What’s up with divvy stocks?

RYAN   By Guest Blogger Ryan Lewenza
.

It’s been a rough year for dividend-paying stocks, underperforming the broader markets. For example, the iShares Canadian Select Dividend Index ETF is down 14% this year, much worse than the S&P/TSX Index, which is down 5%. Dividend stocks are supposed to be less volatile and hold up better in downturns versus the overall market, so what’s up?

Canadian Dividend Stocks are Under Pressure

Source: Bloomberg, Turner Investments

Let’s first look under the hood of the Canadian dividend index and review the sector composition. Financials make up the largest sector weight at 60%, followed by utilities (11%), communication (10%), consumer discretionary (8%) and the energy sector (5%).

The Big 6 Canadian Banks – RY, TD, BMO, CM, BNS and NA – represent the lion share of the financials sector here in Canada and some of them have had a rough year. The banks with more international exposure like TD, BNS and BMO have taken it on the chin, while big blue and CIBC have held up relatively well.

A key reason behind the share price weakness in the bank stocks are the large losses the banks are writing down on their loan books. Called ‘provisions for loan losses’, they’ve been spiking as a result of the Covid-19 induced global recession. Below I capture this with loan loss provisions surging from roughly $2 billion per quarter in late 2018 to $11 billion in the second quarter of this year.

This happens in every recession as the banks have to estimate what mortgages and loans will go bad. But what invariably happens is the economy turns, they overestimate their loan loss provisions and the banks then end up reversing or ‘releasing’ these loan loss provisions in future quarters. This is exactly what happened a few weeks ago when HSBC Canada announced that it was ‘releasing’ $2 million from its previous loan loss provisions. I believe this may mark the peak in loan losses in this downturn.

Big 6 Bank Loan Losses look to have peaked

Source: Bloomberg, Turner Investments

Looking at the historical data, since 1994 there have been four (including this one) spikes in provisions for loan losses from the banks. These include the tech recession from 2000, the financial crisis recession of 2009, a mini spike in April 2016 related to losses on the banks energy portfolios, and the current one due to Covid-19.

Now the cool thing about this is that the peak in loan losses generally marks the bottom in bank share, prices with large gains following in the first and second year following the peak. As seen below, the median 1 and 2 year return after the peak in loan loss provisions is 20.4% and 43%, respectively.

This is one key reason why I’m advising our clients to stick with their dividend stocks and in fact, that they continue to add to them. I see dividend stocks doing much better next year in large part due to my bullish view of the Canadian banks. Patience will be required as Covid-19 is surging again and the Canadian economy remains under pressure, but this patience should be rewarded with nice gains in 2021.

Banks Do Very Well Following Peaks in Provisions for Loan Losses

Source: Bloomberg, Turner Investments

Another industry I see recovering are the Canadian pipelines, which have been hit hard as a result of weak oil prices. Currently, oil prices are around US$37/bl and I see oil prices recovering to $50-$60/bl next year as we get a vaccine, the global economy recovers from the current recession and we see oil demand pick up.

Below I chart US oil prices with Enbridge and TC Energy and it’s clear that the low oil prices have weighed on their share prices. But as oil prices recover so should the share prices. Additionally, with ENB and TRP yielding 9% and 6.4%, respectively, these beaten dividend stocks look quite attractive, which are large weights in our preferred dividend equity ETF.

Low Oil Prices have Weighed on Canadian Pipelines

Source: Stockcharts, Turner Investments

This year investors have flooded into tech and high growth stocks, while eschewing staid dividend paying stocks, which I believe is creating a good buying opportunity. As Garth keeps reminding readers, pandemics end and when we start to see a rollout of vaccines next year, I believe some of the ‘fast money’ will flow out of the expensive tech sector with beaten up dividend stocks receiving some of those flows. So get ahead this and consider adding to your dividend stocks and ETFs, as better days lie ahead.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

91 comments ↓

#1 crowdedelevatorfartz on 11.07.20 at 12:15 pm

Bidens a winner but Crowdie’s chicken dinner… no sweep in the Senate.
See you in a month

#2 the Jaguar on 11.07.20 at 12:21 pm

Good morning Ryan. I sure hope all the dogs on the blogs will show a little restraint in their comments today given the sad news of yesterday about a much loved canine.

Two excellent articles in today’s National Post. One on how the CRA and courts view potential ‘house flipping’ disguised as principal residence exemption reporting. Example cited is a couple who bought and sold five homes between 2007-2012. Interesting read. (page FP3)
Here’s an excerpt from the other article ( page FP8) :
The Office of the Superintendent of bankruptcy Canada reported 7,658 consumer insolvency filings, up 18.5 per cent from August. That’s the biggest monthly increase since 2017, and the most since march when widespread lockdowns were imposed to control the spread of COVID-19.There were still 1.3 million Canadian workers in September without jobs or working significantly fewer hours because of the pandemic.
“Consumer insolvency filings are expected to rise through the end of the year as household support measures, such as debt payment deferrals, have started to expire, while employment remains below the pre-pandemic level,” bank of Nova Scotia economists Nikita Perevalov and Alena bystrova said in a report.

#3 SnowOwl on 11.07.20 at 12:27 pm

Hi, Ryan,
Is there an equivalent of Canadian Select Dividend ETF to buy in a US portfolio?
Happy Election Results Day!

#4 nlabixa on 11.07.20 at 12:48 pm

Good Advice. Stick w/ proven dividend payers.

#5 arse on 11.07.20 at 1:04 pm

Sound investment advice for a chaotic time.

#6 aW on 11.07.20 at 1:05 pm

I’ve been buying TD.to for the last couple of months. But right now I’m holding my contributions in cash. Volatility coming again soon. SC will ultimately call election for Trump. There’s no chance Biden win all those votes, he gets ratioed on all social media, yet somehow he recurved more votes than Obama, or any president ever. Come’on Man!

#7 Casey on 11.07.20 at 1:33 pm

One of the greatest days in history!!!!!

#8 TurnerNation on 11.07.20 at 1:35 pm

I’ve been told that in places like Egypt, Lebanon etc there is no CV, life is as normal.
How can this be, CV targeting only the First World Countries, specifically the most-free one USA?
Things that make ya go hmm.
The New Green Deal was to see First World countries weakened by paying ‘reparations’ to other countries.
Now our economy is in shambles. Same-same: CV or CC pick your poison they got us good.
The Shut downs will continue until the goals are achieved. First World only.

