Darren Sissons, Partner & Portfolio Manager, Campbell, Lee & Ross Investment Management
Focus: Global and technology stocks
Top Picks: Franco-Nevada, Microsoft, Munich Reinsurance
MARKET OUTLOOK:
Heightened volatility, inflation spikes, profit-taking, and sector rotation have been the dominant thematics in 2026 closely followed by the increased risk of rising interest rates and a stronger U.S. dollar.
Peace in the Strait of Hormuz changes the forward-looking view on energy. Lower oil prices telegraph better inflation trends ahead. Price increases are typically sticky so broad price reductions across industries posting an oil price decline are unlikely. However, the rate of inflation should moderate lower.
The U.S. economy continues performing well. However, cracks are appearing as recent labour market trends suggested job creation slowed, the participation rate declined, and wage growth is only marginally positive. Further, expectations for higher U.S. interest rates remain elevated. Higher U.S. rates will positively impact American investments held by Canadians. Equally so, a stronger U.S. dollar is typically positive for Canadian exports but will dampen U.S. exports and U.S. growth.
In 2026, limited exposure to artificial intelligence (AI) and energy was a costly mistake. While the former thematic continues driving portfolio gains, powering the U.S. economy, and broader equity markets, energy gains have moderated lower. Noticeably, investors have booked profits on energy gains since peak share prices in late March and gradually deployed cash reserves into sectors offering inexpensively priced growth and to some degree defensive attributes.
We suggest against increasing oil exposure here and selective profit taking on AI names. Health care and medical technology are attractively priced. Software and data-driven industrial companies unjustly impacted by the AI thematic are also attractively priced.
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TOP PICKS:
Franco-Nevada (FNV TSX)
A progressive dividend currently yielding 0.85 per cent. The company owns a portfolio of royalties on precious metals, base metals and more recently oil and natural gas. The absence of debt coupled with a large war chest and sizable untapped credit lines enables timely execution on new investment opportunities and facilitates a highly accretive buyer of last resort strategy during commodity cycle bottoms.
In recent years management have built a robust pipeline of new projects beginning and or expanding commercial operations including but not limited to Côté Gold, Porcupine, Valentine Gold, Greenstone and the expected resumption of Cobre Panama in the second half of 2026. These projects will collectively drive a step up in forward looking financial performance.
From a shareholder perspective the dividend has risen over the five and ten-year periods at an average annual growth rate of 29.0 per cent and 44.0 per cent, respectively. The ten-year annualized total return is 12.6 per cent.
Microsoft (MSFT NASDAQ)
A progressive dividend currently yielding 0.95 per cent. The company represents an interesting hedge amid the current artificial intelligence mania. While it has been dragged lower on the broader software sector’s AI induced weakness, the multiple compression presents an attractive entry point as the forward price-to-earnings trades at a steep 36 per cent discount to its five-year historical average of 33 times.
Management is right sizing the expense base as evidenced by the recent strategic job cuts, which will also positively impact future earnings. Additionally, its valuation multiples do not fully reflect Microsoft’s sizable OpenAI investment, which when commercialized is projected to deliver a substantial step up in return metrics including return on investment and earnings per share.
The dividend in Canadian dollars grew at an annualized rate over ten years of 27 per cent. The ten-year annualized Canadian dollars total return including the 2026 sell down is an accretive 23.95 per cent.
Munich Reinsurance (MUV2 Xetra)
A progressive dividend currently yielding 4.80 per cent. 2025 was a relatively light catastrophic loss year, which helped improved balance sheet strength and supported the Moody’s credit rating upgrade on June 30, 2026. Additionally, first quarter earnings rose 57 per cent on lower losses year over year.
The diversified, best-of-breed, insurance behemoth has begun pivoting into AI to assist underwriting and claims management. This strategic pivot will lower costs and improve risk management.
The investor algorithm combines an annual dividend increase coupled with a buyback – i.e., the dividend grew in Canadian dollars at an annual average rate of 11 per cent for a decade and the buyback average two per cent per annum over the same period.
The Canadian dollars total return over the same ten-year period averaged 18.20 per cent per annum.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| FNV TSX | Y | Y | Y |
| MSFT NASDAQ | Y | Y | Y |
| MUV2 Xetra | Y | Y | Y |
PAST PICKS: AUG. 26, 2025
Novo Nordisk (NVO NYSE)
Then: US$55.34
Now: US$48.89
Return: -12%
Total Return: -9%
Tourmaline Oil (TOU TSX)
Then: $57.98
Now: $61.19
Return: 6%
Total Return: 9%
Visa (V NYSE)
Then: US$351.18
Now: US$346.50
Return: -1%
Total Return: -1%
Total Return Average: 0%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| NVO NYSE | N | N | N |
| TOU TSX | Y | Y | Y |
| V NYSE | Y | Y | Y |
