David Baskin, president of Baskin Wealth Management
Focus: North American large caps

MARKET OUTLOOK

The market outlook for the rest of 2020 will depend on the answer to three important questions:  whether the ;U.S. Congress will extend the benefit package to persons affected by the COVID pandemic, who will win the Presidential election; and whether and when a vaccine will be found for COVID. Nobody knows the answers to any of these questions, although the first two are likely to be answered within the next 60 days. The momentum-driven express train that drove technology stocks to previously unimagined heights seems to have slowed down, and there may be nascent signs of a significant rotation into less volatile dividend paying blue chips. Much will depend on whether, after the last two days, retail investors will once again “buy the dip.”

Under these circumstances we would not be surprised to see a directionless market, at least until the U.S. election. As always, we believe that large discrepancies between price and value will always, eventually, be decided in favour of value.

TOP PICKS

NATIONAL BANK (NA TSX)

National Bank has done a terrific job of managing through the COVID crisis. While all of the Canadian banks have done better than expected, National has maintained its profitability even while taking substantial credit provisions. It has a solid balance sheet, a dividend yield of 3.9 per cent and a history of increased dividends. This is a solid, conservative pick for income seekers.

COSTCO (COST NASD)

Costco stands apart from other big box retailers because of its membership model, wide range of merchandise and pricing power on in-house brands. While most retail chains have suffered during the COVID crisis, Costco has managed to maintain both its revenue and net income. Not a cheap stock by most measures, with a fairly meagre dividend just under 1 per cent, Costco has elements of growth and stability, making it a good core holding.

BCE (BCE TSX)

BCE Inc. is actively involved in both the fiber optic to the home (last mile) rollout in order to bring very high-speed, high-bandwidth internet access to households, and the evolution to next generation 5G networks. While landline telephones are disappearing, Canadian businesses and individuals are demanding and using more powerful, faster and more data-intensive connected devices all the time. With its deeply imbedded positon Bell will benefit from these changes and continue to increase its dividend, already at 6 per cent.

PAST PICKS: OCTOBER 4, 2019

Brookfield Infrastructure Partners (BIP-U TSX)

• Then: $64.49
• Now: $59.97
• Return: 3%
• Total return: 7%

American Tower (AMT NYSE)

• Then: $225.93
• Now: $253.88
• Return: 12%
• Total Return: 14%

Vail Resorts (MTN NYSE)

• Then: $230.95
• Now: $213.34
• Return: -8%
• Total Return: -5%

Total Return Average: 5%