Never forget they want to shut down our way of live and every pleasure and social interaction. Keep us divided You gets rights given back to you…with a new social contract. That’s how our elites do it:
“Toronto Mayor Tory: Diners should mask up BETWEEN bites when restaurants reopen” <- might have originated via 'Pebble' Media (WWE-style) but there it is

For their health! New UN-enforced poverty, the new CV Caste System

https://huddle.today/more-than-30-percent-of-atlantic-canadians-faced-financial-hardship-due-to-covid-19/
More Than 30 Percent Of Atlantic Canadians Face Financial Hardship Due To Covid-19

HALIFAX – A survey conducted by Narrative Research found that 31 percent of Atlantic Canadians have faced financial hardship in their households as a result of the Covid-19 pandemic.
While 24 percent of Atlantic Canadians reported facing financial hardship when the survey was first conducted in the summer, that number has risen above 30 percent in the fall.

These results are in line with the rest of Canada where Narrative Research reports 32 percent of Canadians reported facing financial hardship in the fall, compared to 29 percent in the Summer.

#9 Penny Henny on 11.07.20 at 1:42 pm

The big 5 banks and Enbridge currently make up almost half my portfolio (too many eggs in one basket, I know).
Soon I will deploy another 20% or so which is sitting in cash, any other recommendations for high div paying stocks.

#10 Dave on 11.07.20 at 1:57 pm

If the usa goes into a recession….1st riots then Biden puts in federal covid restrictions….will the stocks and housing crash?

#11 Joseph R. on 11.07.20 at 2:00 pm

#6 aW on 11.07.20 at 1:05 pm

There’s no chance Biden win all those votes, he gets ratioed on all social media, yet somehow he recurved more votes than Obama, or any president ever. Come’on Man!

———————————————————-

You choose to believe what you read on social media was truth? You choose poorly…

As repeated often during the election period about reading polls, the election is the real poll.

#12 Dave on 11.07.20 at 2:01 pm

With Biden in power…most of North America and Europe will have Green Leaders.

This will kill the oil and gas industry….what sectors will boom?

#13 Yukon Elvis on 11.07.20 at 2:05 pm

#9 Penny Henny on 11.07.20 at 1:42 pm
The big 5 banks and Enbridge currently make up almost half my portfolio (too many eggs in one basket, I know).
Soon I will deploy another 20% or so which is sitting in cash, any other recommendations for high div paying stocks.
………………………..
Same here. They are such a good deal I bought more banks last Monday. I eased up on Enb. Cuz of Biden. I buy the one or two highest paying dividend banks every quarter when they send me the divs.

#14 El presidente no more on 11.07.20 at 2:07 pm

The orange stain is history…

Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
The battle outside ragin’
Will soon shake your windows
And rattle your walls
For the times they are a-changin

#15 aW on 11.07.20 at 2:10 pm

#11

You choose to believe what you read on MSM was truth? You choose poorly…

I’ll be here to say I told you so when Trump is sworn in for second term in Jan. :)

#16 SoggyShorts on 11.07.20 at 2:23 pm

#1 crowdedelevatorfartz on 11.07.20 at 12:15 pm
Bidens a winner but Crowdie’s chicken dinner… no sweep in the Senate.
See you in a month

*****************
2 run-offs in Georgia? Not likely, but still possible I think?

#17 SoggyShorts on 11.07.20 at 2:27 pm

This happens in every recession as the banks have to estimate what mortgages and loans will go bad. But what invariably happens is the economy turns, they overestimate their loan loss provisions-Ryan
********************
Do they always over-estimate?
There’s a lot of doom&gloom about how pooched many home”owners” and others are, is it possible that their losses might be worse than projected?

#18 El presidente no more on 11.07.20 at 2:33 pm

Oh how we are going to miss you…. with crazy Rudy holding your final presser at some random landscaping company across the road from a porn shop and a crematorium……the greatest buffoon the world has ever known…

Someone get a hold of the nuke buttons

#19 KaleyCat on 11.07.20 at 2:38 pm

#9 Penny Henny

https://dividendstrategy.ca/btsx-portfolio/

#20 MF on 11.07.20 at 2:47 pm

0 Dave on 11.07.20 at 1:57

-No. The script has already played out.

If a recession/depression hits, then the world central banks will spend/create x trillions to artificially lower interest rates. World housing and stocks will go up, and the wealth divide will just get worse.

It’s what happens when the economy improves, and the world’s central banks are forced to reduce the stimulus that should be everyone’s worry.

MF

#21 Catalyst on 11.07.20 at 3:20 pm

Do you not think we might be in for a bit longer recovery in bank shares due to low nims and potential housing correction? Seems premature to jump in. Most of the banks are still trading near pre-pandemic levels. OFSI has showered them in exception reporting to keep them looking strong. Lastly, compared to euro/us banks they aren’t really cheap.

#22 G on 11.07.20 at 3:25 pm

Hi #6 aW,

Sounds like you’re trying to time the market by staying in more cash. You may just miss out on gains either way. The 60/40 balance that is talked about here seems to be working, long term anyway. The short term always does just ends up being noise.

I might ‘wish and even hope’ you’re right about the SC too, but that doesn’t make it so. I even find hope in the ‘Tore Says’ show that I found on YT, for now, and the ‘X22Report’ that hasn’t been kicked off bitchute.com yet. And rt.com news has tidbits that are interesting often.

That guy Lionel on YT ‘Lionel Nation’ might be closer to the truth, but his take on things sounds like my ‘hope’ could just be futile. (Kind of like I hoped our host GT would get re-elected.)

I find Lionel entertaining anyway.
‘It’s Over. What’s Next for America?’ https://www.youtube.com/watch?v=awjeVZ9SZJk

But it might just be best to get outside for a walk in the woods, or drive in the country side, if the weather is good were you are, and stop watching the “news”.

And leave you internet connected phone at home. At least for a few hours.

#23 Ronaldo on 11.07.20 at 3:26 pm

And another good reason why most would be better off with just investing with a good company with a good performing balanced fund with a low mer. My balanced fund is up 9.54% ytd net of fees.

