Norman Levine, managing director of Portfolio Management Corp
Focus: North American large caps

MARKET OUTLOOK

We’re at a time in the market where it’s easier to identify what I might want to sell in my portfolio than what I might want to add to the portfolio. Bond yields have plummeted (many countries now have negative yield bonds) and yield curves are either inverted or almost inverted. The bond market is usually smarter than the stock market in its forecasting ability.

Global growth and manufacturing are either slowing or are negative and yet stocks remain fairly high. I think it’s a good time to be more cautious, increase the cash in your portfolios, become somewhat more defensive in what you own and lower your expectations for returns over the next year or two.

TOP PICKS

BROOKFIELD PROPERTY PARTNERS (BPY_u.TO)
Bought on July 19, 2019 at $24.63.

Brookfield Property is a diversified global real estate company that operates across many sectors. It owns, operates and develops one of the largest portfolios of office, retail, multifamily, industrial and hospitality among others. Last year it completed the purchase of shopping centre giant general growth properties in the U.S. and there is some investor concern regarding Brookfield’s ability to turn the assets around and how long it will take. Also, it was recently taken out of the MSCI indexes due to lower liquidity than what they require. These moves have weighed on the stock, which we believe has presented an excellent opportunity. The stock trades at a discount to its net asset value and its current distribution yield is 6.9 per cent.

BCE (BCE.TO)

We have owned BCE since the Ontario Teachers’ Pension Fund abandoned its takeover of the company and continue to buy it for new clients. BCE is one of Canada’s largest communications and media companies. It operates both wireline and wireless telecom operations as well as the largest television and radio group of networks in Canada. Slow and steady growth is its mantra, which is well suited for the current investment environment. It has a history of increasing dividends and earnings regularly, which we expect it to continue. The stock is attractive due to its dividend yield of 5.2 per cent as low and declining interest rates attract investors to companies with high yields and growing dividends. The stock yields more than its bonds, by a lot, and around what its preferred shares yield and the dividend is increased regularly.

EMERA (EMA.TO)

We have owned Emera for a very long time and continue to buy it for new clients. Emera is a Canadian energy generator and distributor in both Canada and the U.S. It generates electricity and distributes both electricity and natural gas to end users. Its main markets are Nova Scotia, Maine, Florida, New Mexico and the Caribbean. The Florida has an excellent growth outlook. Their business is not exciting but both earnings and dividends grow at a steady rate each year. In these times of expensive equities and low and declining interest rates, Emera is a good stock to own as it benefits from lower interest rates and investors who are searching for yield will continue to be attracted to the stock. Currently, the stock yields 4.2 per cent.

PAST PICKS: AUG. 14, 2018

BRIGHTHOUSE FINANCIAL (BNF.O)

• Then: $41.09
• Now: $34.27
• Return: -17%
• Total return: -17%

SANOFI (SNY.N)

• Then: $41.30
• Now: $42.24
• Return: 2%
• Total return: 7%

STANTEC (STN.TO)

• Then: $33.95
• Now: $28.52
• Return: -16%
• Total return: -14%

Total return average: -8%

WEBSITE: portfoliomanagement.ca
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