The Season of Giving Is Full of Opportunity!

The holiday season of giving is finally here, and with that are some upcoming events that investors will find full of opportunity.

| More on:
smiling couple at home with christmas tree

Image source: Getty Images

Holiday music is playing in stores everywhere. There are countless lists of the “best toys of 2021” being farmed out to virtual and physical mailboxes everywhere. It’s the holiday season — the season of giving. And with that festive season, comes a series of updates that are full of opportunities for investors to consider.

Here are several upcoming events that current and prospective investors alike can look forward to.

Canada’s banks are (maybe) going to give investors a major holiday gift

Canada’s bank stocks are about to get very popular among investors. Earlier this month, banks were given the green light to resume dividend hikes and share buybacks. Both measures were halted last year when the pandemic started.

Investors should expect some form of announcement coming when the next set of quarterly updates are announced, later this month.

Canada’s big banks typically maintain a payout ratio in the 40-50% range, but thanks to a string of strong results and no recent hikes, that ratio has dropped into the high 30s. As a result, some of the banks may offer a super-sized hike of 25% or higher to return to that prior range.

Other banks may opt for a smaller hike but turn focus on significant share buybacks. Either way, the banks are awash in cash and ready to return some of it to investors.

When that does happen, the two banks to keep an eye out for are Bank of Montreal (TSX:BMO)(NYSE:BMO) and National Bank of Canada (TSX:NA). National currently offers a yield of 2.69%, whereas BMO currently comes in at 3.06%. 

By way of comparison, during the last pre-pandemic payout, National’s yield was near 3.89%. Similarly, BMO’s pre-COVID payout was an appetizing 4.13%. Investors can expect both banks to announce healthy bumps.

Are Canada’s big banks full of opportunity? Definitely.

48 years of solid increases and still more to come in 2021

Fortis (TSX:FTS)(NYSE:FTS) is one of the most defensive stocks on the market. Fortis is one of the largest utilities on the continent, with operations in Canada, the U.S., and the Caribbean. Unlike many of its peers, Fortis is a utility that continues to seek out new growth opportunities.

One of those opportunities to mention is Fortis’s massive capital program. The company is investing billions over the next few years in growth initiatives, which also include transitional costs related to renewable energy. This not only solidifies Fortis’s impressive defensive moat but also introduces new opportunities for growth.

The reliable income today and growth tomorrow also means that Fortis’s dividend is well covered. The utility has amassed an incredible string of 48 consecutive years of increases. That latest increase, a 6% increase over the current payout, will take effect with the last payout of 2021 next month.

That increase also means that Fortis is within two years of establishing itself as the only Dividend King in Canada. That factor itself makes Fortis full of opportunities for long-term investors.

The season of giving … and buying?

No investment is without risk, but some stocks are safer picks. Canada’s big banks fall into this category. That’s thanks to Canada’s notoriously regulated financial segment, which removes much of the risk and volatility than U.S. banks see roughly once a decade.

The same can be said of Fortis’s impressive defensive moat. Is there a risk? Certainly. But is that risk minimal and offset by the long-term gains that Fortis can provide to investors? Again, certainly.

In short, buy them and hold them. The stocks are full of opportunity, and not just during the holiday season.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou owns shares of Fortis Inc. The Motley Fool recommends FORTIS INC.

More on Dividend Stocks

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »