Last year, who would have thought 2021 would be such a great year? We paid the price of karma and 12 months later we are in the middle of a bear market. However, this is no ordinary bear market. Bearishness hurts many “investment hedges”.
- Bonds suffered as interest rates rose steadily and weren’t over yet
- Bitcoin suffered because it turned out to be nothing, but Tulip
- Gold suffered even though it was supposed to be an inflation hedge
Only one thing worked for 2022… oil and gas!
Do you regret not investing in oil? Not at all
I’ve been pretty vocal about not liking oil and gas stocks since 2013. I’m not saying it’s a bad investment. When it comes to investing, I would rather focus on the numbers. The numbers tell us that energy stocks make bad dividend growers. How many energy stocks show at least 10 years of dividend growth?
- Enbridge (ENB.TO)
- TC Energy (TRP.TO)
- Canadian Natural Resources (CNQ.TO)
- Imperial Oil (IMO.TO)
- Enterprise Product Partners LP (EPD)
- Magellan Midstream Partners LP (MMP)
- Chevron (CVX) and Exxon-Mobil (XOM) did not increase their dividends in 2020, but maintained consecutive increases in their ‘total annual dividend payments’.
do i miss someone? That’s 6 of the 116 companies in the DSR stock screener (8 of him if you want to include CVX and XOM). To be fair, some stocks trade on both markets, so there is some overlap. So 6-8% of all energy stocks are long-term dividend growth stocks can be said.
I obviously missed this opportunity, but I also avoided losing a lot of money between 2013 and 2020. Investing with confidence means missing opportunities. It also means you make mistakes. However, that belief allows us to not panic, make rational decisions, and follow a clear plan.
The complete podcast series on how to invest in 2023 is now available. Prepare your plans for the year so you can catch up.
Here are some great stock ideas for 2023:
Alimentation Couche-Tard (ATD.TO)
- Market cap: 61B
- Yield: 0.90%
- Revenue growth (5 years, annualized): 9.55%
- EPS growth (5 years, annualized): 19.95%
- Dividend growth rate (5 years, annualized): 18.75%
I can’t stress enough the admiration for the world’s second largest convenience store chain. Many people wonder how Couche-Tard will make money once we all drive electric cars. First, know that you are far from this scenario. It will be at least a decade before EVs reach the level where he surpasses ICE (internal combustion engine) vehicles. Second, it is already widespread in Norway, where his 14% of vehicles are electric. They have found success in this market by installing chargers in strategic locations and even by installing their own chargers in consumers’ homes. Third, 65% of Couche-Tard deals do not include gas sales. Two-thirds of Couche-Tard’s businesses are therefore 100% protected from the energy transition. Fourth, most of their profits come from convenience store sales. ATD focuses on improving the customer experience by adding products such as Fresh Food Fast (the company’s version of Healthy Fast Food!), cashier automation, and building a loyalty program.
In addition to organic growth vectors, Couche-Tard also enjoys a solid balance sheet. This means we can pull the trigger on future acquisitions. Management is disciplined and he doesn’t waste a dime on bad deals for growth.
Granite Reit (GRT.UN.TO)
- Market cap: 3B
- Yield: 4.65%
- Revenue growth (5 years, annualized): 12.00%
- EPS growth (5 years, annualized): 28.15%
- Dividend growth rate (5 years, annualized): 4.40%
Granite reported impressive results with a significant unit price drop (-28%) throughout 2022. Granite REIT reported a strong quarter with double-digit sales growth (+14%) and a 4.3% increase in his FFO per unit. GRT’s growth was primarily driven by new acquisitions and contractual rent adjustments. The REIT announced another 3% dividend increase and reported an AFFO payout rate of 80% for the quarter. With interest rates rising, many investors worry about the future of industrial real estate, but Granite continues to report excellent occupancy (99%) and a solid pipeline. Demand in this sector remains strong.
Another piece of evidence that the industry presents an opportunity right now is GIC (Singapore’s Sovereign Wealth Fund)’s 59 It’s a billion-dollar acquisition. This represents a 31% premium over the SMU price. The news boosted the valuations of all other Canadian industrial REITs.
Interestingly, Granite has similar market caps ($4.85 billion for Granite and $4.3 billion for Summit). Could it be an acquisition target in 2023?
Find out about the 6 companies that will kill 2023
The Dividend Stocks Rock annually compiles a list of stocks that are expected to outperform the member’s market. This year, we’ve reviewed 11 of those sectors and included our top picks for each. We decided to introduce three of them: finance, information technology, and utilities.
You can download 6 of the 2023 Top 23 here.
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