Mackenzie Canadian Dividend Equity
Mandate commentary
Q3 2026
Highlights
① The mandate underperformed its benchmark, as gains from energy, industrials, consumer staples and materials were offset by technology, consumer discretionary and communication services.
② Earnings growth provided a powerful tailwind for equities.
③ Inflation, energy costs pushed long-term yields higher.
Mandate overview
The mandate invests primarily in Canadian dividend-paying companies using a bottom-up fundamental approach. Portfolio construction emphasizes valuation, normalized earnings and free-cash-flow potential, while balancing company-specific opportunities against sector exposures and overall portfolio risk. Position sizes are adjusted as valuations, fundamentals and risk/reward characteristics evolve.
Mandate: Performance summary
The mandate underperformed the benchmark. From a sector perspective, the biggest detractor was the information technology sector, where Shopify was not held in the portfolio and the stock saw significant gains in the quarter. Stock selection in the consumer discretionary and communication services sectors also detracted. The energy sector was the strongest relative contributor, as strong stock selection contributed positively. In addition, strong stock selection in the industrials and materials sectors also contributed.
At the security level, Agnico Eagle Mines and Canadian Natural Resources were the strongest contributors, while the lack of exposure to Shopify and the overweight position in Intact Financial were the largest detractors.
Performance contributors
Agnico Eagle Mines was the largest individual contributor to relative performance. The overweight position benefited as the shares advanced, supported by strong operating results, disciplined costs and record quarterly free cash flow.
Canadian Natural Resources also contributed meaningfully. The overweight position benefited from share-price strength during the quarter, supported by record quarterly production and adjusted funds flow.
Performance detractors
The mandates lack of exposure to Shopify was the largest individual detractor to relative performance. The benchmark holding’s strong return during the quarter weighed materially on relative results and was the primary driver of the information technology sector shortfall.
Intact Financial detracted, as the overweight position declined. Second-quarter results included elevated catastrophe and large losses, which pressured underwriting income and weighed on the shares.
Total gross returns:
Total return (CAD) | QTD | YTD | 1YR | 3YR | 5YR | since INC. (NOV. 14, 2016) |
MACKENZIE CANADIAN DIVIDEND EQUITY | 0.95
| 15.75
| 20.55
| 21.07
| 14.06
| 10.76
|
Mandate positioning
The portfolio initiated a position in Ovintiv and eliminated Alamos Gold and ARC Resources. At quarter end, the portfolio’s largest sector exposures remained financials, energy, materials and industrials. Relative to the benchmark, the portfolio was overweight utilities, industrials, energy and health care and underweight financials, consumer staples, information technology and real estate.
The broader backdrop remains sensitive to inflation, interest rates, energy prices and Canada–U.S. trade developments. Accordingly, portfolio positioning remains differentiated from the benchmark, with active sector and security selection continuing to drive the risk/reward profile.
Market overview: earnings growth provided a powerful tailwind for equities
The third quarter showed that the current business cycle still has support, but risks have shifted. Growth held up, earnings improved and corporate investment remained firm, but higher oil prices, persistent inflation and rising long-term yields made the path forward less certain. Equities advanced as earnings provided fundamental support, even as higher rates raised the bar for further gains.
Canadian equities benefited from gains in resources and financials. Higher oil prices supported energy, while precious-metals companies were among the strongest performers. Bank earnings were supported by capital-markets activity, trading income and contained credit costs. U.S. equities also advanced, supported by strong earnings and continued technology investment. Higher yields weighed on more rate-sensitive areas.
International markets remained constructive overall, with parts of Asia benefiting from continued demand across the AI technology supply chain. Fixed income faced greater pressure as rising government bond yields outweighed coupon income, while credit remained comparatively resilient. Across markets, the central tension increasingly became earnings strength versus higher inflation and interest rates.
Market outlook: inflation, energy costs pushed long-term yields higher
With the recent earnings strength, the bar for market performance is higher. U.S. valuations are at the upper end of their historical range and have come under pressure from higher bond yields. Investor sentiment points to strong earnings growth going-forward, which could support equities in the near term, but the magnitude of gains may be muted.
The U.S. Federal Reserve and Bank of Canada each face two rate decisions this year, and persistent inflation has shifted central banks toward a tighter policy stance. Long-term yields remain a pressure point for equities, while also improving the income available from bonds.
The U.S. midterms may add to market volatility, but the path forward will be shaped by the economic cycle, inflation and interest rates.
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This commentary may contain forward-looking information, which reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and do not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of September 30, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised, whether as a result of new information, changing circumstances, future events or otherwise.
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