Friday, October 11, 2013

Bad Economic News for Canada: Time to Buy Canadian Stocks?

If you have read the news lately on the economy of Canada, you would have seen a lot of negative articles, such as Canada’s economic engines running out of gas or maybe U.S. shutdown threatens Canada's economy. And if you compare Canadian stocks over the last year to US stocks, you would see that the iShares MSCI Canada Index (EWC) was down 0.42% versus the S & P 500, which rose 18.13% during the last twelve months.

Not very good new, especially since the natural resources and construction industry has slowed down in our neighbor to the north. It seem like the only positive business news from Canada is the medical marijuana industry.  However, if you are a contrarian, you may want to consider Canadian companies as an investment, especially the ones that pay dividends, to help reduce your volatility and return your capital faster. has turned up well over a dozen high yield Canada stocks, with seven yielding more than 4%.

One of the stocks is a major Canadian bank, Bank of Montreal (BMO), which pays a yield of 4.3%. The stock trades at10.6 times trailing earnings and 10.4 times forward earnings. It even has a reasonable Price to Earnings Growth ratio of 1.12.

In the telecom sectors, there is Rogers Communications Inc. (RCI), the Toronto based wireless and cable TV company.  The stock has a trailing price to earnings ratio of 11.8, a forward PE of 11.9, and a PEG ratio of 2.88, which is a bit on the high side. The stock sports a yield of 3.9%.

Canada has several energy trusts, such as Pengrowth Energy Trust (PGH), which trades at 27 times forward earnings and pays a dividend rate of 7.5%. This oil and natural gas company pays its dividends monthly.

To access a free list of dividend paying Canadian stocks, which provides the PE, the forward PE, the PEG, and the yield, go to

Disclosure: Author didn't own any of the above at the time the article was written.


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