Lorne SteinbergI find L.S. to be a sober, conservative money manager.
If you have ever had the misfortune of being on hold with any of our major wireless carriers in an effort to negotiate your new plan, you may note that, barring a brief teaser rate, you will end up with basically the same price regardless of the carrier. And how about our banking system? While most Americans have a plethora of banking options, Canadians are largely limited to the “Big 6.” Have you checked mortgage or deposit rates recently? Unsurprisingly, the lack of competition results in near identical rates across the board. The major reason for the lack of competition in telecom and banking is that regulations in both industries limit the ability of foreign competitors to enter the Canadian market. It is this lack of competition that creates the opportunity. As we often say, “We hate being customers of these companies, but we love being owners.” Canada is a growth nation, having seen its population grow by over a million last year – the fastest growth in decades. Protected oligopolies, such as banks and telcos, are some of the primary beneficiaries of this and are very well positioned going forward as a result. At current prices, the dividend yields of a number of Canadian companies are higher than we have seen in a long time. Here are some examples: Each of these companies has grown their earnings and dividends consistently over the years, and we anticipate this trend to continue. With dividends at these levels, investors do not need much in the way of share price appreciation to realize an excellent return.
BCE 7.6%, T 6.4, BNS 7.1, RY 4.7, TD 4.8 etc