Ryan Bushell, CEO & Portfolio Manager, Newhaven Asset Management, shares his outlook on Canadian Dividend Stocks.

Ryan Bushell, CEO & Portfolio Manager, Newhaven Asset Management

Focus: Canadian dividend stocks

Top picks: Algonquin Power, Pembina Pipeline, K-Bro Linen

MARKET OUTLOOK:

It is highly unusual to see strong equity market performance without corroboration from the underlying economy.

So, what is driving markets higher?

In our view, four key themes explain current strength in North American equities:

1. Currency debasement and fear of acceleration

Investors are seeking refuge from fiat currencies by buying equities and gold, echoing points from our last commentary.

Real estate would normally participate as well, but valuations remain stretched following the interest-rate bottom during the pandemic.

Rising asset prices often reflect not just stronger fundamentals but a weakening denominator—the depreciating of the dollar, yen, or euro.

Concerns about chronic fiscal deficits in the West, driven by entitlements, healthcare, military spending, and poor demographics, limit governments’ ability to fund ongoing obligations through taxation.

2. Bubble dynamics in AI and gold

History is full of speculative booms sparked by transformative technologies: railroads, automobiles, the “Nifty Fifty,” Internet 1.0, and now AI. These technologies changed the world but also destroyed large amounts of investor capital. AI is likely no different.

Recent circular financing between chipmakers and their customers recalls the excesses that preceded the 2000 tech crash, detailed in the graphic below:

While we see less evidence of a gold bubble, its rapid rise, outsized role in Canadian market gains, and growing institutional interest, suggest momentum chasing is underway.

3. Coordinated central bank easing

In 2025, five major central banks—including the Federal Reserve in the U.S. and the Bank of Canada—have cut rates, with more easing expected.

Since the “Greenspan Put” in 1987, investors have treated central bank easing as an “all-clear” to buy equities, especially outside deep recessions. This was reinforced after the 2008–2009 financial crisis and again following the 2020 pandemic.

Falling yields on deposits and short-term instruments including guaranteed investment certificates (GICs) are pushing more capital into equities seeking return, particularly amid fears of currency debasement and inflation.

4. Rising energy demand and electrification

Structural shifts in trade, climate, transportation, and AI are fueling demand for power.

Utilities and energy infrastructure are typically defensive sectors that are sold to purchase riskier assets during a market rally. Their strength, alongside technology and gold, has amplified equity market gains this year.

In summary, the themes above are propelling markets higher in 2025 despite clear signs of economic weakness. Falling rates reinforce the perception that central banks stand ready to intervene, but we question whether monetary policy is losing effectiveness after such heavy reliance in recent decades. Many consumers and businesses (particularly U.S. homeowners with long-term fixed mortgages) have already locked in low rates, muting the stimulative impact of further cuts. Housing stagnation, tariffs, and weakening employment are all likely to weigh on growth ahead.

TOP PICKS:

Ryan Bushell’s Top Picks: Algonquin Power, Pembina Pipeline & K-Bro Linen Ryan Bushell, CEO & Portfolio Manager, Newhaven Asset Management, shares his top stock picks to watch in the market.

Algonquin Power (AQN TSX)

Following a few painful years, Algonquin Power appears to be on the road to recovery. Now that the company has transitioned to a pure play utility and dividend cuts are in the rear view mirror, the depressed multiple on Algonquin is poised to expand. One of the few companies trading at a discount today, and a solid set of rate cases being filed which should help future earnings. As the street warms up to new management this company could see strong relative performance supported by a 4.5 per cent dividend yield along the way.

Pembina Pipeline (PPL TSX)

Pembina saw some excitement at the beginning of the month with a new datacenter announcement that sent the shares skyward. More recently, news broke that KKR is looking to sell their minority stake in the Pembina Gas Infrastructure JV and Pembina is a likely buyer. We feel that Pembina is incredibly well positioned for the next phase of natural gas volume growth in Western Canada and that the shares represent solid prospects at current levels with a 5.2 per cent dividend yield while we patiently wait for future projects to unfold.

K-Bro Linen (KBL TSX)

K-Bro Linen is off the radar for most investors as they are not a flashy company. They recently completed a material acquisition in the U.K. where they were able to outmaneuver multiple suitors to win this complimentary business. In a market with excessive speculative risk our grounded conversations with management are a refreshing change of pace. A solid 3.3 per cent dividend yield and ongoing operational improvements and integration should result in a steady path forward for the company and shareholder returns.

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PAST PICKS: NOVEMBER 12, 2024

Ryan Bushell’s Past Picks: BCE, Northland Power & Canadian Natural Resources Ryan Bushell, CEO & Portfolio Manager, Newhaven Asset Management, discusses his past stock picks and how they’re doing in the market today.

BCE (BCE TSX)

Then: $38.60

Now: $33.22

Return: -14%

Total Return: -6%

Northland Power (NPI TSX)

Then: $20.12

Now: $24.77

Return: 23%

Total Return: 29%

Canadian Natural Resources (CNQ TSX)

Then: $47.07

Now: $42.25

Return: -10%

Total Return: -5%

Total Return Average: 6%

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