10 Stocks to Play the Hot Canadian Market This Year

by: David Hunkar

Canada offers unique advantages over other developed countries. For example, unlike most European countries, Canada 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 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 (NYSE:TRP)
Sector: Natural Gas Utilities
Current Dividend Yield: 4.37%

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

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

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

5. Company: Canadian Pacific Railway Ltd (NYSE: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 (NYSE:BAM)
Sector: Investment Services
Current Dividend Yield: 1.57%

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

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

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

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

Disclosure: No positions

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