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McMurtry Investment Report – Portfolios (July 2017)
|Cash||Alterna Bank – High Interest Savings (1.9% current rate)||Alterna Bank – High Interest Savings (1.9% current rate)|
|EQ Bank – High Interest Savings ( 2.30% current rate)||EQ Bank – High Interest Savings ( 2.30% current rate)|
|Bonds||iShares XSB Short Term||iShares XSB Short Term|
|iShares XFR Floating Rate||iShares XFR Floating Rate|
|iShares CBO 1-5 Ladder Corp||iShares CBO 1-5 Ladder Corp|
|iShares CLF 1-5 Ladder Gov’t||iShares CLF 1-5 Ladder Gov’t|
|Preferreds||Security||Dividend Yield %||Security||Dividend Yield %|
|Enbridge Pfd V Enb.pr.V US||4.21||Enbridge Pfd V Enb.pr.V US||4.21|
|Horizons Active Mgt. Pfd HPR||4.00||Horizons Active Mgt. Pfd HPR||4.00|
|Common Stocks||Security||Dividend Yield %||Security||Dividend Yield %|
|Financials||Royal Bank RY||3.70||Royal Bank RY||3.70|
|TD TD||3.67||TD TD||3.67|
|Sun Life SLF||3.75||Sun Life SLF||3.75|
|JP Morgan JPM US||2.19||JP Morgan JPM US||2.19|
|Bank of America BAC US||1.24||Bank of America BAC US||1.24|
|Citibank C||0.96||Citibank C||0.96|
|Manulife MFC||3.37||Manulife MFC||3.37|
|T. Rowe Price TROW US||3.07||T. Rowe Price TROW US||3.07|
|iUnits US Regional Banks IAT US||1.49||iUnits US Regional Banks IAT US||1.49|
|Blackrock BLK US||2.37||Blackrock BLK US||2.37|
|Visa V US||0.70|
|First Data FD US||0.00|
|Energy||Suncor SU||3.38||Suncor SU||3.38|
|Freehold FRU||4.60||Freehold FRU||4.60|
|Whitecap WCP||3.02||Whitecap WCP||3.02|
|Torc TOG||4.73||Torc TOG||4.73|
|Pembina Pipe Lines PPL||4.75||Pembina Pipe Lines PPL||4.75|
|Inter Pipeline IPL||6.38||Centennial Resources CDEV US||0.00|
|Materials||Agnico Eagle AEM||0.91||Agnico Eagle AEM||0.91|
|Franco Nevada FN||1.28||Franco Nevada FN||1.28|
|Trevali Mining TV||0.00|
|Industrials||New Flyer Ind NFI||2.40||New Flyer Ind NFI||2.40|
|WSP Global WSP||2.79||WSP Global WSP||2.79|
|Canadian Pacific CP||1.08||Canadian Pacific CP||1.08|
|General Dynamics GD US||1.70||General Dynamics GD US||1.70|
|SNC Lavalin SNC||1.95||SNC Lavalin SNC||1.95|
|Apogee APOG US||0.99||Apogee APOG US||0.99|
|Consumer Discretionary||Home Depot HD US||2.32||Home Depot HD US||2.32|
|Sleep Canada ZZZ||1.60||Sleep Canada ZZZ||1.60|
|Stanley Black and Decker SWK US||1.65||Stanley Black and Decker SWK US||1.65|
|Canadian Tire CTC.A||1.76||Canadian Tire CTC.A||1.76|
|Telecom||BCE BCE||4.91||BCE BCE||4.91|
|Rogers B RCI.B||3.13||Rogers B RCI.B||3.13|
|Consumer Staples||Alimentation Couche Tard ATD.b||0.58||Alimentation Couche Tard ATD.b||0.58|
|Loblaws L||1.50||Loblaws L||1.50|
|Pepsico PEP US||2.79||Pepsico PEP US||2.79|
|Kraft Heinz KHC US||2.80||Kraft Heinz KHC US||2.80|
|Technology||Apple AAPL US||1.75||Apple AAPL US||1.75|
|Microsoft MSFT US||2.26||Microsoft MSFT US||2.26|
|Facebook FB US||0.00|
|Nvidia NVDA US||0.39|
|Alphabet GOOGL US||0.00|
|Utilities||Emera EMA||4.34||Emera EMA||4.34|
|Fortis FTS||3.51||Fortis FTS||3.51|
|Healthcare||AmerisourceBergen ABC US||1.54||AmerisourceBergen ABC US||1.54|
|Johnson & Johnson JNJ US||2.54||Johnson & Johnson JNJ US||2.54|
|Walgreen Boots WBA US||1.92||Walgreen Boots WBA US||1.92|
|Merck MRK||2.93||Merck MRK||2.93|
|CVS CVS US||2.49||CVS CVS US||2.49|
|US Healthcare iShares ETF IYH US||1.14||US Healthcare iShares ETF IYH US||1.14|
|Knight Therapeutics GUD||0.00|
|IBB Biotech ETF IBB US||0.21|
|Real Estate||Cdn Apt. REIT CAR.un||3.81||Cdn. Apt. REIT CAR.un||3.81|
