Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

GICs are a big problem-solver for investors seeking competitive yields and security, but this rule is a little less true than usual today.

Guaranteed investment certificates issued by alternative banks and trust companies typically offer yields that are better than government and investment-grade corporate bonds, with pretty much zero risk because of the availability of deposit insurance. But right now, there are a few investment-grade corporate bonds with yields that edge out alternative GICs. Warning: These bonds are riskier than GICs protected by deposit insurance. But held in a diversified portfolio of bonds and/or GICs, they can help you modestly boost your overall yield.

First, let's establish a yield range for alternative GICs. One online brokerage firm's selection of third-party GICs tops out at 1.96 per cent for two years, 2 per cent for three years, 2.1 per cent for four years and 2.3 per cent for five years. You might be able to get roughly 0.2 of a point more from other firms if you deal with them directly.

Story continues below advertisement

Next, let's see what investment-grade corporate bonds we can find with better yields:

- Canadian Natural Resources 3.05% June 19, 2019: This bond offered a yield of 2.9 per cent as of mid-April. The credit rating was BBB-high, a couple of notches above the BBB-low floor for investment grade. As with most bonds these days, this one trades at levels above the price investors will receive on maturity.

- Ford Canada 2.92% Sept. 16, 2020: These BBB-rated bonds yield 2.5 per cent based on a price just above par.

- Canadian Real Estate Trust 2.56% Nov. 30, 2019: The yield is 2.5 per cent based on a price a little above par. Rated BBB.

- Canadian Western Bank 2.5% March 22, 2018: The yield is 2.3 per cent, based on a price just above par. Rated A-low.

One thing to remember about GICs is the lack of liquidity – you can't easily sell before maturity, unlike a bond. Torn between GICs and corporate bonds? Use GICs as a reference yield and substitute corporate bonds only when you can get a comfortable mix of higher yield and quality. For example, you might set a floor of a BBB-high credit rating on any corporate bonds you consider.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies