TSX hits a 2-month low as dividend-paying stocks fall

By Fergal Smith

(Reuters) -Canada’s main stock index fell on Monday to a near two-month low as a drop in oil prices pressured energy shares and rising bond yields weighed on dividend-paying stocks.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 33.52 points, or 0.2%, at 19,784.87, its lowest closing level since June 27.

“Interest rates continue to climb, which is something negative for the TSX which is littered with dividend payers,” said Barry Schwartz, a portfolio manager at Baskin Financial Services. “The higher rates go, the less attractive those dividend payers become.”

Canada’s 5-year yield rose 5.4 basis points to 4.143%, trading near its highest level since November 2007, as investors bet that the Bank of Canada and some other major central banks will leave interest rates at elevated levels for longer than previously thought.

Stocks paying high dividends dominate the real estate, utilities and financials sectors.

Real estate fell 1.5% and utilities were down 0.9%. Financials, which account for 29% of the TSX’s weighting, lost 0.5%.

Energy was also a drag, falling 0.6%, as oil settled 0.7% lower at $80.72 a barrel.

In contrast, the materials group, which includes precious and base metals miners and fertilizer companies, added 1% as gold and copper prices rose.

Technology was another bright spot, rising 1.3%.

Shares of Restaurant Brands International gained 0.9% after J.P.Morgan initiated coverage on the stock with an “overweight” rating.

(Reporting by Fergal Smith in Toronto and Shubham Batra and Shashwat Chauhan in Bengaluru; Editing by Shilpi Majumdar and Deepa Babington)


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