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Pegasus Resources Begins Follow-Up Exploration At Golden, BC Properties

Pegasus Resources (TSXV: PEGA) has begun a work program on its high priority properties. The program is focused on the
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This article was originally published by The Deep Dive

Pegasus Resources (TSXV: PEGA) has begun a work program on its high priority properties. The program is focused on the firms Golden projects, located in British Columbia, that is comprised of a total of three separate copper-gold properties.

Exploration work has begun on the firms Gold Mountain, Punch Bowl, and Vertebrae Ridge properties. Exploration work is being conducted as a follow-up to the program conducted by the company last year, wherein highlights included samples of 6,670 g/t silver and 7.44 g/t gold at Gold Mountain, as well as 35.5% copper and 360 g/t silver in samples collected at Vertebrae Ridge. The strong results at the latter last year also lead the company to nearly double the property in size via staking.

The program slated for this year will focus on follow-up mapping and sampling of the properties, as well as a small drill program. Drilling is to take place via small-diameter backpack drilling as Pegasus works to further prove out its three Golden properties.

“This is an exciting time for Pegasus shareholders. The Pegasus geological team has advanced our Golden Project to the point we now have many high priority areas to focus our mapping, sampling and drilling efforts on.”

Charles Desjardins, CEO

Pegasus Resources last traded at $0.04 on the TSX Venture.


FULL DISCLOSURE: Pegasus Resources is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Pegasus Resources on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.

The post Pegasus Resources Begins Follow-Up Exploration At Golden, BC Properties appeared first on the deep dive.





Author: Jay Lutz

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6 Canadian Penny Stocks That May Take off in November 2021

If you’re looking for some of the hottest Canadian penny stocks on the market today, you’ve come to the right place. We’ve got 6 of the best penny stocks…

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If you’re looking for some of the hottest Canadian penny stocks on the market today, you’ve come to the right place. We’ve got 6 of the best penny stocks to be looking at in 2021. Continue reading to find out what they are!

What is the definition of a penny stock?

The definition of a penny stock is quite broad. You’ll get varying answers from different investors, but the general consensus is that a penny stock is a stock that trades below $5.

However, it’s important to note that a lot of popular stocks, ones that don’t have the volatility or market capitalization of a penny stock trade below $5. So here is a few more guidelines to help you narrow down your search:

  • Penny stocks are typically smaller companies, and their shares are often illiquid (not easy to buy and sell)
  • They have a small following, and typically are not covered by major analysts
  • They usually trade OTC (over-the-counter, more on this later) or through pink sheets.

Canadians often confuse the term small-cap stock with penny stock. Unlike numerous small-cap stocks, you won’t find penny stocks trading on the TSX.

This is often because they are too small to meet the requirements needed to list on major exchanges, and don’t file the proper paperwork needed.

How do I buy penny stocks in Canada?

The first box you need to check off if you want to invest in penny stocks is the ability to handle significant volatility. If you don’t think you can stomach the risk, simply head to our how to buy stocks page to get started investing in the major exchanges.

What I like to tell investors looking to start trading the pink sheets, is to set aside an amount you would be completely comfortable losing. I wouldn’t recommend anyone invest their whole portfolio into penny stocks. But a designated amount, say 10% of your total portfolio, is completely reasonable.

Once you’ve allocated some capital towards what I like to call “fun investing”, you’ll need a brokerage account.

If you already have one, you’re ahead of the game. If not, feel free to check out our Questrade review. In my opinion, they are the best brokerage to start with if you’re looking to invest in penny stocks.

Take advantage of our exclusive offer for $50 in free trades with Questrade today.

Keep in mind, most brokerages charge more than their standard commission rates to buy penny stocks.

This is simply due to the fact that the stocks are traded over-the-counter, which is a little bit different than processing a transaction on a normal exchange.

Is it bad to invest in penny stocks?

If you’ve developed the proper strategy no, it isn’t bad to invest in penny stocks.

Where people go wrong, is investing money that they simply can’t afford to lose, and in the end it puts them in a very difficult position both emotionally and financially.

Penny stocks are, in the end, a gamble. We don’t have enough fundamental research to form any sort of concrete conclusion about the company’s future. So, our opinion is that you should be purchasing penny stocks with money you would be completely comfortable taking to a casino.

Why are penny stocks so cheap?

Penny stocks are often companies that do not meet the requirements or have the funding to list on major exchanges. As such, they typically have low market capitalizations and less stringent requirements.

One requirement to list on major exchanges is a higher share price. With penny stocks, there is no minimum and as such, stocks can trade extremely cheap, sometimes in fractions of a penny. The key to judging a size of a company is not its share price however, but it’s market cap. This is a very important concept.

Can you get rich off penny stocks?

It is possible to become rich investing in penny stocks yes. But, it’s very important you understand that for every success story, someone striking it rich and retiring early off a penny stock, there is a dozen, if not more, disasters of people risking way more than they were comfortable with and losing it all.

You are more likely to go broke than strike it rich with penny stocks. So, keep this in mind and invest solid, blue-chip stocks with the majority of your portfolio and spend expendable capital if you wish on Canadian penny stocks.

Can you buy penny stocks on Wealthsimple?

Unfortunately with a brokerage like Wealthsimple Trade, you won’t be able to buy Canadian Penny stocks. Why?

Well, when companies aren’t listed on a normal exchange like the NYSE,NASDAQ or TSX, they are traded via a broker-dealer network. Transactions take place via a bulletin board (the OTCBB) and Pink Sheet listing services.

These broker-dealer networks communicate with each other and act as market makers. They will locate shares available for purchase or sale, along with negotiate a price for a fee.

Although most of the stocks trading over-the-counter cannot make it on the major exchanges due to regulations, they still need to meet requirements to trade OTC.

