Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
There are seven new stocks in BMO strategist Brian Belski’s list of top Canadian dividend growth stocks.
The screening methodology involves “Dividend yield greater than 0, free cash flow yield greater than dividend yield; and dividend payout ratio less than the S&P/TSX Composite” .
The new stocks on the list are Cogeco Communications Inc., OceanGold Corp., Secure Energy Services Inc., Stantec Inc., Suncor Energy Inc., Toromont Industries Ltd. and Sleep Country Canada Holdings Inc.
The outperform rated companies on the remainder of the list are ARC Resources, Algoma Steel Group, Alimentation Couche-Tard, Boardwalk REIT, Birchcliff Energy, Boyd Group Services, CCL Industries, Crescent Point Energy, Constellation Software, Cenovus Energy, Dream Industrial REIT, BRP Inc., Enerplus Corp., Gildan Activewear, Hudbay Minerals, Intact Financial, Imperial Oil Ltd., Linamar Corp., Methanex, Nutrien Ltd., Pet Valu Holdings, Paramount Resources, Pason Systems, Parex Resources, Stelco Holdings, Tricon Residential, Spin Master Corp., Waste Connections Inc., Whitecap Resources, and West Fraser Timber Co.
“BMO Canadian dividend growth stock screen” – (table) Twitter
***
RBC real estate analyst Pammi Bir surveyed his sector and provided a list of top REIT picks,
“Our Outperform ratings include: AP, BEI, CAR, CSH, DIR, ERE, FCR, GRT, HOM, IIP, KMP, MI, MRG, REI, SRU, SVI. As concerns over access to liquidity have added another dimension to investor worry, our picks are largely anchored in subsectors where we expect superior operational resilience (multi-family, industrial, self-storage, & defensive retail). While sector valuations seem reasonable, we see improving confidence in private market values and credit availability as prerequisites for sentiment to build … Canadian REITs and REOCs have access to multiple sources of debt financing, with secured debt mostly sourced from large, well-capitalized, and highly regulated financial institutions, including banks and lifecos … On the whole, valuations look a little better than where we started the year. The sector’s trading at 21 per cent below NAV, well below historical parity and down slightly from the end of 2022. With private market cap rates rising in Q1/23, we acknowledge downside risks to NAVs remain. Still, the 80 bps gap between the sector’s 6.8-per-cent implied cap rate and our 6.0% average NAV cap rate already seems to be baking in a healthy dose of cap rate expansion and/or NOI [net operating income] erosion. On P/AFFO [price to adjusted funds from operations] (N12M), the current 16x multiple is slightly below the 10-year average.”
***
Most Canadians are aware that one of the main drivers of housing price growth has been a population that is growing far faster than homebuilding. The sheer scale of the problem, as detailed by National bank economist Stephan Marion, is still surprising,
“In March alone, the working age population expanded by 80,000 people. This brings the cumulative increase to 204,000 in the first quarter of 2023. As today’s Hot Chart shows, there is no precedent for a quarterly rise of this magnitude… Unfortunately, Canadian homebuilders are unable to keep up with this population surge. We estimate housing starts for Q1 2023 at only 57,000 units. At just 0.27, the ratio of housing starts to working-age population growth is the lowest on record and well below the its historical average of 0.61.”
“Hot Charts: Economics and Strategy” – National Bank Economics
***
Diversion: “Gruesome cache of severed hands is evidence of trophy-taking in ancient Egypt” – Ars Technica
Tweet of the Day: