Market Update October 2023
September is historically, the weakest month of the calendar year and this year was no exception.
That said, dividend yield is currently on sale in the Canadian market with the current pullback, especially in interest sensitive groups like telecommunications, utilities, REITS.
That said, even the Canadian bank stocks are paying great income.
*Remember that dividend income from Canadian corporations is subject to a dividend tax credit in taxable accounts. For instance, TD currently paying 4.83%, has a pre-tax interest equivalent yield of approximately 6.76%.
**Dividends are taxed the least where interest bearing securities are taxed the most. The big bonus is exposure to long-term growth in the stock (which I highlighted in my last Market Update).
While short-term pullbacks create opportunity, history suggests that investor do much better as a bank owner versus a depositor.
Here are other examples from other sectors… Enbridge is paying 8.2% and BCE 7.67%
Markets remain volatile in the second half of the year, based on a tug of war between inflation and interest rates. We currently believe that central banks are likely close to, if not finished raising interest rates but also believe it will be longer than previously estimated before we see interest rates start to fall again. You may recall inflation moved up in August in Canada.
For more information on our economic outlook, be sure to consider our Economic Event October 30th in Victoria if you live on the Island. We will be hosting National Bank’s Chief Economist, a Q&A followed by a tea. Please call Maureen for details at 250 953 8415.
Market summary year to date (YTD):
The TSX here in Canada is down <2%> YTD
The SPX (S&P500) in the U.S. is up 10.65% YTD
The Nasdaq (tech index) in the U.S. is up 26% YTD
We are currently considering taxable gains within portfolios. Should we find an opportunity for tax reduction this year, a member of our team will be in touch with you.
I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial.
Best regards,
National Bank Financial
Rob Hunter
Senior Wealth Advisor
Sources: NBF Economics, Reuters
National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).
The information contained herein has been prepared by Rob Hunter, a Wealth Advisor at NBF. The opinions expressed do not necessarily reflect those of NBF.
The opinions expressed herein do not necessarily reflect those of National Bank Financial. The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed consider a number of factors including our analysis and interpretation of these particulars, such as historical data, and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. Unit values and returns will fluctuate and past performance is not necessarily indicative of future performance. Important information regarding a fund may be found in the prospectus. The investor should read it before investing.
The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed do not necessarily reflect those of NBF.
Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department. The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, and Quebec. National Bank Financial is a member of the Canadian Investor Protection Fund.
