CIBC: Canadian Stocks To Offer Best Returns This Year

Canada offers unique advantages over other developed countries. For example, unlike most European countries the country is blessed with many natural resources that emerging markets like China need,  a stable banking system, democratic political system and proximity to the U.S., the world’s largest consumer market.

An article in the Financial Times notes that the Canadian equity market is a good bet this year according to a research report released today by CIBC. From the article:

A new report from CIBC World Markets finds that Canadian stocks are likely to produce the best returns in light of what looks to be a longer-term bear market in bonds, and ongoing fiscal belt tightening in the U.S. and Europe.

“Relative to the U.S. or east Asia, Canada’s equity market carries more insurance against a worsening geopolitical climate in the Middle East, in the form of a larger basket of energy stocks and safe havens like gold shares,” said Avery Shenfeld, chief economist at CIBC, in his latest Economic Insights report.

In addition, Canada presents a good option given the ongoing spectre of inflation haunting emerging market economies.

“Inflation hasn’t run away to the upside, so the Bank of Canada can chart a more careful course of tightening than what might end up being seen in the emerging market economies,” Mr. Shenfled said. “The nation’s fiscal position, while still in need of growth-slowing belt tightening, isn’t as strained on either a deficit/GDP or net debt/GDP basis as that of the U.S. or Europe.”

Ten randomly selected dividend-paying Canadian stocks from different sectors are listed below:

1.Company: Transcanada Corp (TRP)
Sector: Natural Gas Utilities
Current Dividend Yield: 4.37%

2.Company: Manulife Financial Corp (MFC)
Sector: Life Insurance
Current Dividend Yield: 2.82%

3.Company: Telus Corporation (TU)
Sector: Telecom
Current Dividend Yield: 4.59%

4.Company: Encana Corp (ECA)
Sector: Oil and gas operations
Current Dividend Yield: 2.48%

5.Company: Canadian Pacific Railway Ltd (CP)
Sector: Railroads
Current Dividend Yield: 1.65%

6.Company: Teck Resources Limited (TCK)
Sector: Metals mining
Current Dividend Yield: 1.08%

7.Company: Brookfield Asset Management Inc (BAM)
Sector: Investment Services
Current Dividend Yield: 1.57%

8.Company: Enbridge Inc (ENB)
Sector: Oil Well Services & Equipment
Current Dividend Yield: 3.37%

9.Company: BCE Inc (BCE)
Sector: Telecom
Current Dividend Yield: 5.53%

10.Company: Magna International Inc (MGA)
Sector: Auto & Truck Parts
Current Dividend Yield: 1.99%

Note: Dividend yields noted above are as of Feb 28, 2011

Disclosure: No Positions

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