 50 per cent from 30 per cent. When one recalls Canada’s history of running structurally high “twin” current account and budget deficits through the 1980s, being long the Canadian dollar right now is probably the most dangerous thing anyone can do. Read more here.
What investors need to know for the week ahead
Canada’s big banks begin roll out third-quarter earnings in the week ahead, with Bank of Montreal and Bank of Nova Scotia reporting Tuesday, Royal Bank of Canada and National Bank of Canada on Wednesday, and Toronto-Dominion Bank and Canadian Imperial Bank of Commerce on Thursday. Other companies releasing their latest financial results include Lululemon, BRP, Dollar Tree, Dollar General and Dell Technologies.
Economic data on tap include: U.S. new home sales for July (Tuesday); U.S. durable goods orders for July (Wednesday); Canadian employment figures for June (Thursday); Canada’s read GDP for the second quarter and for June, U.S. personal spending and income as well as its wholesale and retail inventories for July (Friday).
Read more: Big Six banks set for earnings bounce, but more virus pain looms
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