Canadian dividends soothe global troubles

Posted on: February 24, 2011 in: Uncategorized with 0 comments

Cars torched. Molotovs hurled. Decrepit dictators toppled. For the PDF, click here. The ground shook far beyond the desert epicentre. For investors, all good reason to seek the security of Canadian dividends.
In December, we bought iShares TSX REIT Index ETF (XRE) for our clients. Its 5% dividend yield and steady appreciation returned about 29% over the last year.
With the Canadian economy in good shape and financial conditions stable, we expect this ETF will have another good year, though its unlikely to match 2010.
For an ETF, XRE is fairly concentrated – not something we like as a general rule. But its holdings are quality names: Riocan is about 25% of the fund. H&R, Cdn Real Estate and Calloway make up another 40%. Chartwell (5%) is thriving says a colleague who has seen its big Mississauga location. Cap Reit (6%) is enjoying a landlord’s market. Trading in XRE is light (see below) but enough to support most investors.
Within our portfolios, as market cycles mature, we gradually adjust the strategic holdings, first over-weighting safer, dividend-paying equities and later, to bonds. XRE is part of this move. So is the US Mega-Cap ETF (OEF) which we also bought in Dec.
This shift will continue over the coming year, regardless of, or perhaps because of, the shaking sands.

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