|Chartwell REIT CSH.un||3.72||Chartwell REIT CSH.un||3.72|
|Pure Multi-family RUF.un||5.62||Pure Multi-family RUF.un||5.62|
|Pure Industrial AAR.un||4.53||Pure Industrial AAR.un||4.53|
|European Equity||BMO European ETF ZEQ||1.91||BMO European ETF ZEQ||1.91|
|Emerging Markets||Horizons Active Emerg. Mkts HAJ||1.89||Horizons Active Emerg. Mkts HAJ||1.89|
Investment Commentary July 2017
I am recommending a 5% reduction in cash for both portfolios with a corresponding 5% increase in Canadian preferreds through the Horizons Preferred ETF HPR. Rate reset preferreds are major beneficiaries of rising interest rates.
I am adding back EQ Bank’s High Interest Savings account that offers a yield of 2.3%. However please ensure that you have less than $100,000 invested in order for the CDIC insurance to provide complete reimbursement in case of any financial difficulties in the future. CDIC guarantees your capital plus any interest owing up to $100,000.
I remain overweight the 50/ 50 benchmark weight for the following equity sectors:
- High Tech
- Consumer Discretionary
I remain underweight:
- Real Estate
- Consumer Staples
I remain market weight Healthcare.
In the Energy area, I have materially lowered my exposure. The ongoing oversupply by the US shale producers and new production coming on from Libya has more than offset any production declines from OPEC.
I have increased my weight in both Financials and Technology. Over the past month there has been some sector rotation out of Technology into Financials. The latter group remains attractively valued and will benefit from rising rates and the steepening of the yield curve.
The high tech sector remains the fastest growing area of the economy and I would use any dips in share prices to increase your holdings.
Share prices in the healthcare sector have started to act much better recently resulting from the possible revision of Obamacare over the next six months. I am adding a new position in the US healthcare iShares ETF IYH. This ETF provides exposure to pharma and biotech, medical devices, pharmacy benefit and medical insurance companies.
In the Industrial sector, I am adding SNC to both portfolios. SNC offers exposure to the large infrastructure spending budget both in Canada and the US. The company has a strong balance sheet and offers rising earnings and cash flows with a reasonable valuation of 18 times forward earnings. It offers a solid dividend of 1.95%.
I am removing Linamar from the Consumer Discretionary sector. While the company’s market valuation on a PE basis remains inexpensive, there is a growing fear that US car sales have peaked. This factor combined with rising interest rates will not help car and auto part sales.
I am adding Emera to the Utilities sector. The company offers an attractive dividend of 4.34% that is expected to rise in the future. Corporate profit growth is expected to rebound nicely in 2018 propelled by the recent large US acquisition.
I am adding Pure Multi-Family to the REIT sector. Although it is a Canadian company, its apartment properties are located mainly in the Dallas/ Fort Worth area of the US. The REIT provides a Free Cash Flow yield of almost 11% and has rising revenues and operating and free cash flows.
McMurtry Investment Report – Sector Weights (July 2017)
|Equity Sector Weights (%)|
|Sector||My Weight||TSX Comp||S&P 500||50/50|
McMurtry Investment Report Asset Mix (July 2017)
|Asset Mix – Income and Growth Portfolios|