Interest rates go up in order to slow down the economy and keep inflation in check. So yes, as interest rates increase, I expect businesses and therefore share prices to do well.Yes, in this ultra low interest environment, dividend stocks in the TSX have done well and outperformed average. (The same does not apply to US stocks by the way).
Do you think the same outperformance will happen going forward, if rates rise significantly?
You have to be lucky to find fast growing smaller cap stocks. Especially ones that would beat the growth of those dividend paying stalwarts I listed above.Just read a bit about GSY. Rents out furniture, offers personal loans, etc:Wow, this is a fine list of growth issues. My strategy is to have about 80% in large dividend stocks that grow dividends, and about 20% in faster growers. My theory is one only needs one or two fast growers to signficantly improve capital growth, while getting income and some growth from the others - for me, the others are mostly banks and utilities. (I used to shun banks and utilities.)
Currently my hopes for a fast grower amidst the stalwarts is GSY.T. It reports on, I believe, Nov 12, and expectations are high. It is also consolodating recently after a significant runup in price.
P/e around 16, but recent growth has been 30% so p/e could expand.
No idea if it will do well, but not something I would buy. By the way, I see it has taken a 12% drop today so far and is still dropping!goeasy Ltd. is a leading full-service provider of goods and alternative financial services that provides everyday Canadians with a chance for a better tomorrow, today. goeasy Ltd. serves its customers through two key operating divisions, easyfinancial and easyhome. easyfinancial is a non-prime consumer lender that bridges the gap between traditional financial institutions and costly payday lenders.
That could be a fun exercise. Growth stocks in Canada have had some excellent returns. And some mutual funds that specialize in it (such as BG Small Caps) have done very well.One of these days I'm going to make a fictional portfolio out of these and see how it does going forward. Call it the "CMF off the top of our heads growth fund".
dividend stocks get a lot of air play here, so I think its time to pay some attention to the growth names.
Good post James. I agree with what you said. I had immediately thought of your LowDiv TSX Portfolio experiment in this regard. I know you might not consider it a perfect candidate for a Growth Portfolio, but any time you get low dividends and small caps, I think "growth".That could be a fun exercise. Growth stocks in Canada have had some excellent returns. And some mutual funds that specialize in it (such as BG Small Caps) have done very well.
Suggestions I have, from experience: make sure you have good sector diversification in the portfolio, because it's easy to end up very heavy in one sector (e.g. tech). Also make sure you evaluate the volatility of the stock picks and don't load up too heavily on the most volatile ones, such as pharma or pot. Finally, growth stocks require more active management... you must constantly re-evaluate the portfolio and weed out the duds, find new promising ones.
This is why a portfolio of mature, dividend payers is probably easier to manage long term. They are already well established, so you can hold them more passively. But I think small cap / growth stock investment requires more active management.
Thanks ltr. You're right, my Lowdiv stocks are mostly growth stocks. In that thread you can also see a link to my older thread (my first attempt at this technique) to see what mistakes I made. I'm still sticking with the method and will increase its size a bit in the December rebalance.Good post James. I agree with what you said. I had immediately thought of your LowDiv TSX Portfolio experiment in this regard. I know you might not consider it a perfect candidate for a Growth Portfolio, but any time you get low dividends and small caps, I think "growth".
Pluto should read through that thread and see what transpired.