David Cockfield, managing director and portfolio manager at Northland Wealth Management
Focus: Canadian equities and ETFs

MARKET OUTLOOK

Equity markets are presently recovering from a significant market correction. Despite concerns about politics, interest rates, tariff wars and pending recessions, the reality of high employment, rising incomes, low inflation and good economic growth will likely drive future market action. Market corrections are a common occurrence in equity markets and should be viewed as such. Given the relatively low yields available in fixed-income markets, investors should take advantage of good-quality, high-dividend-paying stocks that have sold off in the recent corrections.

TOP PICKS

TD BANK (TD.TO)
Purchased in January at $67.96.

This is the second-largest Canadian bank with a focus on retail banking.  A major positive for the TD Bank is its significant and growing banking operations in the U.S.  With better growth potential and  recent results in the U.S., TD deserves a premium value.  The stock is attractive with a good yield of 3.96 per cent and a low historical price-to-earnings of 11.23.

BMO LOW VOLATILITY CANADIAN EQUITY ETF (ZLB.TO)
Purchased in Dec. 21, 2018 at $29.20.

This Canadian equity ETF is designed to provide investors exposure to a low-beta portfolio of large-cap Canadian stocks. The beta of a security measures its sensitivity to market movements: if the market is down, a low beta security will decline less. The underlying portfolio is rebalanced in June and reconstructed to reflect changes in beta ratings in December. Yield is 2.59 per cent, with a management expense of 0.39 per cent. 

BMO LOW VOLATILITY U.S. EQUITY ETF (ZLU.TO)
Purchased in January at $32.21.

This ETF provides exposure to a portfolio of large cap U.S. stocks with low sensitivity to market fluctuations (beta). Utilities, consumer staples, health care and consumer discretionary stocks make up 69 per cent of portfolio.  The portfolio is rebalanced yearly and reconstructed at year-end.  The expense ratio is a low 0.33 per cent and the yield is 2.48 per cent. 

PAST PICKS: DEC. 14, 2017

ISHARES S&P/TSX CAPPED COMP. INDEX ETF (XIC.TO)

• Then: $25.47
• Now: $23.75      
• Return: -7%
• Total return: -4%

NORBORD (OSB.TO)

• Then: $42.38
• Now: $38.94
• Return: -8%
• Total return: 4%

TD BANK (TD.TO)

• Then: $71.70
• Now: $68.83
• Return: -4%
• Total return: 0.4%

Total return average: 0.1%

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