BMO strategist Brian Belski expects volatility in the near term but remains more bullish than most on late 2022,
“We certainly remain bullish heading into year-end, we do believe the issues facing the market are unlikely to dissipate in the near term, and as such we expect this higher volatility backdrop to persist over the coming months. However, we believe this does NOT mean investors should position portfolios more defensively, but rather focus on areas of stability, value and income—three core characteristics of Canadian equities within global markets, according to our work. Overall, we believe Canadian investors should remain broadly more cyclical while focusing on areas with strong relative value and income growth potential … Yes, Dividend Growth and Value Can Diffuse Volatility. Our work shows, these characteristics can consistently outperform the market during periods of elevated and rising market volatility.”
Mr. Belski presented his dividend growth screen as the best volatility-combatting strategy which consists of “Dividend paying S&P/TSX stocks; free cash flow yield greater than the dividend yield; and NTM [next 12-month] P/E lower than the S&P/TSX”
The list is extremely long. “Outperform” rated stocks likely of most interest to Canadian investors include Allied Properties REIT, ARC Resources, Birchcliff Energy, CI Financial Corp., Canadian Imperial Bank of Commerce, Canadian Natural Resources Ltd., CT REIT, Cenovus Energy Inc., Enerplus Corp., Gildan Activewear Inc., Lundin Mining Corp., Mullen Group Ltd., Open Text Corp., Paramount Resources Ltd., Quebecor Inc., Stelco Holdings Inc., Suncor Energy Inc., Teck Resources Ltd. and West Fraser Timber Co. Ltd.