BMO chief strategist Brian Belski has turned more cautious on markets and continues to recommend domestic dividend growth stocks to combat inflation pressure and volatility,
“To be clear, we remain bullish on both Canadian and US equities; however, we believe price swings and bouts of volatility will become more frequent in the coming months and quarters as the market struggles with rising interest rates, inflationary pressures, supply chain issues, and geo-political tensions. As such, we believe investors should look toward dividend growth strategies as a potential way to navigate these risks while maintaining a more bullish outlook and without tilting to more of a defensive sector positioning. Yes, while rising inflation and interest rates certainly pose risks to more simplistic yield strategies, our work shows dividend growth can outperform in these environments. In fact, companies that consistently grow their dividends above the market often produce the strongest relative returns when inflation is above 4% and can outperform 3, 6, and 12 months after the initial US Federal Reserve rate hike. Furthermore, these strategies are not pure defensive positioning – after all, dividend growth traditionally outperforms when the market is posting double-digit gains and during periods of heightened volatility.”
Mr. Belski provided an extended list of 25 dividend growing stocks for investors to research further. Notable names include, in alphabetical order, Artis REIT, Brookfield Business Partners, Cenovus Energy Inc., Dollarama Inc., Granite REIT, Interrent REIT, Methanex Corp., Stelco Holdings Inc., Tourmaline Oil Corp., Thomson Reuters and West Fraser Timber