Guardian Capital Global Dividend
Mandate commentary
Q3 2026
Highlights
① Energy prices and inflation were the dominant headwinds, including renewed hostilities between the U.S. and Iran, and central banks’ hawkish stances.
② Earnings growth provided a powerful tailwind for equities.
③ Inflation, energy costs pushed long-term yields higher.
Mandate overview
The mandate underperformed its benchmark, the MSCI World Index (Net CAD), during the quarter, due to negative stock selection, slightly offset by a positive sector allocation.
The industrials sector was the largest contributor to relative performance this quarter, driven by positive stock selection from Schneider Electric and Republic Services. The mandate’s overweight exposure to the energy sector was also a contributor. In the information technology sector, positive stock selection from Microsoft and Apple also added value this quarter.
On the flip side, the financials sector was the largest detractor, mostly driven by negative stock selection from Royal Bank of Canada and AXA. Negative stock selection in the energy sector, notably from Williams Companies, also detracted this quarter.
Mandate: Guardian Global Dividend portfolio stock review
Performance contributors
Microsoft is one of the world’s largest technology companies, with leading positions in cloud computing, software, productivity tools and artificial intelligence. The stock contributed to relative performance during the quarter, as the company delivered strong financial results, supported by rapid growth in Azure cloud services and increasing adoption of AI products, such as Microsoft 365 Copilot. Azure revenue surpassed US$100 billion annually for the first time, highlighting the strength of demand for the company’s cloud and AI offerings. Microsoft is uniquely positioned to benefit from the long-term adoption of AI across businesses and consumers. Moreover, the company’s market leadership, growing AI ecosystem and strong recurring revenue base support maintained earnings growth and shareholder value creation.
Apple was a strong contributor to performance during the quarter, as the company delivered robust earnings growth despite ongoing supply chain constraints. Investor sentiment was further strengthened following Apple's September product launch event, which featured its first foldable smartphone alongside several notable product innovations that reinforced confidence in the company's ability to drive future growth. These developments, combined with strong results across its iPhone, Mac and services businesses, helped propel the stock to record highs and pushed Apple's market capitalization above US$5 trillion. Apple boasts an unparalleled ecosystem, highly loyal customer base, growing services segment and expanding integration of artificial intelligence across its product portfolio, which the team believes positions the company to deliver sustainable growth and long-term shareholder value.
Performance detractors
The Williams Companies is a leading North American energy infrastructure company that transports and processes natural gas through an extensive pipeline network. The stock detracted from relative performance over the last three months as investors reacted to an earnings and revenue result that fell slightly short of expectations, despite continued business growth. The company nevertheless reported higher earnings, raised its 2026 outlook and expanded its footprint through the acquisition of Momentum Midstream. Williams is well positioned to benefit from growing demand for natural gas from LNG exports, power generation and data centres. Moreover, the company’s high-quality assets, visible growth projects and strong cash flow provide an attractive long-term investment opportunity.
ASML Holding is a Dutch technology company that manufactures the highly specialized lithography machines used to produce the world's most advanced semiconductor chips. The stock detracted from performance during the quarter, as investors reassessed valuations across AI-related technology companies and remained cautious amid ongoing export-control and geopolitical uncertainties. Despite the share price weakness, the company continued to benefit from strong demand for advanced semiconductor manufacturing equipment, raised its 2026 sales guidance and maintained strong order visibility into 2027 and 2028.
Total gross returns:
Total return (USD) | QTD | YTD | 1YR | 3YR | 5YR | SINCE INC. (FEB. 18, 2025) |
GUARDIAN CAPITAL GLOBAL DIVIDEND | 0.89
| 10.93
| 12.54
| 12.02
|
Mandate positioning
During the quarter, the manager initiated positions in Analog Devices (ADI) and American Water Works Company (AWK). ADI benefits strongly from AI growth and boasts a healthy dividend growth rate of 8% and meaningful buybacks. The team saw an attractive entry point in AWK, which is exhibiting a consistent EPS and dividend growth through 2030, supported by a large, regulated infrastructure investment program.
To fund those purchases, the manager exited Oracle, Vistra and WEC Energy Group. Oracle was exited due to its increasing capital expenditure and debt levels driven by its aggressive AI and cloud infrastructure investments. Additionally, early signs of deteriorating dividend sustainability metrics contributed to Oracle no longer meeting our GPS (growth, payout and sustainability) criteria. The WEC exit was primarily driven by higher debt and interest expense that had the potential to weigh on earnings: WEC already carries substantial long-term debt and expects additional debt issuance to fund its capital plan.
The mandate has an overweight allocation to the energy and financials sectors and an underweight allocation to the materials, communication services, consumer discretionary, utilities and information technology sectors. Regionally, the strategy has approximately 26% weight in Europe, 73% weight in North America and 1% weight in India.
The manager continues to evaluate the investment opportunities under the structural frame of GPS: growth, payout and sustainability. Through the latest insights of the manager’s AI-powered model, the energy and information technology sectors continue to exhibit the strongest forecasted earnings and dividend growth outlook globally. The manager has also started to observe early signs of normalization toward slower growth in their model. The manager continues to leverage AI for scale and use the AI-powered model to detect potential signals of growth, monitor valuation, detect quality and assess the risk to earnings growth and dividend sustainability.
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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