Q: In my RIF and TFSA accounts I way overweight BNS, which has performed splendidly, not to mention its attractive dividend. Looking to spread some of the market risk to TD but I'm leery of the other banks as they appear way overpriced by comparison. As an income investor, should I shift to ENB, FTS, EMA for more safety?
5i Research Answer:
We think TD is fine and it has a good outlook. However, utilities such as those mentioned will likely hold up better if we see a recession. Utilities' cash flow is far more resilient during periods of economic weakness, and banks can experience loan losses if things do get bad. We think adding some utilities exposure makes sense for conservative investors.