For the quarter ending December 31, 2019 the S&P/TSX Total Return Index rose 3.2% this quarter, led by Information Technology, Materials, Energy and Industrials. Similar to last quarter, the Health Care sector (mostly cannabis companies) again dropped significantly. For the full year, the Index rose 22.9% led by Information Technology, Utilities, Industrials and Materials. The only negative sector in 2019 was Health Care again primarily the Cannabis sector.
Looking back a year, the S&P/TSX Total Return Index was down almost 9% in 2018 and over 10% in the fourth quarter of 2018 alone due to fears of an economic slowdown from multiple successive interest rate increases caused by an overheating US economy, increasing debt levels and the fallout from continuing international trade wars. But 2019 saw inflation expectations easing early in the year. This was followed by three consecutive 25 basis points rates cuts by the Federal Reserve in the US with no change in rates by the Bank of Canada and by the end of the year, progress on the United States -Mexico-Canada trade agreement and possible improvement in US-China trade relations.
As we now look forward to 2020 unemployment rates remain low on both sides of the border, inflation expectations in both the US and Canada have been trending up in the last three months and global manufacturing is in expansion mode for the first time since late 2018. Meanwhile, despite US-Iranian tensions, North American markets are at all-time highs and the Federal Reserve continues to expand its balance sheet pushing bullish sentiment higher.
With markets at peaks, and earnings multiples at high levels the risk seems to be on the downside, and prudence would say it is time to take profits to protect capital: hold cash awaiting a sell off. Our approach is to maintain investments in stocks providing increasing dividends. No one can call or time the markets and the dividends provide the current income that cash cannot. In addition, dividend paying stocks tend to outperform when markets decline, providing downside protection. Most dividend paying stocks are in the services industry like telecom, banking, pipelines and energy. Except for the energy related companies, this group tends to be less sensitive to market cycles.