The Trump administration is reportedly ready to move forward on its proposed tariffs on steel and aluminum imports. The New York Times reported that, in response, chief economic advisor and Goldman Sachs Group Inc. veteran Gary Cohn resigned after refusing to lend support to the initiative in a meeting with President Trump. Futures for U.S. indexes dropped precipitously in the late hours on March 6.
The S&P/TSX Index rose three points on March 6 but has shed over 120 points week over week, as the announcement of the potential tariffs threw off markets. It is possible that this latest bit of news could also stir anxiety in early March. The Canadian economy is still expected to grow at a solid pace in 2018, and investors may still want to seek out bargains at this stage, especially those that provide solid income.
Bank of Montreal (TSX: BMO)(NYSE: BMO)
BMO stock has dropped 3.8% in 2018 as of close on March 6. Shares are down 5.9% year over year. Bank of Montreal released better-than-expected first-quarter results on February 27.
BMO reported a $425 million write-down due to the U.S. Tax Cuts and Jobs Act, which was enacted in December 2017. First-quarter profit dropped to $973 million, or $1.43 per share, compared to $1.49 billion, or $2.22 per share, in the prior year. However, analysts and bank leadership expect that tax reform will be an overwhelming net positive going forward. Revenue rose 5% year over year to $5.41 billion as Canada and U.S. Personal and Commercial banking posted solid growth.
The bank announced a quarterly dividend of $0.93 per share, representing a 3.8% dividend yield. BMO continues to be a solid target, especially at its current price — $96.71 as of close on March 6.
Maple Leaf Foods Inc. (TSX: MFI)
Maple Leaf is a Mississauga-based producer of food products. Shares of Maple Leaf have dropped 9.3% in 2018 thus far but are up 2.6% year over year. Food prices are projected to increase from 1% to 3% in 2018, according to the Canada Food Price Report released by the University of Guelph and Dalhousie University.
Maple Leaf released its 2017 fourth-quarter and full-year results on February 21. Sales in Q4 rose 5.9% year over year to $876.8 million, and adjusted EBITDA climbed 8.2% to $93.5 million. For the full year, sales increased 5.7% to $3.52 billion, and adjusted EBITDA rose 11% to $381.1 million. The company also announced a dividend of $0.13 per share, representing a 1.6% dividend yield.
Equitable Group Inc. (TSX: EQB)
Equitable Group is a Toronto-based financial services company that provides savings solutions and mortgage lending products. Equitable Group stock has plunged 21.9% in 2018 so far and is down 22% year over year. The company released its 2017 fourth-quarter and full-year results on February 28.
For the full year, mortgages under management climbed 11% to $23.2 billion compared to $21 billion in 2016. Net income jumped 16% to a record $160.6 million and hiked its dividend 13% year over year to $0.26 per share. This represents a 1.8% dividend yield.
New OSFI mortgage rules have cooled housing to begin 2018, which industry experts had expected coming into this year. However, the spring season is expected to bring stabilization to the market and should drive business for lenders as we look ahead.
