Christine Poole, chief executive officer and managing director at GlobeInvest Capital Management

FOCUS: North American large-cap stocks

MARKET OUTLOOK:

Financial markets are facing numerous headwinds including rising interest rates, elevated inflation, geopolitical turmoil and restrictive monetary policy by central banks around the world. The decline in the broad equity indices this year reflects many of these concerns.

Good economic news, especially in the jobs market, is now being interpreted as bad news since it provides fodder for the U.S. Federal Reserve to continue to raise interest rates to combat inflation. These higher rates, in turn, would continue to put pressure on equity valuations. Thus, a sustainable recovery in equity markets will not occur until the Fed’s monetary tightening is put on hold. However, that will not occur until the Fed is satisfied price stability has been restored. 

Economic cycles are inevitable, but the timing is much less so. Macroeconomic forecasting is highly unreliable. We prefer to analyze incoming data, interpret the possible impacts on companies in our client portfolios and respond only if we believe there will be long-term consequences.

On the positive side of things, volatility will create opportunities to invest in companies well-positioned to benefit from secular growth trends. We continue to adhere to a disciplined process of staying invested in financially strong, reasonably priced growth and income stocks. We believe that over the long-term this will result in our clients continuing to build wealth through the power of compounding. 

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TOP PICKS:

Canadian Apartment Properties REIT (CAR.UN TSX)

The company owns and manages multi-unit residential rental properties, including apartments, townhomes and manufactured housing communities, principally located in and near urban centers across Canada. The fundamentals in the Canadian apartment rental market remain positive, supported by the strong influx of immigration over the next few years. CAR.UN offers an income yield of 3.5 per cent.

Fortis (FTS TSX)

Fortis is a North American electric and gas utility company, generating its cash flow primarily from regulated assets with over half its revenues from the U.S. Fortis is a stable cash flow generator, posting 49 consecutive years of annual dividend increases. Supported by a backlog of low-risk, regulated projects and cleaner energy initiatives, Fortis has affirmed an average annual dividend growth of six per cent through 2025.  Fortis offers a yield of 4.5 per cent.

Mondelez (MDLZ NASD)

Mondelez is a global snacking company with top-category market shares in biscuits, chocolate and candy. Its portfolio of leading global brands includes Oreo, beVita, Ritz, Cadbury and Toblerone. With about 35 per cent of its revenues from emerging markets, Mondelez is well-positioned to benefit from the growing middle-class population in these regions.  Mondelez provides investors with a dividend yield of 2.7 per cent.