It’s not only penny stocks that trade over-the-counter either. For example, companies may also issue bonds over-the-counter.

If you want to find a brokerage that will let you trade Canadian penny stocks, you’ll need to stick to one that deals with OTC transitions like Questrade.

Tips when buying penny stocks

Before you get started, I’m going to drop you a few quick pointers you will need to be successful with buying penny stocks here in Canada. This is by no means a complete list, however I feel they are some of the most, if not the most important things you need to know so you don’t lose your money.

  • When buying penny stocks, be aware that smaller sized entities may not be required to file documents with the Securities and Exchange Commission (SEC), something that bigger companies are required to do. This makes determining the financial health of a company nearly impossible, which is often why purchasing penny stocks is often thought of as nothing more than a gamble.
  • In order to reduce your risk, try investing in companies listed on the OTCQX or OTCQB exchanges. These are essentially the top and middle tiers in terms of penny stocks, and companies listed on these exchanges will more than likely have accurate financial information, and will file it in a timely manner.
  • If you’re looking for some of the highest returns, albeit highest risk, the OTC Pink is the lowest tier of penny stocks in terms of financial information provided. These stocks are the most volatile, so they bring with them highest potential profitability. Keep in mind though, the higher the reward, the higher the risk.
  • There are a ton of penny stocks out there, and I would highly suggest using a screener to identify and narrow down your potential list of suitable companies.
  • Knowledge in technical analysis is absolutely crucial when trading penny stocks. Because limited or inaccurate financial information is available to most investors, fundamental analysis almost plays no part in picking stocks.
  • Analyze the management team. More than anything, they will be responsible for the inevitable failure or success of the company. With startups in particular, there will be a lot of key decisions made by the management team that can make or break an over-the-counter company.

FP Newspapers (TSXV:FP)

Hot Penny Stocks On The TSX - FP Newspapers

Speaking of terrible liquidity, you’ll want to be careful trading Canadian penny stock FP Newspapers (TSXV:FP) shares. This $0.63 stock sometimes goes a whole day without trading and has average daily trading volume of just a few thousand shares.

I’m the first to admit a company that owns 49% of the distributable cash of several newspapers in Manitoba – most notably The Winnipeg Free Press – doesn’t sound like a very exciting penny stock opportunity in 2021. But this stock is insanely cheap, and it seems to be turning a corner.

It earned approximately $0.32 per share in 2020, while shares trade for less than 2x that much. It’ll get a nice journalism tax break from the Canadian government in 2021, too.

It also could sell its headquarters in Winnipeg for a nice gain as well. Shares could see another boost when an important loan gets extended.

The stock could also pay a substantial dividend in a year or two once it starts to earn a little more money and it gets its balance sheet more under control. If this happens, you’ll be very happy you got in today.

Kodiak Copper (TSXV:KDK)

Kodiak Copper Stock

 

Kodiak Copper (TSXV:KDK) is a newer player on this list of top Canadian penny stocks primarily because of the rising price of copper.

If you haven’t been paying attention, the price of copper has launched over the last year, going from lows of $2.10 in 2020 to touching highs of $3.70 just recently in 2021. Obviously, with this company being essentially a copper pure-play, it stands to benefit from this increase in price.

In fact, in September of 2020, resource giant Teck Resources invested $8 million into Kodiak Copper, representing a 9.9% stake in the company, and showing strong signs of confidence and outlook for the junior exploration company moving forward.

The company generates no revenue and is largely a play on its exploration efforts and asset base which is located in British Columbia, Arizona and Nunavut.

The company actually recently went through a transition, as it changed its name from Dunnedin Ventures to Kodiak Copper at the start of 2020, and is probably one of the higher risk plays on this list. However, there’s always large potential in exploration companies in the very early stages. Just be wise, and invest with expendable capital.

Namesilo Technologies (CSE:URL)

Top Canadian Penny stocks - Namesilo

 

Namesilo Technologies (CSE:URL) is an internet services company in Canada that registers domain names, provides hosting, offers email services, and provides various other needs for the owners of websites.

In 2021, having your own website is imperative. Customers don’t bother picking up the phone if they have a question or concern; they’re just going to go straight to your website. If you don’t have a digital advertising strategy, good luck.

Namesilo is delivering blistering growth of late, more than doubling its top line on a year-over-year basis in 2019. Net income before taxes, meanwhile, grew more than 1,000% compared to the same period last year. Profit margins expanded as well, and the company reported strong customer retention rates.

The question is whether Namesilo can continue its blistering growth. It should benefit from new businesses (and individuals) becoming serious about building an online presence, as well as taking customers from competitors. Its focus on giving great deals and providing excellent service is a winning combination.

And at just $0.25 per share, Namesilo certainly qualifies as a penny stock. The stock only has a market cap of just under $23 million, so big-time investors might struggle with its lack of liquidity.

Fobi AI (Formerly Loop Insights) (TSXV:MTRX)

Loop Insights Logo

 

Fobi AI (TSXV:MTRX) has surged in value recently, but prior to this the company had a market cap of just over $40 million. It now sits at just under $190 million, but I’d still firmly place this company in penny stock territory.

Fobi AI, which recently changed its name from Loop Insights, provides retail and marketing solutions for digital and physical landscapes. They’re primarily situated in the AI sector, and the company’s primary function is to enable brick and mortar companies to analyze critical customer data, including customer spending habits and trends.

The company works in the casino, sports, hospitality, retail and education sectors and has signed multiple critical contracts with some major players here in Canada, including Telus, Amazon and Shopify. Although the company does not generate any revenue at the time of writing, this is still a company you’ll want to keep a close eye on moving forward.

As of right now, it’s very difficult to value this company considering it has no form of revenue generation or any sort of earnings. And because of this, we can expect the company to be, like many Canadian penny stocks, extremely volatile around earnings time and on news releases. There is a lot of speculation and forward earnings priced in to Loop’s price right now, so we’d stress extreme caution if you’re considering taking a position.

Athabasca Oil (TSX:ATH)

Canadian Penny Stocks - Athabasca Oil

Athabasca Oil (TSX:ATH) is a classic penny stock conundrum. It has huge upside potential, but there’s also a real possibility the company could go bankrupt. It’s almost like flipping a coin, except if you win, you’ll likely do far better than just doubling your money.

The company has light oil production in both the Motney and Duvernay fields in Alberta Canada, as well as heavy oil production near Fort McMurray. The heavy oil assets have a long reserve life, but the company isn’t making much from any of its production because of low oil prices.

Athabasca projects it’ll start earning free cash flow in the next couple of years, but in the meantime, it’s forced to spend approximately $125 million each year on sustaining capital. It has cash on the balance sheet, but it must also contend with refinancing some US$450 million worth of debt coming due in 2022.

You could make a lot of money if oil recovers and Athabasca Oil shares shoot higher. But this $0.22 stock is cheap for a reason. You’re taking some significant risk buying today, especially with the demand in oil plummeting due to COVID-19.

However, a quick recovery in the industry could lead to a quick recovery in this stocks share price as well. Prior to COVID-19, Athabasca’s share price sat in the low $0.50 range.

Redishred (TSXV:KUT)

Top Canadian Penny Stocks - Redishred

One of our favorite Canadian penny stocks is Redishred Capital (TSXV:KUT), which owns and operates the Proshred brand.

Proshred has two separate business models – it both owns mobile paper shredding trucks and it franchises out locations to interested franchisees. The company has either corporate or franchised operations in 40 different U.S. cities.

The mobile paper shredding model has a few interesting advantages. It allows Redishred to easily acquire competitors and then rebrand them. It’s more secure – and convenient — than bringing documents to a central location. And the multi-city business model allows brand recognition in an industry that’s currently very fragmented.

It’s well poised to keep growing, thanks to its clean balance sheet with almost zero debt. Top managers are major shareholders with an ownership stake of more than 40% of the company.

And unlike many penny stocks, this company generates plenty of cash flow. Remember, this company has a share price of $0.61 and a market cap of just over $48 million. It doesn’t take much to really move the bottom line.

Redishred is one of our top penny stock picks in Canada because it’s in a good business with great growth potential. It’s the kind of stock you’ll want to stick in your portfolio and own for a very long time.

However as with any other penny stock, you’ll want to keep a close eye on it incase anything materially changes.












Author: Dan Kent

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11 Top Blue Chip Canadian Stocks to Buy in November 2021

When investors think of blue chip Canadian stocks, they often think of some of the best Canadian dividend stocks. However, this isn’t necessarily the case.What…

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When investors think of blue chip Canadian stocks, they often think of some of the best Canadian dividend stocks. However, this isn’t necessarily the case.

What are Canadian blue chip stocks?

Our definition of a blue chip stock is simply one that has a large market capitalization and is a top company in its industry.

Typically I look for high quality stocks that are within the top three in terms of performance in the sector, but industries like Canadian banking can have a multitude of stocks I consider blue chip even if they aren’t a front runner.

Blue chip stocks are often the backbone of an investors portfolio, and are held for the long term. Investors, especially those just learning how to buy stocks in Canada, should make high quality blue-chip stocks their primary focus.

They provide long term stability and usually (but not always like I stated above) an excellent dividend.

Why is that?

Well, a “blue-chip”
stock is often well established and has been financially sound for decades. This differs from growth stocks, as an investment in them is often banking on the growth potential of the company, not its previous results and can have extensive swings in price over the long term.

An interesting piece of information before we move on to the best blue chips stocks in Canada though.

Did you know that the term blue chip, when it comes to the stock market, is derived from the game of poker?

Typically, blue chips held the highest value, and as such were the most important to hold in your stack.

With all that said, here is a list of high quality Canadian blue chip stocks you need to be looking at in 2021.

The list is dominated by energy, financial and railroad companies, but this is to be expected as they take up a large majority of the TSX.

What are the 11 best Canadian blue chip stocks?

11. Barrick Gold (TSE:ABX)

Top Gold Stocks - #6 Barrick Gold

After a bear market that lasted the better part of the last decade, gold has finally regained its shine.

During the last bull market, gold companies were irresponsible and scooped up assets at high prices. This led to record-high debt loads, and once the price of gold crashed, they were ill prepared.

This was a factor in a number of defaults, write-downs, and dividend cuts.

Fast forward to today, gold producers are much better prepared. They are leaner and are taking a much more disciplined approach to capital investments. This bodes well for the long-term future of gold stocks regardless of the volatile price of gold.

Barrick (TSX:ABX) is one of the biggest gold stocks in the world, and it has emerged stronger than ever. It is one of the most diversified stocks in the industry and generates considerable cash flow.

Based out of Toronto, Barrick is one of the world’s largest producers, with 2020 production coming in at nearly 4.8 million ounces of gold, and 460 million pounds of copper. The company also has nearly 68 million ounces of gold reserves and is well positioned to grow its production profile over the next decade.

Furthermore, it has been laser-focused on reducing its debt burden recently – down by more than 50% over the past handful of years.

The company is making decisions based on $1,200 gold prices, which should insure strong cash flow generation while providing a large margin of safety. It has also returned to dividend growth, a strong sign of confidence by management that the worst is behind them.

All in sustaining costs hover around the $1,030 an ounce level and it is among the best valued in the industry.

There are plenty of other gold companies on the TSX Index, but when we’re looking at blue chip options here in Canada, none of them compare to Barrick in terms of size and stability.

