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.
Three top industrial stock picks for 2020 from an award-winning analyst
Given the stock market’s run and global economic uncertainty, which industrial stocks can provide investors with some degree of downside protection if the positive market momentum reverses course? To answer this question, Jennifer Dowty turned to Maxim Sytchev, a top-ranked analyst at National Bank Financial. Last month, he was named the Brendan Wood TopGun industrial products analyst for the fourth consecutive year. Asked for his top stock selections, he named WSP Global, Toromont and Stantec. Here’s why, along with outlook for the sector.
Heinzl’s mailbag: ‘Yield on cost,’ the 2020 TFSA limit, and when to trim your winners
A reader asks John Heinzl whether the tax-free savings account contribution limit for 2020 been established yet. He responds: Yes. The federal government announced recently that the 2020 TFSA dollar limit is $6,000 – the same as in 2019 – but this should not have come as a surprise. The annual limit is indexed to inflation and rounded to the nearest $500. The limit was raised for 2019, up from $5,500, but with inflation remaining subdued, it could be several more years before we see another increase.
Remember that TFSA contribution room is cumulative. For someone who has been eligible for the TFSA every year since it was introduced in 2009 but has yet to make a contribution, the maximum contribution for 2020 is $69,500. Read his answers to more reader questions here.
More from John Heinzl: Yield Hog model dividend growth portfolio as of Nov. 30, 2019
An easy way to invest in dividend stocks
There are two ways to invest in an income portfolio, Gordon Pape writes. The first is to build it yourself (or have your adviser do it), by accumulating high-quality dividend-paying stocks, some real estate investment trusts and similar securities. The second option is to pick one off the shelf, in the form of a ready-made mutual fund or ETF portfolio.
His experience has been that a carefully constructed portfolio will provide a better return over time. But that involves more work and is more expensive than purchasing a single fund. If one-stop shopping is your preference, consider this exchange-traded fund: Horizons Active Cdn Dividend ETF.
Lessons from your fellow Canadians on how to be successful with TFSAs
The greatest Canadian personal finance success story of this century so far is the rise of the tax-free savings account, Rob Carrick writes. The country’s 19.5 million individual TFSAs had a total fair market value of $277-billion as of 2017, up an impressive 19 per cent over the previous year. The Canada Revenue Agency’s 2017 TFSA numbers, the most recent available, are full of useful insights on achieving success with TFSAs. Here is a look at a few of them.
- Just start a TFSA: If you set up a TFSA, you will very likely contribute to it.
- Don’t stress the max: Feeling inadequate because you haven’t a hope of reaching the maximum $6,000 contribution for 2020? Forget it – most of Canada is in your position.
- Contribute early, contribute often: The average TFSA holder between 25 and 29 made 24 contributions in 2017, compared with the national average of 14.4. That suggests younger people are using pre-authorized contribution plans or at least electronically moving money from their chequing accounts to their TFSAs on a regular basis – a praiseworthy habit.
More from Rob Carrick: Please, for the sake of your kids, choose the boring RESP investment
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Canada’s big banks hit by fallout of global trade slump
The fallout from the global trade slump is spreading beyond industrial sectors and into the heart of the Canadian stock market – the big banks, Tim Shufelt writes. This past week saw the Big Six banks conclude a rare dud of an earnings season, with three of six missing profit expectations, leading to a dip that wiped out nearly $15-billion in market capitalization from the group.
There were common pressures cited by bank chief executives, including rising consumer insolvencies and low oil prices. But the economic havoc wrought by the U.S.-China trade war is right up there among the prime culprits for the sudden weakness. The guidance is a step down from what Canadian investors have come to expect from the Big Six, which are responsible for driving nearly 60 per cent of the gains in the S&P/TSX Composite Index over the past five years.
What investors need to know for the week ahead
In the week ahead, the U.S. Federal Reserve makes its latest interest rate policy statement and economic projections. It is expected to keep rates steady.
Economic data on tap include: Canadian housing starts for November and building permits for October (Monday); China’s consumer price index, producer price index and foreign direct investment (Tuesday); U.S. inflation figures for November (Wednesday); Canada’s New Housing Price Index for October (Thursday); Canada’s new motor vehicle sales for October and U.S. retail sales for November (Friday).
Companies releasing their latest earnings this week include Hudson’s Bay, Lululemon, Costco, Empire, Transat and Transcontinental.