A series of government policy shifts have combined to reduce the returns investors can expect from Canada’s flagship public companies
For retired investors, shares in banks, telecom and energy companies are golden geese. They dependably crank out ever-increasing dividends, funding the lifestyles of those who have left the work force.shares knows, stocks kicking off decent yields are taking a beating. Part of the downturn stems from the spike in interest rates. Part of the problem is poor execution by management. Over time, these shall pass. Rates will fall and CEOs, or their successors, will improve performance.
Over the past decade, banks, telecom and energy companies generated more than half the profits from S&P/TSX-listed companies. The only member of this trio to outperform the S&P/TSX benchmark over the last five years – oil and gas producers – did so as an unintended consequence of government policy. Mr. de Verteuil said energy companies “see little opportunity to re-invest in Canada and have moved to aggressively return profits to shareholders.
Giving Canadians more reasons to move their money out of public companies would be bad public policy. Individual investors are now the key backers of many Canadian businesses. CIBC estimates they account for 35 to 45 per cent of shareholders in domestic public companies. When it comes to mutual funds, retirement savers are also voting with their feet. Ten years ago, domestic mutual fund owners parked 55 per cent of their equity investments in Canadian stock funds. They now allocate just 29 per cent of their savings to domestic equity funds, shifting money to international and U.S. fund managers.
Cent Companies Equity Part Telecom Cibc Time Canada Chrystia Freeland S&P Canada
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