CIBC analyst Ian de Verteuil wrote that the time is now for domestic income stocks in The “When” For Canadian High Dividend Stocks Is Now ,
“We have previously shown there has been “excess” funds flow into term deposits on bank balance sheets over the past two years. We estimate the excess funds in fixed income products in Canada (inclusive of money market and HISA products) at over $200 billion currently. With falling rates, it makes intuitive sense that some of this will reverse – but also reasonable to ask “when” will this occur? … We believe high dividend paying Canadian stocks have been a more “natural” traditional home for these funds. Dividends have tax advantages over interest income, and stocks have the benefit of dividend growth over time. Sectors such as REITs, Utilities, Telecoms and Financials have added appeal of better-than-average business and earnings stability. The relative yield of these stocks (when compared with 2-year government rates) is becoming increasingly attractive. We are now largely back above the zone which accelerated flow into term deposits, and if rates fall further as we expect, fund flows should reverse”
Outperform rated stocks in these dividend sectors include H&R REIT, Nexus Industrial REIT, Automotive Properties EIT, Granite REIT, Crombie REIT, PRO REIT, Dream industrial REIT, Primaris REIT, Northland Power Inc., Boralex Inc., Atco Ltd., Brookfield Renewable Partners, Transalta Corp., Enbridge inc., Altagas Ltd., Brookfield Infrastructure Partners, and Gibson Energy.