Income stock picks, a top dividend driver and the best Canadian equity ETFs: What you need to know in investing this week

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.

Income stocks will likely add to their gains in 2020. Investors should consider these five

Most income stocks thrive when interest rates go down, Gordon Pape writes. That’s why he believes 2020 will be another good year for income-oriented investors. There is no indication interest rates are going up in the next 12 months. In fact, the probability is we’ll see a drop in Canadian rates while the United States stands pat. He recommends you consider these five stocks with above-average yields for your portfolio this year: BCE, Firm Capital Mortgage Investment, Capital Power, Pembina Pipeline and Morguard REIT. Here’s why.

Related: This stock yielding 5% climbs to a record high – and the rally may not be over yet

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Do you have this engine driving your dividend portfolio?

The performance of the two-minute portfolio over the past decade is yet another reminder of how dividend stocks can drive investing success, Rob Carrick writes. You can read the 2MP summary for 2019 and the 2010s here. Though it underperformed the S&P/TSX composite by a bit last year, the 2MP averaged total returns of 10.4 per cent over the past 10 years while the index averaged 6.9 per cent.

There’s not a lot of turnover in this portfolio because the giants in many sectors tend to remain the same. A perfect example is Canadian National Railway. According to, it has increased dividends for 24 straight years. Over the past four years, dividend increases have averaged 14.6 per cent. It says the recent share price, which yields about 1.7 per cent, reflects expectations of future annual dividend growth of about 10 per cent.

More from Rob Carrick: Savings account interest rate war breaks out among feisty upstarts

A dying tradition: Why it has become rare for companies to split their stocks

For anyone who enjoys the peculiar satisfaction that comes when one of your stock holdings splits in two, 2019 was bereft of joy, David Berman writes. Just two Canadian companies completed stock splits last year, a drought made more severe by the fact that the S&P/TSX Composite Index surged 19 per cent. Convenience-store operator Alimentation Couche-Tard Inc. and software company Enghouse Systems Ltd. were the sole splitters last year, according to FactSet.

Why is interest in stock splits fading? The key reason has been percolating for years: Retail investors can now buy any number of shares for the same flat fee (usually about $10), which means that even a $1,000 stock isn’t out of reach. Market meltdowns during the dot-com bust and the financial crisis of 2008 also appear to be playing a role. Companies may be less inclined to split their stocks out of fear that their timing could be off.

More from David Berman: ‘My conviction level has changed’: David Rosenberg now sees lower odds of U.S. recession in 2020

Rob Carrick’s 2020 ETF Buyer’s Guide: Best Canadian equity funds

The fab returns of 2019 send an unhelpful message to ETF investors, Rob Carrick writes. Exchange-traded funds tracking the Canadian stock market routinely clocked in with gains around 20 per cent. Can it really matter which particular ETF you buy if they perform so uniformly well in a given year?

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The answer is an emphatic yes. The careful investor asks not just how much a fund made, but also how and why it did so well. That’s where the first instalment of The Globe and Mail 2020 ETF Buyer’s Guide comes in. It will help you understand the inner workings of 11 core Canadian equity ETFs in a way that offers insights on what may come in the years ahead.

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Canadian tech stocks flying high amid stampede to big names

A small but plucky group of Canadian IT names is quietly trouncing not only the overall stock market, but also the colossal U.S. tech sector, Tim Shufelt writes. The S&P/TSX Composite Technology Sector Index was the class of the Canadian stock market in 2019 with a 64-per-cent return, and the streak has continued into this year, with another 12-per-cent move in just the past three weeks.

For a market dominated by resources and banks, tech leadership is a novel twist. The only problem is there are too few of them – just 10 domestic tech stocks are big enough to be included in the S&P/TSX Composite Index. By comparison, the S&P 500 Technology Sector Index has 70 tech companies totalling US$6.8-trillion in market capitalization, and that doesn’t even include internet giants Facebook Inc. and Alphabet Inc. or e-commerce powerhouse Inc., which are typically classified in other sectors of the index.

What investors need to know for the week ahead

In the week ahead, the U.S. Federal Reserve will make its latest interest rate announcement on Wednesday and Britain exits the European Union on Friday. Economic data on tap include: U.S. new home sales for December (Monday); U.S. durable goods orders for December (Tuesday); U.S. goods trade deficit for December (Wednesday); U.S. Real GDP for the fourth quarter; Canada’s Real GDP at basic prices for November, Canadian product and raw materials price indexes for December, plus U.S. personal income for December (Friday).

It’s another big week for corporate earnings. Companies releasing their latest financial results include Canadian National Railway, Canadian Pacific Railway, Apple, Amazon, AT&T, Boeing, McDonald’s, Microsoft, Tesla, Metro, Pfizer, Procter & Gamble, Starbucks, 3M, Bristol-Myers Squibb, Xerox, Imperial oil, TD Ameritrade, General Electric, Facebook, Visa, Verizon and UPS.

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