In this episode of “The 5-Minute Major,” Motley Fool Canada’s Senior Analyst Nick Sciple hosts Chief Investment Officer Iain Butler discuss the growing trend of Canadians investing in US equities and the potential for this trend to reverse in the coming years.
They highlighted two Canadian companies, Nutrien and Westshore Terminals, as potential investments for Canadians looking to boost their domestic exposure. Nutrien (TSX: NTR), a leading provider of agricultural inputs and services, was identified as a key player in the Canadian potash industry, which could be leveraged in the ongoing trade spat with the US.
Westshore Terminals (TSX: WTE), an under-the-radar company, was noted for its critical services in handling and exporting coal and potash, and its potential as a reliable dividend payer.
Prefer to read? There’s a transcript below.
Transcript
Nick Sciple: I’m Motley, Fool Canada, senior analyst, Nick Sciple. And this is the 5 Minute Major here to make you a smarter investor. In about 5 min the Buy Local Trend is sweeping Canada in response to us President Donald Trump’s ongoing tariff war, and today we’re here to share 2 great Canadian companies you can buy locally in your own investment portfolio. My guest today is Motley fool Canada Chief investment Officer, Iain Butler. Iain, thanks for joining me.
Iain Butler: Great to be here, Nick. Great spring day up there, and let’s roll.
Nick: Let’s get after it. As of the end of June 2024 Canadians own more than 1.7 trillion dollars in US Equities. Given this growing buy in Canada movement, I think that number could be a little bit lower by the time we hit mid-2025. For Canadian investors looking to boost their domestic exposure, what’s a company that should be on their radar?
Nutrien
Iain: For sure. And I mean, the good news is that there are plenty that should be on people’s radars, but one that we’ll flag here today is a company by the name of Nutrien (Ticker symbol is NTR. On the Toronto Stock Exchange. It’s a company headquartered in Saskatchewan, and Nutrien is one of the world’s largest providers of agricultural inputs and services.
So there’s 2 key aspects to Nutrien’s business. The 1st is that it owns a vast network of retail outlets that provide a comprehensive range of products and services, such things as seeds, crop protection products and precision agricultural solutions. So this is where farmers go and get their stuff, their inputs for their farms. And then the other component of Nutrien is more like a mining business. Actually. So it’s a fertilizer production business company is a leading producer of potash nitrogen and phosphate, all of which are critical inputs when it comes to improving the productivity of farmland.
Iain: So if we’re talking about this, buy Canada movement specifically, it’s the potash business I think that is especially of interest. So Canadian potash. The US doesn’t really have potash reserves. So Canadian potash makes up about 80% or so of us demand for potash. And it’s a must have when it comes to growing crops across North America, across the world and so should tariffs on potash be implemented.
Iain: Costs will be borne by us farmers is the expectation, and this will undoubtedly have an impact on US food prices, and just as well as the overall productivity of arable land in the US. That doesn’t seem like a good thing for anyone, really, and it’s not clear that it makes much sense to me, anyway. So this is a situation where Canada does have significant leverage. And I think it’s going to be interesting to see this play out in the weeks ahead and given these volatile day by day headlines that we’re experiencing right now.
Nick: And so Nutrien, one of the biggest companies in Canada, clearly, maybe part of the leverage that Canada can use against the US in this ongoing trade spat. Maybe trade war. If somebody wanted to look a little bit under the radar: a company that maybe isn’t top of mind. What is one that you would share with them?
Westshore Terminals
Iain: Yeah. And I’m going to mention a company that doesn’t get a lot of attention frankly, anywhere in the Canadian market, anywhere in our Canadian services. Actually, it does show up in our dividend service, and it’s a company by the name of Westshore Terminals. And I think it fits this description pretty well. It’s very under the radar, yet it provides critical services or at critical service. So Westshore specializes in the handling and exporting of both metallurgical coal which is used in the making of steel and thermal coal which is used for energy generation in many parts of the world still. It owns a port a facility that’s strategically located at Roberts Bank in Delta, British Columbia.
And given this location, Westshore is expanding beyond coal. So traditionally, it’s just been coal. It’s expanding to include the handling and exporting of potash which we just spoke of about a couple minutes ago. So handling, exporting potash, they’re building a facility right now, in conjunction with BHP Group, which is the Global Mining Company, BHP is building a mine in Saskatchewan, a potash mine, and they will ship this potash from Saskatchewan to the port and out through Westshores facility.
As it stands, though just the Westshore’s profile is very attractive when it comes to dividend payments operates with long term contracts, which means its cash flows are highly predictable and just given the nature of the business expenses are pretty consistent as well. So that makes for a very reliable dividend payer. Stock currently yields 5.83%, which is nicely above its 10 year average yield, which is just under 4%. And I think it makes for a nice little income producing story for one’s portfolio, if that’s what one is looking for.
Nick: 2 Canadian companies helping the world buy Canadian products that are going to be important long after these current kind of trade headlines kind of pass into the dustbins of history. Ian. Thanks for joining us for this edition of the 5 Minute Major. We’ll see you next time. Hope to see our viewers next time, as well.