However, the company has significantly underperformed the TSX Index over the last decade, and as a result it’s number eleven on this list.

10 year returns of ABX vs the TSX:

TSE:ABX Vs TSX Returns

10. Brookfield Asset Management (TSE:BAM.A)

Brookfield

Brookfield Asset Management (TSE:BAM-A) is one of the largest asset management companies in the country. It’s business structure is quite complex, and many beginner investors don’t know where to start.

This is because Brookfield has a multitude of subsidiaries, ones that investors can purchase on their own. In fact, we’ve often called BAM.A the “ETF” of Brookfield companies. 

This is because Brookfield Asset Management contains exposure to the real estate, infrastructure, private equity and even renewable energy sectors.

But, investors can instead purchase a subsidiary of the company like Brookfield Renewable Partners (BEP.UN) to get exposure to its renewable energy assets or Brookfield Infrastructure Partners (BIP.UN) to gain exposure to its utility, transport and energy assets, among others.

So, why buy Brookfield Asset Management instead? It yields less, and is growing slower than a company like Brookfield Renewable Partners? Well, the simple answer to this is you want exposure to all of the company’s assets, and instead of seeking out a higher yield, you instead want overall returns.

$10,000 invested into Brookfield Asset Management a decade ago is now worth $67,000. Although Brookfield Property Partner is no longer traded, this return would have outperformed both BPY and BIP. Brookfield Renewable Partners has outperformed BAM.A, but this is only due to a recent surge in renewable energy popularity.

The company’s assets are primarily located in the United States and Canada, but it does have exposure in both Brazil and Australia as well. With a market cap in excess of $110B, this is one of the largest companies in the country and is certainly worth of  its blue-chip title.

Brookfield is a Canadian staple, and has consistently rewarded shareholders with market beating growth. This is due to outstanding management and operating performance.

Although many investors will not be seeking out BAM for its dividend as it yields less than 1%, it does have a 9 year dividend growth streak, making it a Canadian Dividend Aristocrat and it has grown that dividend at a near double digit pace (9.85%) over the last half decade.

10 year return of BAM.A vs the TSX:

TSE:BAM returns vs TSX 10 year

9. TC Energy (TSX:TRP)

TC Energy

The oil & gas industry was decimated in 2020. However, we’re slowly seeing it recover and Canadian investors are looking for blue-chip stocks to gain exposure.

And in our opinion, you may be wise to avoid producers and stick to pipelines. Why?

Whether it be TC Energy (TSX:TRP), Pembina Pipeline, or Enbridge (TSX:ENB), these are companies that transport various commodities. They are less susceptible to damage due to fluctuations in the price of oil.

One of the best in the industry is TC Energy (formerly TransCanada). The company was the best performing pipeline by quite a wide distance in 2020 up until the end of the year, when the rumored and eventual confirmation of the cancellation of the Keystone XL.

However, the company has plenty of growth projects, and we don’t view the cancellation as an issue at all.

In terms of the pandemic, TC Energy didn’t face any significant impacts. In fact, the company stated:

“despite the challenges brought about by COVID-19, our assets have been largely unimpacted”

It went on to say that its outlook remained unchanged as 95% of EBITDA is underpinned by regulated assets and/or long-term contracts. This was a very strong indicator of the company’s financial health.

The company has critical infrastructure across North America and it expects to spend $37 billion on growth projects through 2023. The majority of which will be spent on natural gas pipelines.

Further highlighting its resilience, the company re-iterated dividend growth guidance of 8-10% annually through 2021. Post 2021, it expects the dividend to grow at a compound annual growth rate of 6% at the mid-range.

If you are looking for a best-in-class energy company, TC Energy certainly fits the bill. It is trading at cheap valuations, the company’s juicy dividend yield is well covered, and it has a robust pipeline of growth projects.

This isn’t a blue-chip Canadian stock that is going to blow you away with outstanding returns. But, it’s going to provide a consistent growing passive income stream.

10 year returns of TRP vs the TSX:

TSE:TRP Vs TSX Returns

8. Canadian Pacific Railroad (TSX:CP)

CP Rail

Railroads are the bellwether for economic activity, and Canadian Pacific Railway (TSX:CP) has made a dramatic move forward.

Pre-2012, the company was having significant operational issues which led to many tough decisions. The turnaround has been nothing short of astounding.

Over the past five years, it has outperformed its larger peer (CN Rail) and it transformed itself from the lowest-margin railroad to the highest of all publicly listed North American railroads.

With its operational issues in the rear-view mirror, the railroad has returned to dividend growth.

In July 2020, the company extended its dividend-growth streak to five years when it raised the dividend by 15%. It was a notable raise as it was declared at a time in which many other companies either cut or suspended dividends as a result of the pandemic.

Over the course of the streak, it has consistently raised the dividend by double-digits.

With July’s raise, CP Rail once again earned Canadian Dividend Aristocrat status in 2021. This is important as it will be added to funds that track the Aristocrat Index and it will regain credibility among dividend growth investors.

Over the next handful of years, the expectation is for earnings growth in the high single digits. This growth actually has a chance to accelerate, but the company is currently in a feud with Canadian National Railway over a purchase of Kansas City Southern.

The recent events have actually led to CP Rail being a frontrunner over CN Rail. But, this is a situation that is still likely going to go on for quite some time.

The deal, Had Canadian National not stepped in to interrupt it, would have been comprised of share issues and debt, and would have created a railway that spans from Canada all the way down to Mexico.

There isn’t much not to like about CP Rail. It forms a duopoly with CN Rail, and rail is the primary means of transporting goods across the country. It is also proving to be a strong defensive stock in light of the current pandemic.

It recently underwent a share split, and is also more attractive to retail investors who couldn’t afford the lofty $400+ price tag it used to trade at.

10 year returns of CP vs the TSX:

TSE:CP Returns Vs TSX

7. Canadian Apartment Properties REIT (TSX:CAR.UN)

canadian apartment properties reit

You might be thinking, how can a REIT make a list of blue Chip Canadian stocks in light of the current pandemic? Let us explain.

Although the sector as a whole is under pressure, there are certain industries that are more stable than others – that includes those that operate multi-unit residential properties.

Although there are better performing names in this area, Canadian Apartment Properties (CAP) REIT (TSX:CAR.UN) provides excellent value here. It has a suite of affordable rent portfolios that is proving to be quite resilient.

CAP REIT is also in strong financial shape. It has a debt-to-gross book value of only 36.4% (a rate below 50% is considered strong), one of the lowest in the industry.

Furthermore, the company’s 2.50% dividend yield is well covered, accounting for only 73% of adjusted funds from operations. Once again, this is in the top tier of TSX-listed REITs.

The company is currently trading at a 17% discount to cash flow value, and a 14% discount to net asset value. In June of 2020, the company was added to the S&P/TSX 60 Composite Index which tracks the largest companies by market cap on the TSX Index. In fact, it is the only REIT among the Index constituents.

Although it does carry greater risk than most on this list, the risk-to-reward proposition is attractive. Now is the perfect time to start accumulating Canada’s largest residential REIT.

10 year returns of CAR.UN vs the TSX:

CAR-UN Vs TSX

6. BCE Inc (TSX:BCE)

BCE dividend

BCE Inc (TSX:BCE) is one of the largest telecom companies in the country and is often grouped together with the “Big 3”, being Telus, Rogers, and Bell.

In terms of Blue Chip stocks, you can’t really go wrong with any of the three, but what sets BCE apart is its ability to generate new subscribers in a mature market, and its sheer size.

The company’s strength is product innovation, and providing the fastest network possible to Canadians. Its success in this department is reflected with a customer base that exceeds 9 million subscribers. 

The company states that 99% of Canadians have the ability to gain access to BCE’s services, which is an industry leader in terms of coverage. This is exactly why it deserves the title of blue-chip stock over its counterparts Rogers and Telus.

Don’t get us wrong though, all 3 are outstanding companies. Why?

The Canadian telecom industry is somewhat of a regulated monopoly. The three big players dominate the industry and the regulations make this unlikely to change anytime soon.

Canadian’s pay some of the highest phone and television bills out of all the developed countries, and strict regulations make it nearly impossible for new players to try and penetrate the market.

The one company that was having some success at breaking through is Shaw Communications (TSX:SJR.B), but they were recently acquired (pending approval) by Rogers.

BCE is one of the best income stocks in the country, with a dividend yield north of 5.5% and an 12-year dividend growth streak. Although it may seem like a short streak, the streak was interrupted by an impending purchase by the Ontario Teacher’s plan that ultimately fell through.

With a market capitalization of more than $54B, the company is one of the largest in the country and is a Blue Chip stock that has provided consistency and reliability for over a decade.

Although it may not provide the best growth out of the Big 3, it has the widest reach across the country and commands the title of blue chip Canadian stock when it comes to telecommunications.

10 year returns of BCE vs the TSX:

TSE:BCE Stock Vs TSX Index

5. Metro (TSX:MRU)

metro dividend

A quick look over the sectors in 2021 and you will find only one that has consistently been among the top performers – consumer staples.

Not surprisingly, as the economy shut down, we still needed our basic necessities and this sector remained strong, particularly among grocery stocks.

One of the country’s best is Metro (TSX:MRU).

A quick look at its long term chart will tell you everything you need to know. Metro is a pillar of consistency. Nothing flashy here, just consistent and reliable growth.

The company’s low yield may be a turn-off for some, but it is one of the best dividend growth stocks in the country.

Metro’s 26-year dividend growth streak is tied for the 7th-longest streak in the country and it is one of the few in the leading 10 to have consistently raised by double-digits over the past three, five, and ten-year periods.

Even in a post-pandemic and post-shutdown environment, we feel that consumer activity and purchasing habits have changed forever.

It’s likely that Metro could see less foot traffic through it’s doors, but a higher amount of volume per purchase as consumers have learned over the pandemic to shop more efficiently.

Another habit? E-commerce. And this is a space that Metro is growing in rapidly. In fact, the company’s online sales saw a 240% increase year over year.

This growth is likely to slow as the pandemic subsides, but there is no question that consumer habits have changed and some will make a permanent shift to e-commerce ordering due to convenience. As a result, we’d still expect significant growth in the company’s online sales moving forward.

And finally, in periods of rising inflation, a company like Metro has the chance to outperform. Consumer defensive stocks like Metro tend to outperform pure-growth plays in rising rate & inflationary environments.

10 year returns of MRU vs the TSX:

TSE:MRU Vs TSX Index

4. Constellation Software (TSX:CSU)

Constellation Software

Although it is starting to make headway, the technology sector is still under-represented on the TSX Index.

Unlike south of the border where tech makes up almost a quarter of the markets, the sector still accounts for only a single digit weighting on the TSX Index.

This is up notably from the 3% it accounted for a couple of years ago, yet there is arguably only one company that could qualify to be a true blue chip Canadian stock.

And that is Constellation Software (TSX:CSU). Constellation is one of the best-managed companies on the TSX Index.

Over the past ten years, its stock price has soared by over 3600% and it has one of the best track records in the industry. It pays a modest dividend, but what it lacks in income, it more than makes up for in capital appreciation.

A $10,000 investment in the company 10-years ago would be worth over $350,000 at the time of writing – and this is without commanding some of the crazy valuations of today’s high-growth tech stocks.

Constellation is simply put, the best consolidator in the industry. It has a knack for acquiring companies and seamlessly bringing them into the fold. It is also important to recognize that tech is becoming a defensive play in this new environment.

The pandemic has accelerated the shift to technology and Constellation has been one of the best performing tech stocks over the last year.

It is however, a company that requires full trust in management. It does not hold quarterly conference calls, and only provides an annual letter to shareholders. You are putting your trust in management, and thus far, it has proven to be a winning proposition.

It also has a high share price, frequently trading in the $1900+ range. This does make it extremely hard for beginner investors with a small portfolio to purchase the stock. If you only have $5,000 or $10,000 to start out with, it presents somewhat of a concentration risk.

Fractional shares, or a potential share split, could make Constellation more attractive to those just starting out.

10 year returns of CSU vs the TSX:

TSE:CSU 10 Year Returns vs TSX

3. Canadian National Railway (TSX:CNR)

CN Rail dividend

Canadian National Railway (TSX:CNR) is the largest railway company in Canada, and as such has become a no-brainer when referencing the top blue-chip stocks here in Canada.

With over 33,000 kilometers of track, CN Rail is engaged in the transportation of forest, grain, coal, sulfur, fertilizer, automotive parts, and more.

CN Rail is a company that is growing the dividend at an impressive pace. It has a dividend growth streak of 25 years and a five-year dividend growth rate of 12.97%, the stock’s consistent rise in price has resulted in a low yield.

Don’t fret. The company may lack in yield, but it makes up for that in capital appreciation.

Over the past decade, it has returned more than 386% to investors. This type of performance out of a large cap, blue chip company is quite impressive.

Simply put, CP Rail and CN Rail are some of the best railways in North America, which is why they’re both on this list. In fact, they’re the only sector that features two companies on this list, that is how strong they are.

Prior to the Kansas City Southern fiasco, CN Rail had been performing exceptionally over the last year. And, now that things seem to be settling in terms of the deal, it’s starting to get back to its outstanding performance despite a short term slump.

The KC Southern situation will likely take a year at minimum to resolve, and the feud between Canada’s railways will likely continue. However, the acquisition attempt by CN Rail has been shut down, and it’s very likely the railroad will not make the acquisition.

The dip in price because of the acquisition new reminded us exactly of the Alimentation Couche Tard failed acquisition attempt of Carrefour. It took Couche-Tard a little over 3 months to recover from the 20% dip in price after the acquisition was released.

Moving on, despite its size, CN Rail has been able to adapt, re-route and focus operations on those customers that ran essential services.

The company’s handling of the pandemic has been rightfully lauded by industry experts. Investors are in good hands with CN Rail, and the short term negative sentiment due to the acquisition attempt will, in our eyes, be quickly forgotten.

Right now, Canada’s railways look expensive. However, they’ve always looked expensive. If you’re looking to add, timing the market on either CN or CP Rail will likely be a wasted effort. Just scoop them up and tuck them into the core holdings of your portfolio.

10 year returns of CNR vs the TSX:

TSE:CNR Vs TSX Returns 10 Year

2. Royal Bank of Canada (TSX:RY)

Royal Bank dividend

The Royal Bank of Canada (TSX:RY) is probably one of the most popular stocks here in Canada.

The company is a global enterprise, with operations in Canada, the United States, and 40 other countries.

The company has been named one of Canada’s most valuable brands for 6 years running, and its reputation is second to none in terms of customer satisfaction. With a market capitalization of nearly $180B, Royal Bank is one of the best Blue Chip stocks to add to your portfolio today.

The company’s dividend is strong, with a yield of over 3% and an ten-year dividend growth streak. The dividend is also growing at an impressive pace, with a five-year growth rate of over 6.5%.

The Canadian banking industry is one of the strongest sectors in the country, if not the world. While banks around the world were slashing dividends and closing their doors during the 2008 financial crisis, all of the Canadian banks held strong. Although their share prices fell considerably, recovery was quick and their dividends were never cut.

Although banks struggled during this pandemic, a similar theme is occurring – reliable dividends and better than expected earnings.

While many countries are asking banks to cut the dividend, or some are being forced to as a result of the pandemic, Canada’s big banks remain among the safest income stocks on the planet.

The Feds have asked the banks not to raise dividends, a small and reasonable ask considering the current environment.

However, now that we are getting to the other side of this pandemic and restrictions are easing, it is very likely we see restrictions on dividend growth removed. And, Royal Bank, along with all of the other Canadian major banks, will likely raise dividends very soon after given the green light.

Royal Bank’s international exposure and sheer size was brought to light during the COVID-19 pandemic, and it ended up being one of the more reliable Canadian stocks of 2020. As such, it’s worthy of its blue-chip title.

You can’t go wrong with any of the Big 5 banks here in Canada. They are all excellent Canadian Blue Chip stocks, and we could just as easily include all 5 on this list.

However, Royal Bank is certainly one of the best.

10 year returns of RY vs the TSX:

TSE:RY Vs TSX Returns

1. Fortis (TSX:FTS)

Fortis dividend

You won’t find a Blue Chip stock list that doesn’t contain Fortis (TSX:FTS) – at least you shouldn’t. If you do, maybe keep looking.

This Canadian company is among the top 15 utilities in North America, and has over 10 utility operations under its belt in Canada, the United States, and the Caribbean.

The utility industry is highly regulated, which often leads to consistent cash flows. As the population keeps growing, energy demands will grow right along with it and utility companies are positioned to profit.

Fortis has the second longest dividend growth streak in the country at 48 years. This has cemented the company as one of the best investments in Canada and definitely worthy of its blue-chip title.

Yielding over 3.5%, the company has grown the dividend at a 5 year rate of 6.79% with a payout ratio of under 60%. The good news?

Fortis recently extended its targeted annual dividend growth rate of 6% to 2025. That means investors can expect a 6% annual raise to the dividend in each of the next five years. That type of transparency and reliability is rare.

Utility companies rely heavily on debt to finance capital investments. As such, these companies are prone to setbacks when interest rates rise. This is something you need to keep an eye on if you’re looking to invest in a Canadian blue chip stock like Fortis.

The Bank of Canada has changed its tune on interest rates, and we could see them rise as early as 2022 to prevent the economy from overheating as a result of reopening’s on the back end of the pandemic.

However, even if the BoC were to raise interest rates, it will likely take many subsequent raises to get back to even pre-pandemic rates.

And in addition to this, rising interest rates seemed to have no negative consequences for the utility giant’s stock price over the last couple of years.

Fortis’ stock is as close to a set and forget investment as you can get.

10 year returns of FTS vs the TSX:

TSE:FTS 10 Year Returns vs TSX









Author: Dan Kent

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Canada’s Top Renewable & Clean Energy Stocks for November 2021

There’s no questioning the fact that as a population we’re moving towards cleaner, greener forms of energy. Fossil fuels will be a thing of the past, and…

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There’s no questioning the fact that as a population we’re moving towards cleaner, greener forms of energy. Fossil fuels will be a thing of the past, and the world will benefit immensely from it.

How long will it take before Canadian renewable companies dominate the energy scene? It’s difficult to say. But if I were to guess, not long at all. That’s why you need to have a look at these Canadian stocks before it’s too late.

The renewable energy vs fossil fuel debate is a heated one

The effects of fossil fuels on the climate and climate change in general is an extremely touchy subject, and arguments from both sides tend to pack a sizable punch in terms of support. Plus, much like Canadian gold stocks, fossil fuel companies rely heavily on a commodity and can be quite cyclical.

But all while this is happening, green energy companies here in Canada are quietly amassing large asset bases and production capacities. It’s an investment gold mine.

Your best bet as an investor is to funnel out the noise and instead take a position in a strong TSX listed renewable energy stock.

Because it’s a matter of when, not if these companies take over as the primary method of energy generation

And while people sit on the sidelines, squabbling over if swapping to renewables is worth it, you can be making boatloads of money off of it.

Don’t believe me? These clean energy companies have crushed the returns of the TSX Index.

So if you’re new to buying stocks here in Canada, you may want to know what exactly these Canadian renewable energy companies do. Lets go over it.

What exactly do Canadian renewable energy companies do?

Renewable energy is defined as such:

“energy from natural resources that can be naturally replenished within a human lifespan.” – Natural Resources Canada

Renewable energy companies provide sources of power that are often considered cleaner and more sustainable including but not limited to:

  • Hydroelectric
  • Wind
  • Solar
  • Biomass
  • Hydrogen

Renewable energy provides nearly 20% of Canada’s energy supply, with hydroelectricity accounting for over half of that.

A common misconception with Canadian green energy companies? 

Renewable companies aren’t the new kids on the block, despite many thinking so.

In fact, they have been around for quite some time now, and as a result clean energy stocks provide stable and reliable cash flows, much like regulated utility giants Fortis, Canadian Utilities and Emera.

The end result?

Clean energy companies are able to provide strong dividends to go along with upside potential in an ever growing industry.

Let’s take a closer look at four renewable energy companies we think are the cream of the crop here in Canada for 2021.

As requested by many readers, we’ve also added a solar energy company to the list in this most recent update. Solar stocks in Canada have been around for a while, but have remained relatively unknown due to high costs, and investors are starting to gain interest

What are the best Canadian renewable energy stocks?

4. Canadian Solar Inc (NASDAQ:CSIQ)

Canadian Solar Stock

One of the primary reasons we’ve never included a Canadian solar company on this list of renewable energy stocks is the fact that the best of the best trades down south on the NASDAQ.

However, due to increasing demand we figure we’d start talking about Canadian Solar Inc (NASDAQ:CSIQ).

Solar stocks in general have surged as of late, but since its lows in March 2020 Canadian Solar has shot up over 81%.

The stock has dipped significantly from all time highs however as renewable energy companies have gone through a significant correction. But, there is still a bullish attitude.

We think investors, and analysts for that matter, are finally starting to see the potential in the once small cap Canadian (but U.S. traded) company.

Canadian Solar benefits from a fairly low cost of production and has a decent amount of projects planned for the future.

Initially, solar power faced a lot of criticism. Production costs were extremely high, and it wasn’t looked at as a permanent solution to dirtier forms of power.

But the fact is, we wouldn’t even need to capture one-hundredth of a percent of the energy hitting the earth in a year to be able to scrap every other form of energy generation. And as costs of production come down, it’s becoming a more feasible clean energy generation method.

Canadian Solar has been a very frustrating stock for those buying it as a value investment.

But interestingly enough, even with a 81% run up, Canadian Solar is still fairly valued considering the future of solar energy.

Trading at only 0.38 times 2021 expected sales and 14.23 times 2021 expected earnings, valuations are not outrageous. The company has been fairly inconsistent with its growth, which is why the market isn’t really willing to pay a high earnings multiple. But again, most of its inconsistencies have been as a result of what we’ve stated above.

Growth is expected to pick back up in 2022 and 2023, and 2023 expected revenue of $7B USD would mark a 100% increase from 2020 revenue of $3.47B. There is promise in the industry, and at current valuations the company is certainly worth a look.

Keep in mind however, this is the only renewable energy stock on this list that doesn’t currently pay a dividend, and we would classify this stock as the highest risk of the bunch as well.

CSIQ 5 year performance vs the NASDAQ:

CSIQ Vs NASDAQ 5 Year

3. Northland Power (TSX:NPI)

Northland Power Logo

Northland Power (TSX:NPI) is a pure-play renewable energy company, and one that has been in business for a long period of time. The company was established in 1987, and operates nearly 2.8 GW of electricity, with potential future capacity in excess of 5 GW.

