Interest rates are staying higher for longer, and inflation is not coming down to the target range anywhere near as fast as predicted. Quelle supreeze! However, it is having the effect that many of the large dividend players are flat to even down as people look for better growth in non-interest sensitive areas. The advantage fo rthose holding the dividend payers is that the steady 5-8% income stream means you are getting paid to wait.
The Communications sector, dominated by BCE, Telus and Rogers is a true Oligopoly, but shares of all of them are down over the last 12 months and BCE shares are down a lot, from 69 to 46 currently. BCE is throwing off a 8.5% dividend but the street is not happy with management and the board. Until BCE can demonstrate a strategic direction, address their debt load, and execute against a well articulated plan, its share price will languish.
Likewise, utilities like CU, CPX, ALA, Fortis etc are trading down to sideways for the same interest rate reasons. AQN still has not recovered from the debacle that the Kentucky Coal powered plant deal created. Good thing that fell through but it is taking AQN a long time to recover.
TRP and PPL are actually doing quite well. Despite being interest sensitive, the fact their pipes are full and prices are rising has done well by them. ENB seems to be starting to settle some of its regulatory challenges but we shall see if they continue to be more calm in their dealings or go back to their combative ways, which is why I sold them off and have not bought them back.
REITs in the office space continue to do really poorly, particularly the U.S. All REITS have been hit by higher interest rates, even the industrial and Apartment/residential ones. Even Chartwell, which focuses on retirement homes, has taken a big drop. It has been a good sector to be out of for the past 24 months.
Airlines and cruise lines are also greatly challenged. Even with a partial return of demand, costs are through the roof and many of the laid off staff want no part of returning to those industries. Both sectors are still having problems with staffing and training of new people completely green to their businesses. I have often said, I own no airlines, never have, because they are the worst run businesses in the world and are very heavily leveraged. All are packing a TON of debt. Cruise lines are right behind them in poor management, and are even more heavily leveraged.
On the bright side, RY, National and TD have been doing decent share price wise and growing their dividend. BNS, CIBC, and BMO are a little more challenged on the Share Price side but still increasing their dividend every year.
|