Consumers may grumble, but these oligopolies are great for investors
Consumers may grumble, but these oligopolies are great for investors
Introducing the top stocks in sectors with limited competition
Canada: three oligopolies in a trenchcoat.
Bank service charges and overdraft fees can infuriate consumers, and more choices could lower their temperature.
From the perspective of investors, though, Canada’s cozy network of oligopolies – in which a few players dominate one sector – can look very different. Slim competition can keep upstarts out and profits in, driving strong shareholder returns and attractive dividends over the long term.
“We have a handful of oligopolies that are able to fend off new entrants (whether regional or foreign) without needing to destroy profits for an extended period of time, or where we need a government financed solution,” Ian de Verteuil, head of portfolio strategy at CIBC Capital Markets, said in an e-mail.
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The image reminds me the RBC just bought HSBC, reducing our options and tightening the oligopoly. I was a customer of HSBC, but I’m not grumbling about RBC because I switched to another smaller bank. I’m not willing to fund their executive bonuses.