Northland has witnessed some incredible growth in terms of earnings over the last 3 years with a compound annual growth rate (CAGR) in excess of 30%. The company has also managed to more than double revenue since 2015.

The bulk of the company’s renewable operations are located in Eastern Canada.

In fact, the farthest the company reaches out west are two facilities in Saskatchewan – its Spy Hill facility with 86 MW of production and its North Battleford facility, with 260 MW of production. Both of these facilities generate power by burning natural gas and full contracts are established until 2036 and 2033 respectively.

The company has a total of 27 assets, 2 of which we’ve already talked about. With 19 facilities in the province, Northland has a high percentage of its assets in Ontario. Quebec has 2 wind farms, while the Netherlands and Germany have one wind farm each, Netherlands being offshore.

The renewable company closed on its acquisition of EBSA back in September of 2019, a Colombian regulated utility company for around $1.05 billion. EBSA serves nearly half a million customers, and its revenue is highly regulated, thus highly reliable. It also provides Northland Power with strong revenue outside of North America.

In terms of performance, Northland Power, at least over the last year and a half, has not disappointed. Much like other Canadian renewable energy stocks, it was hit hard in the correction at the start of 2021. However, it held on better than most and didn’t witness the volatility that many small/micro cap renewable companies did.

The company currently has a yield in the high 2% range and a payout ratio in terms of earnings of 104%. This payout ratio looks high, however the dividend is well covered by cash flow at 16.09%.

Northland Power’s lack of dividend growth is one of the primary reasons it falls short on this list. Especially considering the company has ample room to grow it.

But, don’t let that fool you, this is still a very strong renewable energy stock, one that has actually faced some recent weakness due to seasonal and temporary issues with its windfarms.

NPI.TO 5 year performance vs the TSX:

TSE:NPI vs TSX Index

2. Brookfield Renewable Energy Partners (TSX:BEP.UN)

Brookfield Renewable Partners

Brookfield Renewable Energy Partners (TSX:BEP.UN) is another pure-play renewable company and is one of the fastest growing by a landslide. The company is expected to grow earnings at a rate of nearly 40% over the next 5 years.

To add to this, the company is already the fastest growing pure-play renewable energy company in the country with a compound annual growth rate of 10.71%.

The company has over 20,000 MW of capacity and just shy of 6000 facilities in North America, Europe, Asia and South America.

The company’s goal is to deliver shareholders annual returns in the 12-15% range. Thus far, it has more than accomplished its objective.

The company’s portfolio consists of wind, solar, storage facilities and distributed generation and most importantly, hydroelectric, which makes up over 62% of its portfolio. An interesting note, this is down from the 75% that was noted last time we updated this article, a sign the company is diversifying its asset base.

Back in March of 2020, the company entered an agreement to buy Terraform Energy in an all stock deal. Why are we still mentioning this year later? Well, this purchase made Brookfield Renewable Partners the biggest pure-play renewable energy company in the world.

The company pays a generous dividend, north of 3%, and the dividend accounts for only 80%~ of funds from operations.

Management has stated they want its dividend to grow by 5-9% annually over the next 5 years. This would be an increase over its past results, so it will be interesting to see how the company performs.

Renewable companies faced a significant correction in 2021, which will be evident in the performance chart below. In our eyes, all this did was make Brookfield Renewables more attractive.

In our last update of this piece, we had stated that valuation was one of the main reasons it was number 3 on this list. Well, we’ve bumped it up to number 2 now due to its recent correction.

The company also set up a Canadian corporation, BEPC, to be the “equivalent” to the partnership BEP.UN. This is primarily a tax consideration, one that you’ll need to figure out on your own which one is best for you.

Brookfield Renewables 5 year performance vs the TSX:

TSE:BEP.UN Vs TSX Index

1. Algonquin Power (TSX:AQN)

Algonquin

Algonquin Power & Utilities (TSX:AQN) is a diversified generation, transmission and distribution utility company. The company provides rate regulated natural gas, water, and electricity generation, transmission, and distribution utility services to over 1 million customers in the United States and Canada.

The company is engaged in the generation of clean energy through its portfolio of long term contracted wind, solar and hydroelectric generating facilities representing more than 1,600 megawatts (MW) of installed capacity.

There are a few things we really like about the company, but there’s one thing that stands out with Algonquin, and that is its growth rates.

Algonquin is one of the fastest growing utility companies on the TSX Index. In fact, the company grew earnings by 33% in 2020, and prior to a very unfortunate one-off event in Texas that ended up costing the company $55 million, analysts expected strong growth in 2021 as well.

They’ve changed their tune now, and overall it will be a flat or even shrinking year for Algonquin. But, it’s important to understand that this is very temporary, and we’d expect the company to get back to growth in 2022. In fact, the company expects to inject $9.4B USD into capital projects through 2025, adding more than 1.6 GW of capacity.

2021 aside, you’re not going to find many utility companies on the index that provide this kind of growth, especially one that offers a rock solid dividend to go along with it.

Algonquin, at the time of writing, yields north of 4%. In terms of earnings this works out to be a payout ratio of around 40%.

With a dividend growth streak of 10 years, the company has proven to be capable of consistently raising its dividend. In fact, Algonquin is one of the few Canadian Dividend Aristocrats that raised the dividend during the COVID-19 pandemic.

Algonquin is a top 5 holding in one of Canada’s biggest utility ETFs, and pays its dividend in US dollars, providing an even more attractive proposition to Canadian investors.

AQN.TO 5 year performance vs the TSX

TSE:AQN vs TSX Index




Author: Dan Kent

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