Top dividend stock picks, BMO’s big gain predictions and looking beyond yield: What you need to know in investing this week

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Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.

Three top dividend stock picks from the portfolio of an award-winning fund manager

It’s not just what he owned in his dividend portfolio, but what he didn’t own that helped money manager René Fantin of Stone Asset Management outperform the market in recent years, Brenda Bouw writes. “We like to own companies that are able to consistently deliver results, and we avoid sectors and securities that are either too volatile or lack the room for either growth or dividend growth,” says Fantin, who manages four dividend funds, including the Stone Dividend Growth Class fund, a Lipper Award winner this year for its performance. Read more here, including the funds top five holdings, what he’s sold out of plus why Telus, AES and TFI International are his three picks.

Read more: The Mawer New Canada fund is closed to new investors, but you can find the $2.5-billion fund manager’s three small-cap stock picks here.

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Full list: The 2020 Lipper Fund Award top mutual fund and ETF group winners

BMO predicts big gains ahead for the TSX and S&P 500

BMO Capital Markets’ chief investment strategist Brian Belski, one of the Street’s more reliably bullish prognosticators, doesn’t believe skyrocketing COVID-19 cases and spreading lockdowns will get in the way of the equity market’s upward trajectory, Darcy Keith writes. This past week, he released his 2021 market outlook, setting a year-end S&P 500 target of 4,200 – a more than 17-per-cent rise from current levels. For the S&P/TSX Composite index, he set a target of 19,500, a rise of more than 15 per cent that would bring it to record highs. Read more here about his forecast assumptions, sector recommendation changes and why he’s advising investors to lighten up on utilities.

With stocks and ETFs, don’t be myopic about yield

It’s a common mistake, particularly with new investors, to evaluate a stock or ETF based solely on its dividend yield. Stocks with puny yields can produce outsized gains if they’re reinvesting their cash internally at high rates of return – think of tech stocks such as Amazon or Facebook that pay no dividends at all. And stocks with high yields can deliver disappointing results. In some cases, an exceptionally high yield can be a danger sign that may portend a dividend cut.

In my model Yield Hog Dividend Growth Portfolio, I try to get the best of both worlds by identifying stocks with above-average yields that will also produce dividend and capital growth over the long run. Read more here, including answers to other reader questions.

More from John Heinzl: Beyond Meat, Target and more investing stars and dogs for the week

Gordon Pape: Looking for stability and good yields? This ETF may unlock a largely ignored market

Canadian preferred shares have not been kind to investors, Gordon Pape writes. The overall performance of U.S. preferreds, however, has been much better. I suggest the easiest way for Canadian investors to take a position is by investing in an exchange-traded fund managed by a team that specializes in these securities. Consider the Brompton Flaherty & Crumrine Investment Grade Preferred ETF, with a 4.7-per-cent yield. Here’s why I like it.

More from Gordon Pape: Here’s how to prepare your portfolio for further pandemic-related turbulence

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Have bank stocks turned the corner?

Bank investors, meet your new best friend: a steeper yield curve, David Berman writes. Canada’s Big Six bank stocks have risen nearly 15 per cent since the start of November, on average, and are now down less than 4 per cent for the year. The gain this month has outpaced both the S&P/TSX Composite Index and the S&P 500 over the same period, after bank stocks lagged the benchmarks throughout most of 2020.

To be sure, there are several factors working in the banks’ favour right now. But the role of the yield curve, which compares short-term government bond yields with longer-term government bond yields, is a welcome tailwind that could help lift bank stocks even as vaccine euphoria wears off – that is, if the yield curve plays along. Read more here.

What investors need to know for the week ahead

In the week ahead, U.S. markets will be closed on Thursday for the Thanksgiving holdiay. Companies reporting their latest financial results in the coming week include BRP, Best Buy, Alimentation Couche-Tard, HP, Dell and Deere.

Economic data on tap include: Canada’s wholesale trade for October (Monday); Canadian manufacturing sales for October (Tuesday); U.S. durable goods orders, new home sales plus personal income and spending for October (Wednesday).

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