Weekend Reading – TSX turnaround edition
Hi There!
Welcome to a new Weekend Reading edition, the potential for the TSX to turnaround edition.
Before some highlights on that theme, a few recent posts:
I offered up a few smart ways to manage your tax refund:
If you’re struggling with the pay down your mortgage vs. investing debate, well, here are some thoughts including those from readers who provided a comment on this issue.
Weekend Reading – TSX turnaround edition
Back in December 2023, I read a few articles that suggested Canada’s stock market was poised for an upcoming good year (this year).
Maybe those days are here…?!
Now that interest rates have been stable for some time, I would like to think companies in our financial and utilities sectors in particular have adjusted. Those sectors have hardly done well in recent years which makes me believe the rest of 2024 could be a rebound year – for patient investors – who have remained invested in those sectors and the TSX overall.
Better still, smart investors might have added to their TSX portfolio along the way…
In recent weeks, many market cap-leading TSX stocks have been on the upswing something this Wealth Professional forecast hinted could happen back in January 2024.
“For Canadian dividend stocks, I think the opportunities are better than they have been at any point in recent history,” says Noah Solomon, chief investment officer at Outcome Metric Asset Management. “I can’t remember the last time you had some very stable, low-volatility blue chip companies offering the kind of mouthwatering yields that they are offering today.”
As a case in point, Solomon highlights Bell Communications and TELUS – both stable Canadian businesses that reside in a “cozy oligopoly” of telecom stocks, which bodes well for their ability to generate profits.
“They’re offering yields of between 6.5% and 7.5%, which are tax-preferred because they’re Canadian companies,” Solomon says. “That’s like a bond equivalent yield approaching 10%.”
In the utilities space, he sees similar opportunity from Hydro One, Emera, and Fortis, which he says are yielding about 4.5% – close to 6% bond equivalent yield when accounting for the difference in tax treatment.”
Another financial expert also recently saw value in our TSX: Brian Belski, BMO’s chief investment strategist.
While Brian didn’t pick any particular stocks to own nor say when the TSX would see more investment inflows, he did peg a lofty target in a recent Globe and Mail article for the S&P/TSX Composite Index to finish 2024 at:
23,500.
That would be impressive.
That’s another 6% raise on top of what low-cost XIC (iShares Core S&P/TSX Capped Composite Index ETF) has already delivered year to date: 7%.
Will we see double-digit TSX returns for 2024?
I hope so…which would blow past my 2024 predictions but I won’t complain. 🙂
More Weekend Reading – TSX turnaround edition
Barry Schwartz believes our Canadian oil sands companies are materially undervalued. Yet another reason to buy local in 2024.
My take on Canadian Banks and why I think the Canadian oil sands companies are materially undervalued. https://t.co/PrF0m4Ci4t
— Barry Schwartz (@BarrySchwartzBW) March 25, 2024
Experiencing Nvidia FOMO? (subscription)
A good reminder you have just two choices when it comes to buying soaring stocks in your DIY portfolio.
“Accept that you missed this one. Can’t win ‘em all. This way, you can at least look like a genius if the whole AI frenzy collapses in on itself. Plus, if you own any U.S. index products, you already have some measure of direct exposure to Nvidia, which has a 5 per cent weighting in the S&P 500 index.
The other route is to buy into the hype. There are plenty of credible market observers who say that it is not too late to get on the Nvidia bandwagon. But if you climb aboard, you ought to understand the risks.”
Preet Banerjee wrote those most likely to benefit from a budget are least likely to have one (sub). Seems about right based on my interactions with others on this subject too…
For the record, this is my better way to budget.
A reminder one of my ETF favourites (to invest in the Canadian stock market) is XIU (even though I don’t own it). I do own low-cost ETFs QQQ and XAW in my portfolio though. I threw in ZLB as a potential good low-cost ETF to own as well:
Source: Portfolio Visualizer.
Dividend Growth Investor shared his thoughts on continuous improvement – rooted in processes and times of reflection.
“I do believe that successful investment is about continuous improvement, which is only possible through active learning. That includes reading books, articles, journals but most importantly also doing the heavy lifting and actually investing money.”
A nice collection of weekend reading material from Banker on Wheels, including subjects such as:
- Larry Swedroe: Should Investors Be 100% in Equities?
- Are Index Funds Propping Up the Stock Market?
- Who are the World’s Richest People in Finance?
Thanks to a recent reader question – I’ll link to this post – since without any debt, spending $72,000 per year after tax with spending rising by 3% every year is a nice retirement lifestyle. 🙂
It has been said that “dividends don’t matter” by some. Well, tell that to Dividend Daddy. I like your boat.
Dividend investing is fuelling my life 💰
On a transatlantic cruise to Europe next month 🚢 pic.twitter.com/0xVrA9SEPA
— Dividend Daddy (@DividendDaddy1) March 28, 2024
Have a great weekend!
Mark
Juicy dividends for sure. I really think these are the days us dividend investors look forward to. I bought more this past week to top up BCE with a dividend of 8.5%.
Good article and info. I hope the TSE hits 23,500 this year.
Thanks Mark!
I think the TSX has a shot at that! We’ll see!
Cheers.
First sentence: “turunaround edition.” – slight typo. And believe me, “to run around” would have a far different meaning than “to turnaround” 😉
Ha, my goodness, thanks for that Mikey! Fixed. 🙂
Have a great weekend.
“Those sectors have hardly done well in recent years”
Adding to the recent malaise of the financial sector is the ongoing Canada Recovery Dividend. Not sure exactly how this temporary tax played out for the individual investor, but taking out 600 million per year has to have had *some* kind of effect. Still a few more years to run yet. 🙁
Going to be interesting long-term but I suspect with everyone needing a home; buying houses, others starting businesses in Canada, I don’t think bank profits will be hurt very much.
Have a nice weekend, Lloyd!
Hoping you’re right on the turn around Mark. Some pretty anemic looking stocks here.
Good point Loyd. Governments can be very arbitrary and often have political objectives that drive decisions more than pragmatism.
LOL. Yes, hopefully things come around in 2024!
Mark
Didn’t mean to sound like complaining. Overall its an incredible start to ’24. Just those old stalwarts like BCE, T, EMA, FTS, pipes, some banks have taken a major beating!!
I hear ya, no worries, I know where you are coming from! 😉
Thank you for sharing Mark! I appreciate it!
Enjoy, have a great weekend!