#24 Ace Goodheart on 11.07.20 at 3:27 pm

Joe Biden: making America sane again.

#25 Grunt on 11.07.20 at 3:32 pm

Biden reminds me of a kind of hybrid of Jimmy Carter & Spiro T Agnew.

#26 Ryan Lewenza on 11.07.20 at 3:35 pm

SoggyShorts “ Do they always over-estimate?
There’s a lot of doom&gloom about how pooched many home”owners” and others are, is it possible that their losses might be worse than projected?”

Well I guess we’ll see if ‘this time it’s different’ and homeowners are pooched but if I was a betting man, this time next year we’ll be back in growth mode and bank share prices will be quite a bit higher than they are today. – Ryan L

#27 Ryan Lewenza on 11.07.20 at 3:50 pm

aW “ You choose to believe what you read on MSM was truth? You choose poorly…

I’ll be here to say I told you so when Trump is sworn in for second term in Jan. :)”

I’m confused. Are you saying the entire election is rigged and the 4+ mln more votes for Biden is a fraud? Biden is ahead in Arizona, Nevada, and Georgia, which are Republican strong holds, and run largely by Republican state legislatures. Georgia, for example, has a Republican governor, Republican controlled state legislature, and has a Republican Senator (Purdue) who is a massive Trump supporter. Why would this Republican controlled state allow the Georgia election to be rigged for Biden? Same story with Arizona, Nevada and other red states that voted for Biden. It makes no sense why Biden would win these states if Republican controlled. Face it, Trump lost and all the silly conspiracies coming from Trump, the Whitehouse, and Qanon websites cannot change this fact. – Ryan L

#28 Ryan Lewenza on 11.07.20 at 4:00 pm

Catalyst “ Do you not think we might be in for a bit longer recovery in bank shares due to low nims and potential housing correction? Seems premature to jump in. Most of the banks are still trading near pre-pandemic levels. OFSI has showered them in exception reporting to keep them looking strong. Lastly, compared to euro/us banks they aren’t really cheap.”

First, prices lead fundamentals so by the time you see an improvement in their loan losses and earnings, the bank share prices will already be higher. Second, as the economy recovers interest rates will rise leading to higher NIMs. Third, the same thing happened in 2008/09 where there were concerns about US housing and interest rates were at record low levels, but yet the recovered. Lastly, Canadian banks have way stronger earnings and higher ROEs so they deserve to trade at higher P/Es and P/Bs. Sure Deutsche Bank is cheap but it’s a crappy bank compared to a RY or TD. – Ryan L

#29 Barb on 11.07.20 at 4:04 pm

I still wonder why the IMF, a couple of months ago, “suggested” that banks “stop paying dividends”.

Harbinger?

#30 46 on 11.07.20 at 4:43 pm

Message to T-rump: YOU’RE FIRED!!!

#31 Prince Polo on 11.07.20 at 4:43 pm

ENB <$40 = super-juicy divvy!

#32 NSNG on 11.07.20 at 4:48 pm

#9 Penny Henny on 11.07.20 at 1:42 pm

The big 5 banks and Enbridge currently make up almost half my portfolio (too many eggs in one basket, I know).
Soon I will deploy another 20% or so which is sitting in cash, any other recommendations for high div paying stocks.

===================================

Telecom? It should be Covid-proof. It actually should benefit from Covid.

Someone recommended T(US) on here. It looks good.

#33 AntMan on 11.07.20 at 4:54 pm

Thank you Ryan.

#34 Tarot Card on 11.07.20 at 4:55 pm

Thanks for the blog Garth
Thanks for the post Ryan
I own bank ETF ZWB what’s not to love almost 6.5 percent dividend, and ZWC ETF almost 9 percent both paid monthly and Enbridge almost 9 percent. Paid quarterly and almost at the 52 week low!
Interestingly my broker is not recommending adding to ENB at this time? But why not earn a nice dividend while waiting for a recovery.
I plan to buy next week.
I agree invest earn dividends and wait!

On another note I am still holding my breath as my mortgage is coming up for renewal in June and hoping to lock in another five years current BMO five year 1.8 percent. I understand the BOC will hold rates low which is good for variable rates.
So my question Ryan do you still see long term bonds which affect the five year mortgage remaining low for the next six months?

Thanks

#35 KNOW IT ALL on 11.07.20 at 4:56 pm

“Currently, oil prices are around US$37/bl and I see oil prices recovering to $50-$60/bl next year as we get a vaccine”

And what if we don’t get a vaccine??

#36 Slim on 11.07.20 at 5:02 pm

Joe Biden (confirmed) elected POTUS. Why am I feeling so happy?

#37 Brian Ripley on 11.07.20 at 5:02 pm

CANADA’s 6 BIGGEST METROS:
Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montréal Single Family Detached Housing and the Average Price of Vancouver, Calgary and Toronto Condos (OCT data)

http://www.chpc.biz/6-canadian-metros.html

Montreal single family detached prices hit a new consecutive monthly high as buyers in Toronto also bid up prices of detached to within 0.8% of a new price peak.

Vancouver detached house prices caught bids as well and the residential sales absorption rates (total sales / total listings) hit 30% in Vancouver vs Toronto at 61%.

#38 One For The History Books on 11.07.20 at 5:02 pm

Whether you favor Trump or Biden, I don’t think anyone could have seen this coming. Certainly not the pollsters.

When we went to sleep on Nov. 3rd, Trump was comfortably ahead based on polls reported to that point. When we woke up this morning he had lost to the mysterious mail in ballot. The media did get that prediction right. The mail in ballots were overwhelmingly for Biden with some time periods in some states reporting nearly 100,000 votes for Biden with nearly zero corresponding votes for Trump.

What they did not get even close to right was the “down ballot” results. States that Trump won, “down ballot” Republicans for congress were usually within a couple thousand votes of Trump. Swing states where Biden won he was sometimes nearly 100,000 votes ahead of the Democrats for congress. Who could have predicted people would vote like that? But apparently they did so Biden doesn’t get the Senate and has lost ground in the house. This means packing the court and socialism are not in the cards for at least the next 2 years. Actually Biden probably won’t get anything done at all except stopping further construction of the wall.

