We often forget this simple principle, but the stock market is always ahead of the economy. Therefore, when things look bad (high unemployment rate, global economic slowdown, etc.) the stock market can rise. In fact, investors expect the effects of a vaccine along with all of the “free money” that is printed or borrowed at extremely low rates. Hence, while we pile up bad news about the macro environment, the market is rising.

What will happen this year The economic news will improve and stocks are likely to move sideways or even fall. Why is that? Because all the good that could happen in 2021 is pretty expensive in the market right now. What can you do about it? Nothing.

The hard part is that if the economy grows as expected, not much will happen. However, surprising news (both good and bad) could also happen! The underlying force of having so much liquidity in the stock markets is likely to support another year of growth. However, I would not be surprised if we had a “year without a return” in 2021. I expect dividend growth investments to become more attractive again in this challenging investment environment.

Last year was quite a roll cost! If there is one single piece of wisdom to remember from 2020 it is: stay invested. If you’ve stayed invested since December 2014, your portfolio is now in significantly better shape as the US market has doubled in value and the Canadian market is up 50%.

What will 2021 bring us as investors? More dividends! Today I’m going to share with you two stocks that are among my top picks for 2021. The selection method of these companies is explained in this article:

What will a dividend growth investor buy in 2021?

Sysco (SYY)

  • Market Capitalization: 39B
  • Yield: 2.36%
  • Revenue growth (5 years, annualized): 1.67%
  • EPS growth rate ((5 years, annualized): -18.25%
  • Dividend growth rate (5 years, annualized): 7.89%
Source: Ychart

Sysco has been on Mike’s buy list for some time and was recently taken off the market after a strong performance in November. With vaccines coming in 2021, many are hoping we can get back to normal life sooner than expected. I’m not an epidemiology expert, but I can see for sure how Sysco will benefit from this situation in the long run.

Source: Presentation by Sysco on December 1st

Sysco is the dominant player in the highly fragmented food distribution business. Better still, this market in the US is fragmented with over 10,000 small grocers across the country. This gives SYY a great opportunity to attract and integrate smaller players. Not all grocers can get through the pandemic without getting injured. Sysco has the balance sheet to master this challenging time and emerge stronger than ever.

The company has helped restaurants find other ways to survive during the partial lockdowns. SYY has also upgraded its digital services and focused on cutting costs to improve liquidity. The cash payout ratio for the last quarter (September 30th)th, 2020) was around 50%. Statistics show that many households are fed up with cooking and are looking for take-away options. Sysco’s weekly sales have steadily improved since April.

I expect a slowdown this winter as the vaccines have not yet been distributed in North America. This should hurt smaller players and open the doors for Sysco to gain additional market share. It can take up to two years, but sales will start growing again and Sysco will continue to dominate the food distribution industry.

BlackRock (BLK)

  • Market capitalization: 120B
  • Yield: 1.84%
  • Revenue growth (5 years, annualized): 5.58%
  • EPS growth rate ((5 years, annualized): 8.11%
  • Dividend growth rate (5 years, annualized): 11.32%
Source: Ycharts

I can’t get enough of BlackRock! Back in 2013, when we created our 25,000 and 100,000 DSR portfolios, BLK was among the first to be identified as a great candidate. At the time, I didn’t have any personal money to add BLK to my portfolio. When I quit my job in late 2017, BLK stock prices were nearing nearly $ 500. I ignored it thinking it was expensive. In other words, I haven’t followed my own advice to buy stocks you believe in whenever you can. I kicked myself for a while when BLK hit nearly $ 600 in 2018. I finally got lucky and had the opportunity to get BLK for $ 400 during the small market crash of 2018. Today the stock is trading above $ 700 and I would buy it right now.

Source: BLK investor presentation

BlackRock counts on several growth vectors. Of course, you can think of them as the greatest ETF developer with their iShares series. While the ETF business is thriving and this trend is not ending, BLK offers a lot more than the most popular investment vehicles.

A lot of money should be earned through asset management in the future. Many people have amassed a significant amount of wealth and are looking for more than a simple investment solution. You are looking for a competent advisor who not only looks after your money, but also plans your financial future. BlackRock supports these consultants with a full platform called Aladdin. This platform is more than a simple portfolio management tool. It is a gold mine of financial data combined with artificial intelligence that helps portfolio managers, advisors and institutional clients optimize their investment decisions. In a world where retirement provision is everyone’s responsibility, such an instrument is invaluable. Aladdin is still in the early stages of growth as it is used by only 20% of portfolio managers, 23% of US annuities and 17% of the top 250 insurers.

Find out 6 companies that will wipe out in 2021

Every year I make a list of 20+ stocks that are expected to outperform the market. As early as December 2019, we ended a fantastic year with double-digit returns. Then the pandemic depressed the market (minus 30%) and the flood of new money combined with the strong growth of technology, consumer staples and gold brought the market back up double digits. Staying invested has been the key factor for the many who have succeeded with their portfolio in 2020.

You can download 6 of my top 20 for 2021 here:

Disclaimer: I hold shares in BLK.


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