The investment opportunity in robotics. Plus, 10 stock picks with yields still above 5% and fractional share purchasing comes to Canada – The Globe and Mail

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I’ve always been skeptical about the ‘robots are taking our jobs’ sentiment because globalization has had a much bigger employment-displacing effect in developed countries. Recent trends, however, have me considering robotics providers as a long-term investment opportunity.

Citi’s monthly Global Theme Machine report, which monitors over 80 investment trends for performance and attractiveness, identified manufacturing onshoring as the most attractive global investment trend. This involves the moving of production facilities from lower wage developing nations back to home countries. Citi’s global product head Alex Miller emphasizes that automation is a big part of this trend.

The current labour shortage as major economies re-open has been well documented. Managers surveyed by the U.S. Institute of Supply Management were in near-panic mode in the most recent results when it came to searching for workers.

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The pandemic has caused severe disruption in global supply chains. The ongoing global shortage of semiconductors, for instance, has resulted in shut-downs for major auto manufacturers and millions of gamers are still awaiting the chance to buy PlayStation 5s.

Onshoring will help alleviate supply chain concerns, reducing complexity, but major manufacturers will be reluctant to let higher wage costs – that’s if they can find workers – push profit margins lower. The answer seems to be a big jump in process automation and robotics investment.

The performance of major automation and robotics stocks has been mixed year to date, which implies that it’s still early for a potential investment in the sector. Switzerland-based ABB Ltd. has jumped 31.5 per cent year to date in U.S. dollar terms which is great, but Japan’s Fanuc Corp. and Wisconsin-based Rockwell Automation Inc. have only climbed 11.6 per cent and 18.0 per cent, respectively.

These are not thoughts I’m going to act on right away in my portfolio but I will be following relevant data closely in the coming months.

For readers looking for a more comprehensive look at the global automation trend, Citi has helpfully made “TECHNOLOGY AT WORK v6.0: The Coming of the Post-Production Society” publicly available here

— Scott Barlow, Globe and Mail market strategist

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Stocks to ponder

Mobile TeleSystems Public Joint Stock Co. (MBT-N) As stock markets continue to make new highs, it has become exceedingly difficult for The Contra Guys – read “cheap” – to find stocks to add to their portfolios. Their latest purchase took them well around the globe to Moscow. They look at why they recently purchased this telecom stock.

The Rundown

Doubting the commodity supercycle? It’s now a cheaper bet

Commodity prices have been struggling in recent weeks, pausing this year’s remarkable run on materials stocks and raising the question of whether the opportunity for investors has ended. But some observers remain convinced that a commodities “supercycle” – an extended period of strong demand for raw materials – is continuing, offering a buying opportunity for anyone who missed the first stage of the rally. David Berman reports

Top dividend ETFs for yield-hungry investors

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Even after a huge run-up, you can still nail a dividend yield of about 2.5 per cent by investing in a broad-based Canadian equity ETF. But you can do better, yield-wise, by looking at exchange-traded funds that hold exclusively Canadian dividend-paying stocks. These products differ widely in their approach to portfolio building, which means yields vary by a surprising amount. Rob Carrick tells us about some of his top picks.

Ten recommended stocks with dividend yields that are still over 5%

When the stock market is rising, it’s always nice to open your monthly portfolio statement and see how much your net worth has increased. But for income investors there are two sides to this coin. While share values have risen, yields in most cases have dropped. What’s the solution? One possibility is to move some of your assets from lower yielding securities into higher yielding ones. Gordon Pape looks at 10 of his recommended stocks that are still yielding 5 per cent or more.

Wealthsimple Trade becomes first broker to offer fractional share purchases in both Canada and U.S. companies

Wealthsimple Trade is now offering its clients the ability to buy fractional shares in certain Canadian and U.S. companies, putting some of the market’s most highly priced stocks more easily within reach of newer investors. Irene Galea reports.

Wall Street charges ahead but some option traders hedge against sharp pullback

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Even with U.S. stocks scaling record highs day after day and Wall Street’s “fear gauge” showing a low level of worry, some corners of the options market indicate investors are growing much more fearful of a sharp pullback than they have been in months. Saqib Iqbal Ahmed of Reuters reports.

Others

These 11 growing companies from the S&P 500 are becoming increasingly attractive

Wednesday’s analyst upgrades and downgrades

Tuesday’s analyst upgrades and downgrades

Tuesday’s Insider Report: CEO buys shares of this stock as it falls into correction territory

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BlackRock CEO does not see inflation as transitory

ARK Invest’s Cathie Wood looks past rising consumer prices to focus on deflation

Globe Advisor

Why emerging markets are betting on green infrastructure

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Ask Globe Investor

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Question: When ETF companies publish performance data for their funds, are the returns before or after fees? And do they include dividends?

Answer: Exchange-traded funds and mutual funds report their returns after fees, with all distributions assumed to have been reinvested in additional units. Similarly, when a fund company provides a benchmark return for comparison – such as the S&P/TSX Composite Index – it is a total return with dividends reinvested. Standardizing returns in this way allows for apples-to-apples comparisons between funds and with indexes.

Unfortunately, not all ETF companies thoroughly explain what their returns measure, which leads to confusion. Bank of Montreal and Vanguard Canada, for instance, refer to the change in “NAV” (net asset value) or “market price” of their ETFs, which may lead some readers to believe, incorrectly, that dividends are not included.

BlackRock Canada does a better job with its iShares ETFs. Its ETF performance tables include a clickable information button that brings up the following text: “Total return represents changes to the NAV and accounts for distributions from the fund.”

–John Heinzl

What’s up in the days ahead

Stelco shares are on a roll as the steel industry booms, and special dividends could be on the way. Brenda Bouw will take a look at why analysts are so bullish on the stock right now.

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Globe Investor Staff

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