After all the recounts and fraud investigations the results will probably hold because at this point there is no solid evidence and any that comes forward will be treated with disdain by most people. But it does raise serious questions about the voting systems in many states. Why were Texas and Florida able to report by Wednesday morning whereas it took Pennsylvania, Georgia, and Arizona until today? Why were the final results so much different than how the election tracked on Nov. 3rd? (Aside from the mail in ballots.) Why did so many dead people and non-residents attempt to vote? Did any of those votes get through?

Another clear result of all this nonsense is that the rest of the world isn’t going to be willing to listen to lectures about “democracy” from the US anymore.

Anyway Trump will continue to be the president that keeps on giving to the news media until Jan. 20th as the recounts and lawsuits ensue. After that the MSM will have to find some actual news to report on. My prediction is that Trump will not be successful, he has to flip the results in too many states, and Biden will be president on Jan. 20th.

After all this excitement I am not sure whether I am looking forward to 4 years of relatively peaceful news or not. I’ve become hooked. But I am pretty sure 2024 promises to be quite exciting because this election also proved that Trumpism hasn’t gone away. Depending on who the Republicans field in 2024 it’ll be back, this time with a vengeance.

#39 Moonshine on 11.07.20 at 5:05 pm

PPL.TO a bargain right now..also KEY.TO with a 10.64% dividend yield. Ex-dividend date in less than 2 weeks

#40 Ryan Lewenza on 11.07.20 at 5:07 pm

SnowOwl “ Hi, Ryan, Is there an equivalent of Canadian Select Dividend ETF to buy in a US portfolio?
Happy Election Results Day!”

Here’s a list of US dividend ETFs. Focus on the ones with highest assets, lowest MER and best track record. – Ryan L

https://etfdb.com/etfs/investment-style/dividend-etfs/

#41 tbone on 11.07.20 at 5:11 pm

I have a pile of TD and ENB plus smaller positions in the other banks . I use this for dividend cash flow and dont really care where the stock price is. Its enough to live off of .
The balance is in mutual funds as i prefer an actively managed product. This provides the diversification for some balance.
ENB looks tempting with the 9 % yield , but i have as much as i want right now.
The cash i was holding back is going into my favourite
global equity fund.

#42 zoey on 11.07.20 at 5:12 pm

Well played, some juicy ETF yields out there.

Biden may stomp Keystone Pipeline though I read.

#43 Lorne on 11.07.20 at 5:17 pm

#15 aW on 11.07.20 at 2:10 pm
#11

You choose to believe what you read on MSM was truth? You choose poorly…
….
I’ll be here to say I told you so when Trump is sworn in for second term in Jan. :)
………..
Hope you will you also be here to admit you were obviously incorrect??

#44 crossbordershopper on 11.07.20 at 6:05 pm

do you really need to buy a mutual fund or even an etf to hold 5 different canadian bank stocks?
the canadian bank stocks have paid regular dividends for like 200 years, 200 years, this stock can be passed on from one generation to another, to say that you need an etf or some advisor skimming money from you is a joke. you can simply clip the quarterly dividends forever, i have given some to my daughter, she will own them for life,
given the canadian controlled oligopoly situation, its like a utility. either way, its good money for nothing, people who have been in canada for 200 years should all be millionaires many times over,

#45 Slim on 11.07.20 at 6:10 pm

Why is no one not investigating the attempts to sabotage delivery of the mail in ballots, by all the little Trumpsters? Interference with the US Postal Service is a federal crime.

#46 Stone on 11.07.20 at 6:20 pm

#34 Tarot Card on 11.07.20 at 4:55 pm

Interestingly my broker is not recommending adding to ENB at this time? But why not earn a nice dividend while waiting for a recovery.

———

Thoughts going through broker’s head: Buy high. Sell low.

#47 Flop... on 11.07.20 at 6:26 pm

Haven’t got a hope in hell trying to sum it all up properly, but I’ll try.

America gets a fresh start.

Garth gets a fresh hole in his heart…

M46BC

#48 SnowOwl on 11.07.20 at 6:34 pm

SnowOwl “ Hi, Ryan, Is there an equivalent of Canadian Select Dividend ETF to buy in a US portfolio?
Happy Election Results Day!”

Here’s a list of US dividend ETFs. Focus on the ones with highest assets, lowest MER and best track record. – Ryan L

https://etfdb.com/etfs/investment-style/dividend-etfs/

Thank you so much, Ryan! I do appreciate it. Page bookmarked and duly noted. Cheers!

#49 willworkforpickles on 11.07.20 at 6:40 pm

Red Lies Blue Hypocrisy…nothing new about this.
All the talk in the world where masking requires distancing to diminish viral spread appears to be no big deal in New York City, Washington and other cities where blue celebrations have become super spreader events. Many masks zero distancing with nary a comment from the blue media.
If it were a red celebration the media would be all over it…it would be terrible, just terrible then.
With the pandemic, expect it to last through 3 peak infection seasons 20 21 22… initial outbreak, peak, wind-down. Heading into peak infection rates now, the pandemic isn’t half way through. Concern out of Europe with new lockdowns has double dip recession fears rising. Vaccines/treatments & pipedreams aren’t near as certain.
President elect Joe Biden is pro lockdown and we will likely see a double dip recession combo in 2021 with the virus snowballing. This is the biggest worry in Europe currently.

I have nothing against people having fun…let them have their fun…its a free country…so they can and will and should anyway.
I have no problem with recession either…the distillery I’m invested in does great in down times.

#50 Penny Henny on 11.07.20 at 6:50 pm

Thanks Kaleycat

#51 Nonplused on 11.07.20 at 6:53 pm

#12 Dave on 11.07.20 at 2:01 pm
With Biden in power…most of North America and Europe will have Green Leaders.

This will kill the oil and gas industry….what sectors will boom?

———————————–

Why would this kill the oil and gas industry? Oil and gas aren’t going anywhere anytime soon, because we have no alternatives that can realistically support an energy intensive economy. The only alternative that might work is GenIV nuclear, which Trump was green lighting but I don’t know what Biden’s stand on the issue will be.

