By Michael Kokalari CFA, chief economist, and Thai Thi Viet Trinh, senior economist.

Understanding one of the fastest-growing asset classes

For any income-focused investor moving from initial interest to active consideration of adding a stock to their portfolio, it is advisable to interrogate the extent to which the company’s strategy is supported by a durable and mathematically sound shareholder return framework.

Will they secure the dividend and fund buybacks?

An analysis for income-focused investors

For any major integrated energy company, the central challenge is clear: deliver competitive shareholder returns today while navigating the complexities of the global energy transition. bp has announced a "fundamental update" of its strategy—a decisive answer to this challenge that reflects decades of leadership experience and the imperative to deliver strong performance for shareholders.

Here’s the scorecard to watch

Edison’s investment companies team recently published a review of Canadian General Investments (Ticker: CGI). It has significantly outperformed the Canadian market over the very long term; not many investment companies are able to report a 50-year record of outperformance. Things have been a little more challenging this year in a volatile and narrow market led by gold stocks. However, CGI’s relative performance is improving now the market is broadening out and manager Greg Eckel acknowledges that there are times when the best portfolio outcome is to leave well alone and wait for the dust to settle. As well as core long-term holdings, there are some interesting themes in the portfolio such as uranium stocks, which are not widely held, and have performed very well. Dividends are an important part of CGI’s total returns. This year has seen a step-up in the company’s annual dividend growth rate from a 4 cents per share increase over the last seven years to an 8 cents per share increase. This year will mark 12 years of consecutive higher dividends.

Canadian General Investments’ (CGI’s) objective is to provide better-than-average returns to shareholders by investing in a diversified portfolio of primarily Canadian equities. It aims to achieve this through prudent security selection, timely recognition of capital gains/losses and appropriate use of income-generating instruments. CGI’s performance is measured against the S&P/TSX Composite Index.

Here are five things investors need to know about CGI:

1. It is a well-established fund with an enviable long-term performance record.
2. CGI can be considered as a ‘one-stop’ shop for investment in Canada.
3. The manager employs a bottom-up stock selection process, with low portfolio turnover.
4. The portfolio has a long-term, below-market weighting in financial stocks.
5. CGI offers a leveraged, dividend-paying portfolio at a wide discount.

If you would like to learn more about CGI, please see our latest research.

Scaling up in Canada