Most of the banks have reported their fourth-quarter earnings, but I have not seen a single dividend increase yet. Is this a bad sign?
Not at all. Most of the Canadian banks follow a predictable pattern with their dividend increases. Toronto-Dominion Bank, for example, tends to raise its dividend once a year when it announces fiscal first-quarter results in late February or early March. So the lack of an increase from TD is no cause for alarm.
Royal Bank, Bank of Nova Scotia and Canadian Imperial Bank of Commerce typically raise their dividends twice a year. All three banks hiked their dividends in August, when they released fiscal third-quarter earnings, so – assuming the semi-annual pattern continues – their next increases will also be announced with first-quarter earnings.
Bank of Montreal is the only one of the Big Five that is expected to raise its dividend during the current reporting season. BMO also follows a semi-annual pattern and last increased its dividend in May. Robert Sedran, an analyst with CIBC World Markets, predicts that BMO will hike its dividend by 3 cents to 99 cents a quarter. BMO is scheduled to release results on Dec. 4.
Mr. Sedran also expects that Laurentian Bank and National Bank, both of which report on Dec. 5, will raise their dividends. However, because Laurentian’s payout ratio is already at the high end of its target range of 40 per cent to 50 per cent, “confidence in this call is lower,” he said.
It’s worth remembering that dividend increases aren’t official until they are declared by the board, and that banks – and other companies – may forgo dividend increases if their earnings hit a rough patch, as happened during the financial crisis. But for now, I see no reason that the banks will deviate from their established dividend-hike patterns.
When is the last day I can sell a stock in 2018 and claim the capital loss for the current year?
When you sell (or buy) a stock, there are two important dates you need to know. The first is the trade date, which is when the order is executed. The second is the settlement date, which is when the money and the shares actually change hands. For the purposes of claiming a capital loss, it’s the settlement date that matters.
For years, settlement took place three business days after the trade date. As of September, 2017, however, the settlement period for stocks was shortened to two business days. Because Dec. 29 and Dec. 30 fall on a weekend this year, if you want to your trade to settle by Dec. 31 you will need to sell the stock no later than Dec. 27.
If you wait until Dec. 28 or later, your trade will settle in 2019 and you won’t be allowed to claim the capital loss this year. You’ll still be able to use the loss eventually, however.
When you have a capital loss, you must first apply it against capital gains recorded in the same year. If you still have net losses left over, you can carry them back up to three years or forward indefinitely to offset capital gains in those years. Only losses incurred in non-registered accounts qualify, so if a stock has dropped inside your registered retirement savings plan (RRSP) or tax-free savings account (TFSA), for example, you can’t use it for a tax loss.
For more on tax-loss selling, read my column here.
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