All one has to do is peruse this chart and contemplate the implications to realise that all this “Green New Deal” talk is a bunch of hooey:

https://www.iea.org/data-and-statistics?country=WORLD&fuel=Energy%20supply&indicator=TPESbySource

Hydro is too small to label on the graph. Wind and solar even more so. Oil, natural gas, and coal are all rising, not falling.

We can’t build much more hydro because most of the good sites have already been built. You need geography and geology to cooperate and build most of the reservoir containment for you.

We can build more wind and solar but look how many of these eyesores dot the countryside already and it represents but a sliver of total energy supply. To meaningfully reduce oil, natgas, and coal would require solar panels on every roof and windmills on every 4 acres of land all across the world, so say goodbye to all the birds. Not to mention all the battery storage that would be required. There just isn’t that much lithium.

Nuclear could in theory scale to make a difference but it would require a huge buildout and nobody seems to want to live near a nuclear plant. Maybe one day we’ll all have a “Mr. Fusion” like Doc. Brown in “Back to the Future” but I doubt it.

The only other choice is to downsize the economy dramatically because energy is the economy. We’re talking about “live like the Amish” type downsizing. I think most people would rather a bit of global warming.

Efficiency helps grow the economy given existing levels of energy consumption, but contrary to intuition it does not reduce consumption. All it does is make the use of energy affordable to more people for more tasks. Think of it this way: More fuel efficient cars lead to more cars on the road driving more miles, not to an overall drop in demand.

So worry not about oil and gas, they will be back. The industry has always been cyclical. Once covid lockdowns go away demand will return. There just isn’t any other way to power a jetliner for a 4 hour flight to Mexico.

#52 gfd on 11.07.20 at 7:07 pm

DELETED

#53 Flop... on 11.07.20 at 7:28 pm

Midnight Oil has put some new music out for the first time in eons, so let’s see who else is relying on the oil to perform.

Oil is black on the map, Northern Hemisphere is still looking dark.

I would have gotten some right.

Wouldn’t have guessed it to be my blog buddy NoName’s native Croatia’s biggest export.

Soya Beans for Brazil?

Strike two.

Milk for New Zealand?

Take a seat, son.

I had lamb or facial tattoos…

M46BC

“These Maps Show Every Country’s Most Valuable Export.

The coronavirus disrupted the global economy in more ways than we can count. With multiple European countries reimposing strict lockdowns in light of a predicted second wave of the virus, international trade is primed for another unstable period. With that being said, here are the top exports for every country in the world”

*Petroleum is the single most common top export around the world, spanning North America, Africa, the Middle East and Russia.

*Our map illustrates how manufacturing finished goods, like cars and airplanes, is much more common in Europe than anywhere else in the world.

*Many African economies remain heavily dependent on the export of raw materials, especially petroleum, gold and copper.

*The electronic industry as a top export is most prevalent in Asia, where there is a cluster of countries specializing in high-end electronic devices.

https://howmuch.net/articles/top-export-in-every-country

#54 Ponzius Pilatus on 11.07.20 at 7:30 pm

Efficiency helps grow the economy given existing levels of energy consumption, but contrary to intuition it does not reduce consumption. All it does is make the use of energy affordable to more people for more tasks. Think of it this way: More fuel efficient cars lead to more cars on the road driving more miles, not to an overall drop in demand.

So worry not about oil and gas, they will be back. The industry has always been cyclical. Once covid lockdowns go away demand will return. There just isn’t any other way to power a jetliner for a 4 hour flight to Mexico.
—————–
I think there are more efficient eh effective ways to spend energy than flying some overweight bums to a 14 day holiday.

#55 John in Mtl on 11.07.20 at 7:42 pm

Hi folks,

Just wondering if I did this right…
VGRO is in TFSA acc’t
RY, CNR, BCE is in non-registered acc’t

Where should I stick XEI and ZRE?

Thank you!

#56 Stone on 11.07.20 at 8:16 pm

#45 Slim on 11.07.20 at 6:10 pm
Why is no one not investigating the attempts to sabotage delivery of the mail in ballots, by all the little Trumpsters? Interference with the US Postal Service is a federal crime.

———

Are ya feeling a bit naked? You do realize the cheque Trump sent you is going to bounce. No need to continue trying to make it look like you actually believe what you’re spewing. Instead, go try to cash in that cheque and be ready to be surprised.

#57 Prince Polo on 11.07.20 at 8:18 pm

#49 willworkforpickles on 11.07.20 at 6:40 pm
Red Lies Blue Hypocrisy…nothing new about this.
All the talk in the world where masking requires distancing to diminish viral spread appears to be no big deal in New York City, Washington and other cities where blue celebrations have become super spreader events. Many masks zero distancing with nary a comment from the blue media

====================
Picklesbro;

Jake Tapper (on CNN) has been regularly scolding non-maskers for the past hour. What else ya got on the topic of fictitious double-standards?

#58 Ronaldo on 11.07.20 at 8:27 pm

#55 John in Mtl on 11.07.20 at 7:42 pm
Hi folks,

Just wondering if I did this right…
VGRO is in TFSA acc’t
RY, CNR, BCE is in non-registered acc’t

Where should I stick XEI and ZRE?

Thank you!
————————————————————-
Unless you have a million bucks to play with, why are you investing in individual stocks and etfs when a good balanced fund is all you need that will provide you with an average of 7% per year. But if you enjoy trying to time the market and this is a hobby of yours and you enjoy the risk, fly at it.

#59 Russ on 11.07.20 at 9:34 pm

Stone on 11.07.20 at 8:16 pm

#45 Slim on 11.07.20 at 6:10 pm
Why is no one not investigating the attempts to sabotage delivery of the mail in ballots, by all the little Trumpsters? Interference with the US Postal Service is a federal crime.

———

Are ya feeling a bit naked? You do realize the cheque Trump sent you is going to bounce. No need to continue trying to make it look like you actually believe what you’re spewing. Instead, go try to cash in that cheque and be ready to be surprised.
============================

Hey Stoned,

Are you alright?
I read the Slim message as being on your side, may be a fellow TDS’r.

But really, WGAF (who gives a…) with American election trivia. A Canadian doesn’t need to connect with the drama. It’s okay to sit back and watch.

Cheers, Russ

#60 belly rubs on 11.07.20 at 10:01 pm

“I believe some of the ‘fast money’ will flow out of the expensive tech sector with beaten up dividend stocks receiving some of those flows. So get ahead this and consider adding to your dividend stocks and ETFs, as better days lie ahead.”

I propose mandatory insurance on financial advice. Mortgage, cars, medical, builders, and now finance. Fees to be set by a regulator. Something like the CMHC. I never offer advice unless I am prepared to take the hit along with my clients. cc Ministry of Finance and Whatever Global Initiative is Currently in Fashion, Cash Cow Dept.

#61 Sail Away on 11.07.20 at 10:02 pm

#1 crowdedelevatorfartz on 11.07.20 at 12:15 pm

Bidens a winner but Crowdie’s chicken dinner… no sweep in the Senate.

See you in a month

————-

What? So both of you lost?

Naw- that’s bull. A proper bet is only one item- more than that turns into a legislative motion. Your guy won. Keep commenting.

#62 Bill on 11.07.20 at 10:35 pm

#24 Ace Goodheart on 11.07.20 at 3:27 pm
Joe Biden: making America sane again.
——————–
Really? When was it sane? I was down there 20 times a year.
Spent 2 months in Arizona before they slammed the boarder
Bushes and Clintons are all out criminals. Its all out there do your research.
Obama an Biden accomplished nothing.
Oh they raised taxes and killed Alberta.
Do you know what Obama care did to small business? Probably not.
Bidens first order of buisness is to re-kill Keystone.
The guy dosent even know where he is.
Sorry im 1/2 yankee and a business person.
Buisness people know waaaaay more than people that have never run a business. You know waiting for your paycheque every 2 weeks.
Anyone know why? Its a fact google it.
Biden is in bed with Hillary and Obama…
Enjoy your solar panels that the zillion trillion dollar new geen deal disater says we going to save earth and be green and great.
Want to bet me $10,000 on where we are going? Ill pay for the contract you put the money in escrow.
[email protected]
Arm chair qaurter backs.

#63 John in Mtl on 11.07.20 at 10:40 pm

@ #58 Ronaldo on 11.07.20 at 8:27 pm

Thanks for the “advice” Ronaldo. I know, it goes against much of what Garth & others have been advocating for years. I went on a buying spree back in march and am doing very well so far. I did time my market entry and had 5 figures just lying around as sort of play money. Not that I’m OK with losing this money, but there’s lots more “properly” invested and under management. I admit I only half know what I’m doing (still learning!), I can’t go too wrong with B&D “VGRO” ETF; the other equities (CNR, BCE, etc.) have proven winners over time.

I’m no day trader or gambler and I know enough to not get into trouble – penny stocks, shorting, FX, buying on margin, etc are all things I’m not going to touch with a 10 foot pole. I know my limits.

#64 Tccontrarian on 11.07.20 at 11:34 pm

Your thoughts on going deep in TLT etf and USD denominated assets Ryan. I like US regional banks and a few energy names as well. I tend to stick to names that have had insider buying and care less about dividends, although sometimes they coincide. Phillips 66 is one, for instance.

#65 Ronaldo on 11.07.20 at 11:48 pm

#55 John in Mtl

John, here is an example of what I was referring to. Check out their balanced funds and see for yourself. Save yourself a lot of hassels and let the experts do the picking for you. It’s really that simple. As one financial advisor said to me many years ago, “slow and steady wins the race”. https://www.mawer.com/funds/performance/

#66 Jasnice Beckword on 11.07.20 at 11:54 pm

DELETED

#67 Nonplused on 11.08.20 at 12:43 am

#54 Ponzius Pilatus on 11.07.20 at 7:30 pm

I think there are more efficient eh effective ways to spend energy than flying some overweight bums to a 14 day holiday.

—————————–

No argument there but that is how people do. What is the point of anything if it does not bring some level of joy? Happiness? Even for only 14 days a year? I ain’t working so Bezos can fuel up his yacht. He can paddle it himself if I don’t get some sort of a cut, no matter that it be smaller than his.

#68 Democracy is coming on 11.08.20 at 1:08 am

Sail on, sail on
O mighty Ship of State
To the Shores of Need
Past the Reefs of Greed
Through the Squalls of Hate
Sail on, sail on, sail on, sail on
It’s coming to America first
The cradle of the best and of the worst
It’s here they got the range
And the machinery for change
And it’s here they got the spiritual thirst
It’s here the family’s broken
And it’s here the lonely say
That the heart has got to open
In a fundamental way
Democracy is coming to the USA

#69 BillyBob on 11.08.20 at 4:51 am

I have to admit it is really incredible how mention of Coronavirus has gone from saturation level to almost non-existent on – for only one example – CNN’s website.

Like a switch was flipped. Apparently, Biden being elected has ended the pandemic.

Hooray!

Oh, there is some little item down the page about how the US set another record in daily Covid-19 cases. But apparently it is of little importance compared to breathy paeans to Kamala etc. Team Biden has done the sum total of NOTHING, not even sworn in yet and the press is licking their backsides so hard they must have blisters.

On balance I am not sorry to see Trump go but the simplistic jingoism and complete abandonment of any pretence of impartiality of the major media is beyond amoral, it’s dangerous.

Yes, I know, Department of the Obvious. But the naked manipulation is particularly evident at the moment.

The way this election has been conducted and its result will only accelerate polarization. Beaming Biden imploring reconciliation will be too much hypocrisy for many average Americans to swallow, even at the levels they have become immune to.

#70 earthboundmisfit on 11.08.20 at 5:24 am

Thank you Ryan, for this interesting and informative piece. But I’m sticking with the plan …. “no individual stocks”. While I might have the time, I just don’t have the interest or inclination to delve that deeply. Kind regards.

#71 arse on 11.08.20 at 5:52 am

This election like the last one is a shocker for me. Last time I thought Hillary would win this one I thought it would be Trump reelected

#72 Guelph Guru on 11.08.20 at 5:53 am

Great advice Ryan. And love your charts.
For some time, I’m adding ZEO and ZRE now.
I will now check out the banks and maybe start adding VDY to my shopping cart. Though am worried about the banks when the RE market corrects and mass bnkrupcies follow in Canada.
Plan is to complete the buying by Feb, 2021. Equal purchases every month till Feb (DCA).

