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.
What the new federal budget means to your bottom line
Home ownership: One of the biggest investments most of us ever make is buying a home, and the federal budget introduced this past Tuesday includes a raft of measures aimed at improving affordability. Under the new First-Time Home Buyer Incentive program, a fund administered by Canada Mortgage and Housing Corp. will provide 5 per cent of the cost of an existing home and 10 per cent of a new home through what amounts to an interest-free loan to be repaid when the property is sold. Also, the maximum tax-free withdrawal from registered retirement savings plans under the federal Home Buyers’ Plan rises to $35,000 from $25,000, effective immediately. Rob Carrick breaks down the eight ways the budget will affect your personal finances here – and they include employee stock options.
ETF tax loophole: The federal government is moving to close a loophole that allows investors in certain exchange-traded funds to defer taxes. Citing “unfair tax advantages,” this week’s federal budget said the proposed changes would “prevent the use by mutual fund trusts of a method of allocating capital gains or income to their redeeming unitholders where the use of that method inappropriately defers tax or converts fully taxable ordinary income into capital gains taxed at a lower rate. (ETFs are a type of mutual fund trust.) One of the government’s main targets is believed to be swap-based ETFs – also known as total return ETFs. These complex products don’t hold any securities directly but deliver the same performance as an index through an agreement – called a total return swap – with a financial institution. Read more from John Heinzl and Brenda Bouw.
Related: Why covered-call ETFs aren’t on Ottawa’s hit list
Vehicle tax breaks: The federal budget may present an opportunity for you – particularly if you’re looking to buy an electric or hybrid vehicle. And if you use your car in your work, the tax benefits could be significant. Tim Cestnick explains here.
Retirement funding: If you’re worried about outliving your money in retirement, Ottawa may have a solution. The budget clears the way for the creation of advanced life deferred annuities that would kick in at the end of the year you turn 85. With an annuity, a lump sum investment is turned into a preset flow of cash for life. Ian McGugan takes a closer look.
Read more from David Rosenberg: Wake up, Canadians: This is the wrong time for a vote-buying, deficit-spending budget
Plus: Ottawa moves to defrost the chill on art donations
Boyd Group’s stellar rise
As John Heinzl points out in his look at investing stars and dogs, Boyd Group had a stellar week. Shares of the company – which operates a fast-growing network of auto-body and glass repair shops in Canada and the United States – surged after Boyd Group reported a 19.4-per-cent increase in sales and 29.1-per-cent jump in net earnings for the fourth quarter. But if investors earlier this year had acted upon top stock picks for 2019 from Desjardins Securities, Raymond James or BMO, they stood to gain much more. Year to date, the Boyd Group stock has risen 27 per cent.
Read more: A security with 13 buy calls that has delivered positive annual returns since 2007
Canada’s biggest pot ETF gets a major new holding
A change in U.S. federal law has cleared the way for one of the biggest cannabis companies to join the pre-eminent pot-stock exchange-traded fund, David Milstead and Mark Rendell write. Horizons Marijuana Life Sciences Index ETF has added Charlotte’s Web Holdings, a Colorado-based, Canadian Securities Exchange-listed hemp company with a market capitalization of more than $2-billion. Since HMMJ is listed on the Toronto Stock Exchange, it follows the TSX’s rules banning Canadian-listed companies with U.S. businesses that violate that country’s federal laws against cannabis. Charlotte’s Web produces and sells hemp-based, cannabidiol (CBD) wellness products in the United States. In December, as part of the 2018 Agriculture Improvement Act, the U.S. federal government removed hemp-derived CBD from the Controlled Substances Act.
Read Rob Carrick: Four things ETF investors are doing right in 2019
How this business analyst built herself a dividend portfolio and retired early
These days, many investors are building portfolios of dividend stocks in hopes of becoming financially independent well before age 65. Susan Brunner has been there, done that. She began investing during the 1970s and ended up with a dividend portfolio that enabled her to leave the work force in 1999, when she was in her early 50s. The Globe and Mail recently interviewed Ms. Brunner, now in her early 70s, about her 40 years of investing and 20 years of retirement. “I wish I had done more investing outside of RRSPs,” she confides. “With the mandatory withdrawals from RRIFs [registered retirement income funds], I am now paying more in taxes than what I avoided through RRSP contributions.” Read more here.
Further reading: Where free cash flow is king: 17 TSX dividend stocks offering safety and value
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Even after a 15% jump thus far in 2019, this REIT remains attractive
Real estate investment trusts continue to deliver returns that exceed expectations, Gordon Pape writes. After performing surprisingly well in the face of higher interest rates in 2018, the sector surged by about 12 per cent in the first 2½ months of this year, thanks in part to a switch to a more dovish approach by the Bank of Canada and the U.S. Federal Reserve Board. One of the top-performing REITs is Northview Apartment REIT, which was first recommended by his Income Investor newsletter in November, 2004. So far this year it’s ahead 15 per cent. Here’s why he’s maintaining his buy rating.
Read more Gordon Pape: Capitalizing on share buybacks may be a fleeting trend. Here’s how to take advantage now
What investors need to know for the week ahead
Economic data on tap in the coming week include: U.S. housing starts and building permits for February (Tuesday); Canada’s merchandise trade balance for January as well as U.S. goods and services trade balance for January and current account deficit (Wednesday); U.S. real GDP and corporate profits for the fourth quarter, plus pending home sales for February (Thursday); Canada’s real GDP for January, industrial produce and raw materials price indexes for February and U.S. new home sales for February (Friday). Among the companies releasing earnings this week are Apple, BlackBerry, Accenture, Aimia, Dollarama, AGF Management, Lululemon and Park Lawn.
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