In this multi-part, shallow dive into investing and my own investments in the stock market, I highlight those industries in the following two sectors:
Financials – This sector, which I understand, like Communications, Discretionaries and Industrials, also makes up ~10% of the market, encompasses those businesses that keep track of the debits and credits of the economy. Like some other sector’s businesses, they are subject to interest rates and economic conditions, and they can be even further interfered with – or assisted by – government intervention via regulation.
This government oversight is also present in this industry as it is crucial to ensure integrity, security, stability and transparency, and is no more evidenced anywhere, in my opinion, than in the Canadian financial sector. As such, I have significant investments in it, through Canada’s banks and insurance companies for the aforementioned reasons, and as they also pay generous dividends.
Others in this sector deliver investment management and real estate services and together, they keep the capital flowing, extending credit and loans and other investment services to one and all; from individuals, through businesses to governments.
Some of the most recognizable names in this sector, aside from the big five Canadian banks BNS, BMO, CIBC, RBC and TD and insurance providers Sun Life and Manulife – all of which I own shares in – are those legendary US banking entities like JP Morgan Chase, Morgan Stanley and Goldman Sachs. Also in this sector are well known payment processing networks Visa and Mastercard, in-person and mobile transaction player Square and e-commerce and online payment services provider PayPal.
Healthcare – This sector, I understand, makes up ~15% of the market, consisting of businesses critical to our well-being and which provide medical and other products, pharmaceuticals, services and technologies. Like sectors previously mentioned, this one is also heavily regulated, with all of its businesses’ goods and services subject to approval through rigorous studies and testing.
It boasts many sub-sectors, from bio/pharmaceutical to bio/technological to those in the life sciences. From the healthcare devices, equipment and instruments manufacturers that supply them, to those providing healthcare services and insurance, all contributing to a “healthy” sector. Most sectors, of course, grow in time, but seemingly none more so than this one, not only as one and all of us grow old with age – which is accompanied by the inevitable decline in our health – but also because despite our declining health, we are all conversely living longer, so there are exponentially more of us to (health)care for.
In addition to growing due to aging-related reasons, the successful companies in some of its segments grow as a result of breakthrough research and development efforts. These result in positive publicity and product purchases, boosting the company’s brand and bottom line, fueling funding for more R&D.
It’s known as a defensive sector, as the wealthy and poor alike require care when their health is suffering through good economic times and bad, all year round. There is a dearth of solid Canadian players here, especially those that pay dividends, so my investments in it are in those south of our border.
Well established drug manufacturers such as Abbvie, Amgen, Bristol-Myers Squibb, Gilead Sciences and Pfizer, not to mention medical devices developer Medtronic and healthcare plan player CVS Health Corp – all of which I own – all pay solid dividends, which is another reason why I own them.
In part six, I’ll cover the Industrials and Materials sectors and how I have invested in them both directly and through the use of ETFs.
Disclaimer: The information contained herein should not be construed or considered professional advice. Nonetheless, thanks for reading! If it resonates, there’s “plenty more where that came from” on Facebook, Instagram, YouTube ‘n’ Twitter.