#73 arse on 11.08.20 at 6:04 am

2020 is the weirdest year in my life. I think people will get too relaxed that that the Orange Man is gone, and as a result Covid 19 could get much worse.

#74 JM on 11.08.20 at 7:11 am

The news is so interesting. Yesterday, Ontario set a record for Covid cases however you wouldn’t know it browsing through the news. You had to dig deep on City Panic 24 to find it,

#75 McSteve on 11.08.20 at 7:30 am

Bullish on banks, pipelines, oil and gold? That’s pretty much the entire TSX 60. Load up on the XIU, Ryan?

#76 Phylis on 11.08.20 at 8:10 am

#73 arse on 11.08.20 at 6:04 am
2020 is the weirdest year in my life. I think people will get too relaxed that that the Orange Man is gone, and as a result Covid 19 could get much worse.

————-
Well, super spreading events still ongoing and to come, election celebrations, thanksgiving, xmas, inauguration…. Go Joe.

#77 Penny Henny on 11.08.20 at 8:49 am

#61 Sail Away on 11.07.20 at 10:02 pm
#1 crowdedelevatorfartz on 11.07.20 at 12:15 pm

Bidens a winner but Crowdie’s chicken dinner… no sweep in the Senate.

See you in a month

————-

What? So both of you lost?

Naw- that’s bull. A proper bet is only one item- more than that turns into a legislative motion. Your guy won. Keep commenting.
//////////////

The bet was blue wave, that’s why I gave 2 to 1

#78 macduff on 11.08.20 at 9:30 am

#63 John in Mtl
I’m 96% in balanced and diversified portfolio (managed), but 4% in speculative gold stocks which could easily increase tenfold in the current climate. I feel this is a logical approach will limited downside.

#79 Stone on 11.08.20 at 9:32 am

#59 Russ on 11.07.20 at 9:34 pm
Stone on 11.07.20 at 8:16 pm

#45 Slim on 11.07.20 at 6:10 pm
Why is no one not investigating the attempts to sabotage delivery of the mail in ballots, by all the little Trumpsters? Interference with the US Postal Service is a federal crime.

———

Are ya feeling a bit naked? You do realize the cheque Trump sent you is going to bounce. No need to continue trying to make it look like you actually believe what you’re spewing. Instead, go try to cash in that cheque and be ready to be surprised.
============================

Hey Stoned,

Are you alright?
I read the Slim message as being on your side, may be a fellow TDS’r.

But really, WGAF (who gives a…) with American election trivia. A Canadian doesn’t need to connect with the drama. It’s okay to sit back and watch.

Cheers, Russ

———

I agree with your WGAF approach. My point is that all this paranoia about conspiracies is idiotic, including with the mail in ballots regardless whether it comes from either ideology. If it was a problem, Biden wouldn’t have won.

The USPS is like any other corporation. It relies on goodwill to retain its customers. I’m sure there are processes in place to deal with any employee who starts showing a pattern of irregular behaviour. It’s not in the interest of any corporation to retain anyone who would cause harm to its reputation.

Distractions. All these sowers of doubt are distractions. Eyes on the prize.

#80 MaryRichardson on 11.08.20 at 9:42 am

On another note, don’t Biden that US election. It is not a surprise what happened, just like don’t Bundy that book in married with children episode Bundy putting back the library book to not pay the decades long fine.

The media is toast, very little people believe you any more. I doubt this comment will get through as comments suppression and censoring is at an all time high.

#81 crossbordershopper on 11.08.20 at 9:50 am

still believe that a 3 to 4 percent div with a little inflation lift per year equals your long term goal of 6 to 7 percent a year is too low. weve all seen half decent div paying companies drop 20% and yes over time they recover, and you get your lunch money quarterly and over the long term you end up with the 6 to 7 assuming you dont pay a large amount of fee to people to manage it.
people should raise there expectations i think there too low, they pay for the volatility and are not reimbursed for it, and only end up with the 7 percent a year. sorry, thats not enough, people should get more return.

#82 justdeleteitifyoudontlikeit on 11.08.20 at 10:10 am

#69 BillyBob — “I have to admit it is really incredible how mention of Coronavirus has gone from saturation level to almost non-existent on – for only one example – CNN’s website.”

I don’t use CNN, but looking at the New York Times home page right now, I see:
– An Explanation for Some Covid-19 Deaths May Not Be Holding Up
-As Italy’s Eateries Closed Early, a Neighbor Became a Dinner Hot Spot
– Biden’s Team Prepares Plan to Fight Virus as Cases Surge
– A Double Whammy – This winter, the pandemic is expected to…
– There are nine key ways that outdoor dining will change New York City
– An era of social distancing may kill off the manicure.
– On Masks and Clinical Trials, Rand Paul’s Tweeting Is Just Plain Wrong

Plenty of coverage, both serious and somewhat fluffy, in places where serious people look for serious reporting. Still, it’s understandable that many media outlets might focus on the breaking outcome of an important story rather than an ongoing one which will still, alas, be with us tomorrow. They watch what people are clicking on, minute by minute, and give their audience what it wants. They’re selling eyeballs to advertisers. Who’s selling what you’re buying?

#83 Dharma Bum on 11.08.20 at 10:13 am

Dividends pay the bills, put food on the table, and buy the toys.
Sometimes the stocks are up, sometimes they’re down.
Who cares?
It doesn’t MATTER.
Income is excellent. Especially when taxed less than salary, and up to a point, not at all.
Buy dividend stocks for the income.
The stock prices, in the long run, take care of themselves.

Also:

MAMA!

(Make America Mediocre Again.)

When’s the recount????

#84 Tbone on 11.08.20 at 10:52 am

# 65 Ronaldo
You and I are on the same page .
I throw in some global equity and global small caps of the same fund family to keep it a bit more interesting.

#85 Karlhungus on 11.08.20 at 10:55 am

#83 Dharma

Dividends arent magic. Selling stocks creates the same effect for income.

#86 Diamond Dog on 11.08.20 at 11:58 am

Apologies Ryan, have to disagree with your outlook entirely. I see bankruptcies peaking again from November into March and while I don’t see oil prices going to zero like the haphazard event this spring, I don’t see strength in this sector either.

Why? Corona virus.

Media has been distracted with the election but the big story that is worsening is Corona. This “CNN” clip explains it best. Note, daily cases @ 100,000 a day x 365 days a year = 36.5 million reported cases annualized (non reported cases would likely be double this number):

https://www.youtube.com/watch?v=xaxNNnXxM0s

Where are we now in the U.S. and Canada and around the world? The U.S. had 132,000 cases on Friday & 126,000 on Saturday (up from 100,000 a week ago), while Canadian cases went from 500 or so to around 4,000 since early September. Our numbers are down from the U.S. by a third per capita, but that can change. Scrolling down to the daily charts on these links below flesh it out:

https://www.worldometers.info/coronavirus/country/us/

https://www.worldometers.info/coronavirus/country/canada/

https://www.worldometers.info/coronavirus/

To summarize, Europe is blowing up with daily charts rising everywhere with cases growing exponentially with no tops yet in sight. Some nations like the UK, Germany and France have been forced to shut down already and its early November. These are ugly numbers and bode ill for the world economy, never mind North America. We are no doubt in recession globally and will be into Q2 of next year as this virus continues to have it’s way.

What I’m trying to tell readers is if we think we’ve gotten past this thing, think again. It’s going to be an ugly winter, hospitals will be overwhelmed across North America (in a few provinces next year too, I should think) and this virus will turn deadly as it shifts from the young demographic to the old and winter herds everyone indoors exponentially increasing the viral loads of initial infection. (I’m thinking December and Jan will be gruesome)

I strongly feel that the exponentially increased viral loads of initial infection over winter leading to much higher fatalities, is grossly overlooked here. The initial viral load, (which quality masks in particular reduce in an airborne pandemic) if the initial virus count of infection is on the high side as is expected to be the case as people are herded indoors from winter, it will lead to a much more serious viral disease outcome. People will undoubtedly get sicker and deader. This means hospitalizations and fatalities will go up this winter, more inline with what we saw early on in this pandemic.

What, where are the fatality numbers, some say? There is a 3 to 5 week lag between initial reported cases reported deaths. Both daily case numbers and viral loads of infection are going up. Again, check the charts. Most daily chart numbers around the world were not alarming even 3 or 4 weeks ago, so give it time as death rates catch up to dailies and the young demographic with the highest number of case loads passes it on to the old and I will re-iterate, as hospitals become overwhelmed, the level of care will fall and as a consequence, morgues and crematoriums traffic will only grow higher.

In short, its a mess. We will see economic shut downs as hospitals become overwhelmed, no doubt about it as governments become forced to act as Europe is right now. On the money side, we will not see political action in the U.S. against Covid until Trump is gone (Jan 20th). There will be a personnel transition from there and the normal changing of the guard won’t be there as Trump predictably to be the fly in the ointment at every turn including the transition of power. We are likely looking at February before policy can roll out and March and April before we see impacts in numbers from policy changes. From April on, the numbers should fall as flu season passes and hopes of a vaccine materialize but this is still 5 months away! It’s pain between now and then, marked by bankruptcies and high unemployment. Why should we expect something different? The seeds have already been sown with failed U.S. pandemic policy.

Readers should keep in mind as well (will expand on this later this week), Canada was under heavy pressure to borrow as much money from the U.S. as possible during this pandemic. 2020 is an election year and the Trump presidency did all it could do strengthen the dollar to win re-election. It’s difficult to calculate how much extra money velocity or pennies on the dollar it makes for Canada to borrow its brains out from the U.S. through government loans and mortgages, but the pressure on Canadian governments to borrow from the U.S., to borrow more than Canadians needed, this pressure would have been quite high. And, it looks like the U.S. had its way.

Well, that is about to change. The election is over, our systems of credit must be near saturation and conditions will tighten because of it. Couple this with possible shutdowns, first in the U.S. as their cases per capita are much higher than ours, but I think here too, it really depends on government and citizen response. This pandemic has not been politicized here and Canadians should be extremely thankful for that so messaging is easier but in the U.S. its another story and it will be painful, hard times there (Trump era, what an epic fail). Just look at the growing daily numbers everywhere, the worst is yet to come.

#87 Shawn on 11.08.20 at 12:03 pm

I disagree. USD looks like it’s about to move higher on renewed political stability from BUYden. Oil is into significant overhead resistance going back at multiple points over 15 years. Oil could go back to $20.

The current political back drop in the US is ideal for growth stocks despite their already significant outperformance.

Banks will face more headwinds with low rates and pressure from fintech.

Dividends will be cut in many of the examples you have provided.

#88 Bill on 11.08.20 at 12:04 pm

Divvy stocks have their place. The oppertunity was to back up the truck to anything in March.
The best returns have come from my gold stock speculations. Most up 100-200% since March.
Interestingly enough some exploded to new highs EOW when Biden was announced…and that is very telling.
What a crooked election….the blue sweep predicted by the MSM was a joke as was it the last one 2016…MSM=garbage.
Shallow people think that all will be well with Biden as they dance in the street.
They blame Trump for problems down south with their cluless assessments, I pray for them. Sorry the political and financial ills started decades ago. To bad that the lions share of sheople are financially illiterate. Ill repost this as we are all in a black hole that ends badly. Eye popping #s. If and when bonds respond to the risks, lookout below.

https://thetrendletter.com/2020/09/26/the-elephant-in-the-room/

#89 Doug in London on 11.08.20 at 2:39 pm

Why would anyone buy overpriced tech stocks, some of which pay no dividends, when they could scoop up dirt cheap dividend paying stocks that pay a generous yield? And now the punch line, these stocks like oil companies, banks, pipeline companies, REITs, and telecom companies sell goods and services we all need.

#90 Tony on 11.08.20 at 3:22 pm

Re: #87 Shawn on 11.08.20 at 12:03 pm

The U.S. dollar will be roadkill with the DXY index retesting the 74 level. From what I heard many months ago if Biden won the election everyone would get $3,000 U.S. apiece come January 2021. I put a lot of money into gold and silver penny stocks on the Venture Exchange.

#91 Gabby Xenphels on 11.08.20 at 10:42 pm

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