A pro-business federal government, conservative corporate culture, abundant energy and natural resources, and a solid sovereign balance sheet–these strengths have made Canada a popular and highly profitable investment destination over the past decade.
However, 2013 has been a challenging year for Canada’s equities and currency. After starting the year at a slight premium to the greenback, the Canadian dollar has skidded to an exchange value of barely US$0.95–its lowest level in almost two years.
And whereas the S&P 500 has generated a total return of about 14 percent this year, the S&P/TSX Composite Index has given up 6.7 percent of its US-dollar value when you factor in reinvested dividends.
Income stocks have been among the Toronto Stock Exchange’s biggest losers. Shares of more than a few former income trusts have tumbled precipitously after the companies slashed their dividends to shore up their balance sheets. But this selloff has extended to stocks issued by strong companies that continue grow their payouts.
All this adds up to an opportunity for savvy investors to buy shares of high-quality Canadian dividend payers at a discount.