Young and Frederick - ScotiaMcLeod Whitby

Welcome to Technically Speaking

Young & Frederick Investment Solutions is proud to introduce our biweekly technical analysis commentary of the TSX. This comment is intended for your informational purposes only, and is not a recommendation to buy or sell any security. It is intended to inform you of the technical structure of the market and what you as an investor can expect in the time frames being commented on.

For our purposes, the analysis will provide a comment reflecting a short term time horizon as well as the more important intermediate term time frame. The short term analysis is a daily analysis and is generally utilized by more aggressive traders and investors. For our purposes this indicator acts as an early signal for the intermediate term. Intermediate term data is weekly and is of use to the more conservative long term investor.

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Geoff Ho, CFA - Director, Canadian Equities, Portfolio Advisory Group

Global markets have had a phenomenal run over the past six months, with the S&P/TSX Composite Index posting capital appreciation of 22.5% and total return including dividends of 24.3%. It is not very often that share prices experience such dramatic and rapid advances as this was a rare confluence of severely oversold conditions, unprecedented fiscal and monetary policies aimed at stimulating economic activity, resilient and opportunistic emerging markets, and excess liquidity looking for a home. On a relative basis, dividend income has certainly been a small component of the overall gain during this recent period.

Taking a longer term perspective, however, we continue to highlight the importance of dividend income as a component of total investment return. For example, between 2001 to the present, the S&P/TSX Composite rose by 27.6% while the total return including dividends came in at 54.7%. Accordingly, while it is important to have exposure to cyclical stocks and growth companies to position for the next economic cycle, it is equally important to enhance returns with a core list of strong dividend paying stocks in the portfolio.