High Yield Performance in June, 2025

 

It's June and in the last week in May, it was about the Big Bank earnings and the expected loan loss provisions set by the bank authority here in Canada. All banks are above the minimum threshold required while some banks added extra billions.

The US initiated trade war with Canada will bring more layoffs with sectors affected along with companies laying off to restructure to boost earnings. Certainly makes it tougher on people where everything has gotten more expensive since Covid. 

Unfortunately, there's no trade deals involving Canada to date. Perhaps even escalating again with a possible 50% on steel and aluminium coming from the US

In their books. loss provisions are recorded as a hit to their earnings but all are in good shape with The Bank of Nova Scotia, BNS.TO being the laggard this time around. With a 6% yield, the bank increased their dividend by 3.8% on a positive note.

TD Bank, TD.TO is the big story rising above their past US debacle while investors like their moves and a new CEO in charge while the stock has risen above $90 CAD making a run for closer to $100 per share possibly this year. 

I'll be adding to both banks in my portfolio. I usually tend to lean more towards the laggard bank after quarterly earnings which is BNS and undervalued by the Graham Number.

Last year, TD was the down trodden bank working through their US issues and paying a huge fine. Its onwards and the bank has moved on from that while making changes internally.

The sector of interest to me after the Banks is energy and pipelines. Pembina Pipeline, PPL.TO with a favourable 1st quarter report for 2025 has an ex-dividend date of June 16th with a current 5.52% yield. More of my energy related stocks will have ex-dividend dates in the second half of June and I'll be looking at them mid month.

An experienced investor, Gordon Pape recently updated his high yield portfolio in the Globe and Mail which continues to gain near 10% on average since he started it in March of 2012 with an initial amount just shy of $25,000 and today worth $83,340 with many of the stocks I own in the 10 stock portfolio, PPL.TO included.

The stock I sold before the recent dividend cut was BCE.TO ... the telecom in his portfolio. It's wise not to copy a portfolio but do your own research and if questions about a stock keep swirling around in my head about performance and management moves with unfavourable news, I sell it and move the funds into another stock I prefer.

It's not only about dividends but share price growth as well where one of my stocks, Sun Life Financial, SLF.TO (also in Mr Pape's portfolio) gained close to $10 since my last buy in February of this year when the US tariff threats ramped up.

I continue to buy JP Morgan Canada's JEPQ (Nasdaq holdings) and JEPI (S&P 500 related holdings) with their fluctuating monthly distributions from these ETFs. They move in price with what's going on in the US as well and investor sentiment, averaging out around $24+ CAD each at this time. 

Mid May 2025 and the Canadian Big Bank Earnings

 

The TSX index is doing surprisingly well while there are no trade talks with the US at this time. Showing consecutive gains since the 6th of May. Cooling trade relations with the US and China is a plus for now.

Meanwhile, I like seeing "Beats Estimates" and "Increases Dividends" in reviews of quarterly reports recently while scanning over numbers and distributable cash flow with more reports to come from the stocks I own.

The Big Banks of Canada start reporting with TD Bank leading off the earnings reports on May 22nd, 2025.

                           

After the spin off from TC Energy, TRP ... South Bow, SOBO recently reported earnings for the 1st quarter in 2025 and where their Keystone pipeline runs through the US, there's the unpredictable Mr. Trump's tariff tantrums that could flare up which is mentioned in it's forward guidance. 

The company had a pipeline break in the US and that has been repaired while the remaining cleanup is nearing an end. Where the pressure in the line determines oil flow, The pipeline pressure has been ordered to be reduced so slower flow while the company completes it's order contracts. 

SOBO has an ex-dividend date in June 2025 on June 30th with payment on July 15th. The 0.50 per share is in USD so I get a bump in the USD to CAD conversion in my account.   

Another company which pays it's dividends in USD is Brookfield Infrastructure Partners L.P., BIP.UN with an ex-dividend date of May 30, 2025, so I'll gain about 30+% with the USD conversion of the distribution to CAD. BIP.UN has a current yield of 5.25%.

Brookfield Infrastructure is currently buying the US company, Colonial Enterprises for 9 billion, which has the longest established pipeline in the US.

Pipelines and Banks are some of my long term interests here in Canada where there's more interest in shipping natural gas and oil to Asia and Europe than there is to the USA these days. Investor interests vary where many like the Tech sector, specially those companies in the US like Microsoft, Apple and chip makers. 

Banks and mortgage renewals has been on the news lately. For example, those renewing after 5 years. Covid, house prices went ballistic with some bids exceeding the asking sell price and interest rates shot up with the high inflation during the last 5 years. That in turn drove up payments for many not on fixed terms, although interest rates have come down since the highs. Defaults are expected but the Banks have funds set aside for that,

With the insurance sector, Great-West Life, GWO.TO is on my radar to further fund for the 2nd of June ex-dividend date which kicks off a busy month for my stocks in a variety of sectors on my dividend calendar for June

Great-West Life has a yield of 4.75% and a recent dividend increase of 9.91% for 2025.

I look forward to dividend increases and perhaps even The Bank of Nova Scotia, BNS.TO will come across with one this year with no increases since mid 2023.