The S&P/TSX Composite Index rose 29 points on April 20. The Index has dropped 4.4% in 2018 thus far. Representatives from the two companies we will cover in this article have sounded a bullish signal for the TSX in April. Although the TSX has struggled to start the year, its value is enticing at this juncture, and financial stocks have been particularly turbulent since late January and early February.
As Canadians climb out of tax season, they should be on the lookout for bargains and for stocks yielding income in a choppy market. Let’s look at two stocks that should be on your radar today.
Gluskin Sheff & Associates Inc. (TSX:GS)
Gluskin Sheff is a Toronto-based wealth management firm. Shares of Gluskin Sheff have dropped 12% in 2018 as of close on April 20 and are down 15% year over year. In its fiscal 2018 second quarter results, the company saw assets under management increase $55 million to $9 billion as at December 31, 2017. A positive investment performance of $221 million offset net withdrawals of $166 million.
In the first quarter of 2018, the S&P/TSX Composite Index was listed number 77 among 93 global exchanges. David Rosenberg, chief economist and strategist at Gluskin Sheff, recently vouched for the enticing value offered by the Canadian stock market. “The near 7% earnings yields compares to 2.25% 10-year GoC yield for one of the most compelling equity risk premiums on the planet,” Rosenberg wrote in a recent article for The Globe and Mail. “In terms of sectors, energy, real estate, financials and consumer stocks all trade at below-normal multiples in Canada.”
In 2017 Gluskin Sheff offered an annual dividend of $1.85 per share, thereby representing a 6.8% dividend yield.
Fiera Capital Corp. (TSX:FSZ)
Fiera Capital is a Montreal-based asset management company boasting over $125 billion in assets under management. Shares of Fiera Capital have dropped 10.5% in 2018 so far and are down 16.4% year over year. In 2017, Fiera Capital reported a 10% increase in assets under management, reaching $128.9 billion. Annual revenues increased 33% from the prior year, and the company posted a quarterly dividend increase of 5.6% to $0.19 per share, representing a 6.2% dividend yield.
Candice Bangsund, the vice-president and portfolio manager at Fiera Capital, has also been keen to point to the attractive value of the TSX. Fiera Capital sees the S&P/TSX heading over 17,000 by the end of 2018, with global growth powering the Index to new highs.
“Market sentiment remains extremely fragile,” Bangsund said, referencing anxiety over U.S.-China trade tensions and ongoing NAFTA negotiations. “The earnings season could be a huge potential catalyst to get the markets refocusing their attention on fundamentals.”
Both stocks offer a highly attractive dividend yield, and a broader rally in the TSX should provide momentum for investment and financial services assets. Softer inventories and heightening tensions in the Middle East have also boosted oil prices, which should bode well for energy stocks going forward.
