Just like that, and the markets are flirting with all-time highs — again.
This raises the question, “Whatever happened to this recession that everyone was so convinced we’d be falling into just a few weeks ago?”
Has everybody suddenly forgotten of the ominous inverted yield curve after positive news of U.S.-China trade talks? Or could this be a profitable recession for investors who don’t even try to time this erratic market?
Nobody knows for sure, but those who sold on news of the inverting yield curve lost big money and will likely have to repurchase their positions at higher prices, as the markets look to break out. And those Fools who bought the dip following the inversion of the yield curve are suddenly looking pretty smart.
For now, investor sentiment is looking peachy. This is, until trade talks fall through again with another new round of tariffs to be slapped on Chinese goods. We’ve heard this story over and over again, so now is not the time to be greedy with overly cyclical names.
We could be in for another roller-coaster ride, and if that’s the case, it’d be wise to look to the following dividend stocks, so you’ll have something tangible to show for staying invested through these big ups and downs.
At this juncture, Canadian Western Bank (TSX: CWB) and TC Energy (TSX: TRP)(NYSE: TRP), with dividend yields of 3.5% and 4.5%, respectively, look like timely bets for those who’d rather invest and not worry about whether the broader markets are going to break out or break down.
Canadian Western Bank
Canadian Western Bank is a regional bank that doesn’t get nearly as much love as its bigger brothers in the Big Six. The Edmonton-based bank has a considerable amount of exposure to the ailing Albertan market and is thus an undesirable financial stock to own relative to its more geographically diversified peers.
While Canadian Western Bank isn’t in a market that’s deemed as “sexy,” I see the name as a “safer” way to play the recovery of Alberta’s beaten-up economy, with its stable dividend that’ll continue to be paid, as Canada’s energy scene looks to get back on the road to recovery. The stock is also absurdly cheap at 10.9 times trailing earnings and 3.3 times sales at the time of writing.
Several firms, including TD Securities and Cannacord Genuity, raised their price targets following the release of Canadian Western Bank’s solid third-quarter results, which beat handsomely on earnings.
TC Energy
TC Energy, or the TransCanada that we used to know and love, remains one of the most robust energy infrastructure players in the space. The company clocked in better-than-expected second-quarter results and continues to separate itself from its peers, many of whom are under a considerable amount of pressure amid industry headwinds.
TC Energy recently announced its plan to sell its Halton Hill and Napanee plants and a half stake in the 550-megawatt Portlands Energy Centre for nearly $2.9 billion. Together with other asset sales, the funds are to finance major projects, including the much-anticipated Keystone XL pipeline.
Although investors are going to continue playing “the waiting game” with Keystone XL, the company is poised to reward those who are patient with 8-10% in annualized dividend growth until 2021.
The stock trades at 12.16 times EV/EBITDA, which is not a high price to pay for a company that knows how to navigate through rough industry terrain.
Stay hungry. Stay Foolish.
