Rates Are Going Up. Are Canadian Dividend Stocks Still Safe?

Ryan Bushell (0:04)

Canada has a part to play here. We have so undersold ourselves for so long, the opportunity I think is pretty significant.

Amber Kanwar (0:11)

What if the best way to insulate your portfolio against rising rates was to buy Canada? That's the view of Ryan Bushell at Newhaven Asset Management, and the dividend investor is putting up some pretty impressive numbers. Rates have been grinding higher, and you might think that somebody who runs a defensive dividend portfolio has suffered, but you haven't. You're up 18 percent so far this year. How are you doing that?

Ryan Bushell (0:31)

The infrastructure side got way too cheap in 2020, and that's really been the source of most of our performance.

Amber Kanwar (0:37)

Enbridge has sold off with other pipelines, high debt. Why Enbridge here now?

Ryan Bushell (0:43)

If the floor price on gas goes up, you're going to want to own Tourmaline.

Amber Kanwar (0:46)

Nice takeout, ARC Resources taken out by SHEL.

Ryan Bushell (0:50)

I would debate you on nice takeout. We're not happy about that takeout.

Amber Kanwar (0:54)

This is my most explosive question on it. Do you see a world where VCE and Telus come together and become a combined company?

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Hey everyone, welcome to a brand new episode of In the Money with Amber Kanwar. We know that interest rates around the world have been rising, and at some point that can be a problem for investors, especially if you are a dividend investor. You might be looking at your portfolio and looking at your traditionally stable names, like your pipelines, and wondering why are they down 10-15%?

Well, that's because of the rate environment. And in this episode, we speak to Ryan Bushell of Newhaven Asset Management, who loves stable dividend paying stocks, and has been known to weather some pretty awful storms in order to get to long-term better returns. And you know what? The proof is in the pudding. Their numbers, despite rising rates, despite a lot of stocks that have pulled back, are still really impressive. They're up 18% so far this year, and have done really well over the long term as well. And one of the reasons that Bushell attributes that to is betting on Canada. He said the bar has been so low for so long that some of their biggest gains have come from the infrastructure sector, which even though it's done well over the last couple of years, he thinks better days are ahead. So it could be that the best way to insulate yourself around a rising rate environment is to buy Canada. Let's get into it.

Ryan Bushell, thank you so much for rejoining me on the podcast.

Ryan Bushell (3:56)

Thanks for having me. It's a pleasure to be here.

Amber Kanwar (3:58)

You know, we came into September pretty hot. There was a laundry list of kind of problems right away. Seasonally, September isn't great for stocks, but there was a really good reason this time for the selloff. And that was what was going on in the bond market. Interest rates are high, and that's a problem for nearly every single asset class. And we saw that reflected in the market. As somebody who traffics in dividend payers, how worried have you been about the interest rate picture?

Ryan Bushell (4:29)

Yeah, so it's clear over in history that dividend paying stocks suffer when rates rise, especially those more regulated, slower cash flow sectors, lower growth sectors like utilities and telecommunications. And those were hit alongside some of our favorite infrastructure and midstream names. But I think what's more interesting in this cycle is the tech debt issuance that's leading, potentially leading to some of that interest rate increase.