STANTEC (STN.TO 0.73%)
Stantec offers professional consulting services to both public and private-sector clients for all phases of a project’s life-cycle. Services include planning, architecture, interior design, landscape architecture, engineering, surveying, environmental remediation, project economics and project management. For example, Stantec has done interior design work for the expansion of the Edmonton International Airport Terminal, rehabilitated sewer lines in Boston and brought solar and wind power to the Brooklyn Navy yard.
Its latest acquisitions have provided them with more U.S. exposure, mostly in the environmental sector. If U.S. President Trump encourages the passing of an infrastructure bill in 2018, Stantec should benefit from it. Last purchase was January 26, 2018 at $35.39.
SVENSKA HANDELSBANKEN (SHBA)
Svenka Handelsbanken provides corporate and individual clients with deposit products, loans, credit cards and other banking services. The bank boasts more than 830 branches in 25 countries, with most in Sweden, the U.K., Denmark, Finland, Norway and the Netherlands. Founded in 1871, the bank’s assets now exceed $360 billion (as a comparison, RBC’s assets exceed $1.2 trillion).
We like the bank for its customer-centric business and its business model: branch managers make the lending and deposit decisions, not the head office. Branch banking is more profitable and stable than capital market activities. Its Tier 1 capital ratio is 27.9 per cent, making it less risky than other European banks. Loan growth in 2017 was 5.2 per cent, while deposit growth was 10 per cent. Finally, the dividend has grown nicely, averaging 10 per cent a year for the past 15 years. Last purchase was January 29, 2018 at $116.32
U.S. TREASURY TIPS (TII 2.125% due February 15, 2040)
This is an inflation-protected Treasury bond rated AAA. An investor receives 2.125 per cent in coupon payments plus the inflation rate each year. If inflation is running at 1.5 per cent, the investor receives 3.625 per cent in payments. If inflation runs to 10 per cent, the investor would be paid 12.125 per cent. The inflation rate compounds each year to maturity.
With a falling U.S. dollar and rising commodity prices, companies may be forced to raise prices for their goods. If wages start to rise because of a labour shortage, that too is inflationary. If Trump decides to run higher deficits and if a new $1-trillion infrastructure bill is enacted, they, too, are inflationary.
This investment is a hedge against inflation, naturally, but also against a falling U.S. dollar. Last purchase was January 19, 2018 at $147.12.