Bank of Nova Scotia, BNS-T, Owned by clients and personally, Last Purchase September 16, 2016 $69.85
The Bank of Nova Scotia is the most international of the Canadian banks with branches in the Caribbean, Central and South America. Loan growth in the Latin American markets has been robust. While exposed to Mexico (6% of profits), the future of NAFTA could be of some concern but to date there has not been any apparent deterioration in credit quality. Overall, we anticipate that International and Canadian Banking results will demonstrate positive trends when BNS reports results on February 27. The current yield of 4.1% is attractive as are the relative valuation parameters to its peers.
BCE Inc., BCE-T, Owned personally and by clients, Last purchase February 13, 2018 $56.24
BCE Inc. is Canada’s largest communications company. The company’s dominant infrastructure build provides some competitive advantage over its primary competitors. However, changes in technology and the competitive landscape will require large ongoing capital outlays. In the wireline business, BCE is leading in its quest to bring fibre to the home that will provide superior internet and related services. The wireless busines remains competitive promotions are expected to continue but BCE retains the largest market share. The media business remains challenging. In the current environment, we antcipate that BCE will more than hold its own position in the competitive landscape and the current yield of 5.1% is attractive given the likelyhood of future dividend increases.
Enbridge Inc., ENB-T, Owned by clients, Last Purchase November 16, 2017 $44.72
Enbridge Inc. is a leading energy generation, distribution and transportation company in the US and Canada. Its pipeline network includes the Canadian Mainline system, regional oil sands pipelines and natural gas pipelines.
The company also owns and operates a regulated natural gas utility and Canada’s largest natural gas distribution company. Additionally, Enbridge generates renewable and alternative energy with 2,000 megawatts of capacity. While rising interest rates and concerns about funding have constrained stock performance recently, free cash flow and an objective of raising the dividend by by 10% annually through 2020 will be reflected in future share performance. Enbridge has a project backlog of $22 billion that will benefit future cash flows. Non-core asset sales of a $3 billion this year and a further $7 billion later will be supportive of their capital plan . The recent pullback in the share price has resulted in a current attractive yield of 6.2%
In the last month, we have witnessed the return of some volatility in the global stock markets. While valuations have corrcted somewhat, They are still above their longer term norms. To date, there have not been any notable downward revisions in global economic growth over 2018. However, ten years is an exceedingly long time for an economic expansion to continue without a slowdown or recession. During any expansion, there are always elements in the economy that accumulate until things come to a breaking point.
All of the same geopolitical concerns stemming from Washington, North Korea, the Middle East and elsewhere remain. NAFTA negotiations drag forward with little progress in eveidence.
All of these factors lead us to continue exercising caution and prudence in the current environment.
You can view the complete Market Call interview here>>
What is Successful Investing? Learn more here>>
We believe that successful investors focus on the quality of the assets they buy. Speculators focus on guessing the future prices. Like to learn more? Please contact us here>>
The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.