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3 top picks from Toron Investment’s Charles Lannon

Charles Lannon is the director of research for Toron Investment Management. His focus is on global equities.

Market outlook
The capital markets will continue to demonstrate a high degree of sensitivity to news flow regarding European debt refinancing initiatives. For investors this likely means periods of volatility over the medium term.

On a positive note, volatility frequently gives rise to opportunities to acquire high quality, dividend-paying stocks at steeply discounted prices. The sovereign bond market will likely remain overbought, as large institutions are ignoring the negative yields on offer and are clearly making allocations based on fear of the volatility that may arise from a dissolution of the euro.

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Dividend paying equities, and especially dividend payers that demonstrate organic growth potential, will continue to disproportionately benefit from the over-valued fixed income market.

Past Picks: August 11, 2011

Cominar REIT
Then: $21.55
Now: $24.43
TR: +21.21 per cent

Smith & Nephew plc
Then: £541.00
Now: £659.50
TR: +24.13 per cent

Then: $28.44
Now: $37.77
TR: +40.34 per cent

Total return average: +28.56%

Top picks

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H. J. Heinz Co.
Heinz has a broad portfolio of sauces, children's food and beans. The dividend equates to a 3.7 per cent yield, and will grow in coming years as the company benefits from its sizable emerging market exposure and a gradual rebound in U.S. restaurant sales.

CLP Holdings
CLP is a blue chip, Hong Kong based power generator that operates on a pan-Asian basis. The company has a conservative business model, and we expect the dividend -- 4 per cent on the current share price -- will rise steadily as refurbishments in Hong Kong and growth projects throughout the emerging Asian economies come on stream.

In a market environment where too many low growth, high dividend Canadian equities have been overbought, Genivar stands out for its attractive and sustainable dividend yield of 7.0 per cent and strong medium-term earnings growth prospects.

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