Ryan Bushell, President & Portfolio Manager, Newhaven Asset Management
Focus: Canadian dividend stocks
Top picks: Brookfield Infrastructure, Aecon, BCE
MARKET OUTLOOK:
With the December rate cut from the Federal Reserve now behind us, markets likely coast into year end with a second straight year of significant gains.
Looking back to last year at this time, newly elected U.S. President Trump was only beginning to articulate the radically different trade policy that has unfolded over the past 12 months. It’s been an incredible year of economic upheaval, geopolitical conflict, and financial market performance. We also saw an unexpected political change at the top at home, and just nine months later our economic policy looks markedly different than at this time last year.
At the end of the day short term rates dropped on both sides of the border and that was likely the driving force behind strong equity market performance both at home and abroad.
As we look ahead to 2026, we must consider whether things are getting easier or harder at the margin as well as the starting point for valuations which is clearly higher than it was 12 months ago.
At Newhaven we remain cautiously positioned in businesses and assets that can withstand, and in some cases benefit, from a downdraft in equity market sentiment. We continue to like the equities we own for the long-term, despite our concerns about the concentration of equity market benchmarks in technology stocks.
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TOP PICKS:
Brookfield Infrastructure (BIP.UN TSX)
In a Tax Free Savings Account (TFSA) or Retirement Savings Plan (RSP) I really like Brookfield Infrastructure Units (BIP.UN). They are trading at a 25 per cent discount to the corporate share structure Brookfield Infrastructure Corp (BIPC) which was created in 2020. If you take out the dislocation in 2020 this is near the widest discount ever for the unit trust structure meaning that a person owning the units in an RSP or TFSA gets a 33 per cent higher yield owing the exact same company. And the underlying assets are all you’d ever want in terms of go forward themes including natural gas storage and transportation, utilities, electricity transmission and distribution, exposure to data centers, cell towers, ports, toll roads and more. The dividend has been growing at a steady five per cent annual pace and we expect that to continue.
Aecon (ARE TSX)
With Aecon breaking out to new highs it might be surprising to some to see this on my list. We have been strong supporters of the company since 2019 and have endured some painful times. The company has never waivered on its dividend and kept trudging through a difficult environment for project delivery brought on largely by the supply chain and labour disruptions resulting from the pandemic.
After finally delivering the two major Toronto LRT projects the company is now running downhill with a thriving nuclear franchise, targeted mergers and acquisiton (M&A) in the U.S., record backlog of government projects now with more favourable terms and money flowing out of richly valued ethics and compliance (E&C) firms due to AI related jitters. We already own our positions at much lower levels but think the company is poised for predictable ongoing growth ahead.
Bell Canada Enterprises (BCE TSX)
Although not terribly exciting Bell Canada Enterprises BCE is showing signs of improvement from a sentiment perspective. The company still has a 5.5 per cent dividend yield after the cut and money is poised to rotate back from Quebecor and Rogers if/when BCE can show tangible results at Ziply.
We recently met with management and came away satisfied that they have a good sense of the levers they need to pull to get the company operating better in its core business.
| Disclosure: | Personal | Family | Client Portfolios |
|---|---|---|---|
| BIP.UN TSX | Y | Y | Y |
| ARE TSX | Y | Y | Y |
| BCE TSX | Y | Y | Y |
PAST PICKS: FEB. 4, 2025
Pembina Pipeline (PPL TSX)
Then: $52.09
Now: $53.95
Return: 4%
Total Return: 8%
Freehold Royalties (FRU TSX)
Then: $12.65
Now: $15.22
Return: 20%
Total Return: 27%
Altagas (ALA TSX)
Then: $33.89
Now: $41.58
Return: 23%
Total Return: 25%
Total Return Average: 20%
| Disclosure: | Personal | Family | Client Portfolios |
|---|---|---|---|
| PPL TSX | Y | Y | Y |
| FRU TSX | Y | Y | Y |
| ALA TSX | Y | Y | Y |
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