Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.
Nostalgic for bonds with 5% yields? These blue chip dividend stocks may help you get over it
I’m coining the phrase “yield nostalgia” for my fellow investors who have been around long enough to remember when it was possible to get a substantial return from bonds and guaranteed investment certificates, Rob Carrick writes. But if you’re open to 5-per-cent yields from blue chip stocks rather than GICs or bonds, you do have a few possibilities.
First off, we should make it clear that dividend stocks in no way substitute for bonds in a diversified portfolio. But if you’re an income-focused investor and have some leeway in your asset allocation, these 5-per-centers may be of interest because they’re blue chip companies with a history of dividend growth. Here’s the group, including BCE, CIBC and Enbridge.
More from Rob Carrick: Got $4,000? This might be the best guaranteed return you’ll get anywhere
Stocks or fixed-income? Why retirees need both
A reader whose retirement savings are fully invested in the stock market asked John Heinzl to recommend a safe place move his money to preserve capital that still has a decent rate of return. His response: Moving a portion of your money into a high-interest savings account (to maximize flexibility), GICs or bonds will help to control your risk and keep your emotions in check. The percentage you allocate to stocks compared with fixed-income depends on factors including your age, risk tolerance and whether you are receiving income from a defined benefit pension, the Canada Pension Plan and Old Age Security programs. Generally, the more sources of guaranteed income you have, the more you can allocate to equities.
But quality is also important. I suggest that you review your stock holdings with the goal of reducing or eliminating your exposure to speculative investments and focusing on high-quality companies such as utilities, power producers, telecoms, banks and others that pay dividends and raise them regularly. Although stock prices bounce around, many dividend-paying companies have yields that are substantially higher than GICs.
More from John Heinzl: Canada Goose, Canopy Growth and more investing stars and dogs for the week
TSX breaks through 17,000 for the first time, but it’s been a restrained climb
The S&P/TSX Composite Index rose for the 11th straight session Friday, breaking through 17,000 for the first time amid a remarkable stock market rally this year. But the latest 1,000-point move for the index took a lot longer than previous steps earlier this year, reflecting various challenges that have popped up over the course of 2019, David Berman writes.
The index was below 14,000 just 11 months ago. In short order, it then rallied above 15,000 in January and 16,000 in February. But it has taken 187 trading sessions (including Friday’s) to rise above 17,000. Blame the slowdown in gains on an uncertain global picture, which has weighed on the world’s stock markets for much of the year. The simmering trade war between China and the United States dampened expectations for the global economy, and clouded the outlook for the commodity producers that still define much of the TSX.
More from David Berman: Home Capital rebounds from financial crisis with big profits
Five ideas to reduce the clawback of OAS benefits - including some that involve your investments
Tax specialist Tim Cestnick offers some simple ideas you can use to lessen the clawback of your Old Age Security benefits, including some that involve your investments:
- Use your TFSA: If your investment income is sufficient to create a clawback problem, it makes sense to invest as much as you can inside a tax-free savings account where the income from your portfolio inside the TFSA won’t show up on your tax return.
- Defer your RRSP deduction. If you’re still contributing to your registered retirement savings plan, but expect to run into a clawback problem later when you start collecting OAS benefits, consider deferring your RRSP deduction (for perhaps a few years) and claim it in those years when you want to reduce your income to minimize clawbacks.
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A reality check on ethical investing: Four things you should know before buying an ESG fund
Many investors would like to invest ethically. The problem is defining exactly what “ethical” means, Ian McGugan writes. Consider the flurry of high-minded exchange-traded funds that have hit the Canadian market over the past two years. These ETFs attempt to find companies with good records on environmental, social and governance issues – ESG, as the jargon goes. But what an ESG strategy means in practice is likely to surprise many people.
BP, the major oil producer, and Nestlé, the consumer-goods company with a controversial past, are among the top holdings of one ESG fund. Another fund, designed to appeal to those worried about climate change, lists oil and gas pipeline operator Enbridge as its biggest single holding. Here are four starting points for anybody thinking of investing in an ESG fund.
What investors need to know for the week ahead
Canadian inflation numbers will be released in the week ahead, with analysts eyeing a slight increase in Wednesday’s CPI figures. Other economic data on tap include: Canadian manufacturing sales and orders for September, plus U.S. housing starts and building permits for October (Tuesday); U.S. existing home sales for October (Thursday); Canadian retail sales for September (Friday). Companies releasing their latest corporate earnings include George Weston, Metro, Home Depot, Lowe’s, Target, TJX Cos., Macy’s and Nordstrom.