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VPI Canadian Equity Pool Newsletter – May 2017
What You Own – Canadian Utilities – The longest track record of annual dividend increases of any Canadian publicly traded company. With $5 billion in expected future investment from 2017 to 2019 in natural gas and electricity distribution and transmission, we expect that track record to continue.
What You Don’t Own – Aimia – Another unfortunate example of capital loss and wealth destruction. The headline this morning that Aimia was suddenly “suspending their dividends” reminded us that we still had to send out the newsletter electronically this month. So thank you Aimia.
Great Businesses are Diverse – Royal Bank has a diversified revenue base that allows for growth opportunities regardless of the operating environment. Royal Bank is a market leader in financial services focusing on lending, capital markets, wealth management and insurance. People were concerned about the Canadian banks exposure to the energy sector in the fall of 2015, but those concerns proved to be unwarranted. Currently, people are concerned with the Canadian banks exposure to the residential real estate market. Although the value of mortgages outstanding is massive, the actual losses to the banks have been minimal. With the structural and regulatory backdrop of the Canadian housing market, we believe that the risks to the Canadian banks will continue to be manageable.
Absolute Performance – Growing capital over the long-term through business ownership.
Own the Best, Leave the Rest – We believe we can grow your capital by focusing on the best businesses at attractive prices.