And I’m back on MoneySense, making sense of the week. The weekly column was led by the big Canadian banks who all reported this past week. Thanks to Dan from stocktrades.ca for helping with that analysis. Banks are showing to somewhat be a hedge in the rising rate environment. The banks benefit from favourable net interest income. The spread increases between what rate they lend at vs what they pay out. It the big Canadian bank week on the Sunday Reads.
Here is Making sense of the markets for the week ending December 4.
And the recent scenario for the big Canadian banks, from the MoneySense post …
The banks benefited from a rising rate environment, as net interest income increased. The spread between the rate banks borrow at and the rate they lend at increased favourably and helped their bottom line. They faced pressure in wealth management and capital markets due to decreased investment returns and trading activity. Amid recession and real estate risks in Canada, the banks increased their provisions for loan losses.
The take from Canada’s biggest bank
On the topic of the rising rate environment and economc risk, an RBC executive added (on their earnings call) …
“Although higher interest rates are needed to preserve long-term economic stability, the lagging impact of monetary policy combined with strong employment and significant liquidity in the system has likely delayed what may end up being a brief and moderate recession”.
Here was the dividend increase scorecard for the big banks.
- BNS: 0%
- RY: 3%
- TD: 8%
- BMO: 3%
- CIBC: 2.4%
- NA: 5%
Please note that RBC, BMO, CIBC and National Bank are typically on biannual dividend increase plans. So, you might double the above raises to get to the annual rate of dividend increase for those banks.
In my opinion and weakness in the Canadian banks (that may or may no arise) is a long term investment and income opportunity.
More Sunday Reads
On stocktrades.ca. a look at 8 Canadian value stocks to consider heading into 2023.
On Tawcan, Bob offered why dividend investing works for him. One of the main observations or truths around dividend investing is that it can lead to very good investor behaviour. There is just so much positive reinforcement.
After investing in dividend stocks, I found that I was able to remove myself from the emotional side of investing. Regular dividends helped me to stay on course and reinforce the buy-and-hold mentality.
At the same time, investors would be wise to consider lower yield stocks – you’ll find those as a recent growth engine in the Canadian Wide Moat Portfolio.
And we recognize the costs with the strategy of living off of the dividends in retirement.
On Findependence Hub, Anita Bruinsma writes on the lure and risk of the big dividends.
A popular approach or consideration is the Beat The TSX Portfolio that holds the top yielding stocks in the TSX 60. That approach has a long history of very significant outperformance vs the TSX Composite (XIC.TO). And we do see some of the 2022 constituents under stress in 2022 – Scotiabank, Power Financial and Algonquin Power. That said, the stress is not enough to undo the outperformance in 2022. The energy names are powering the BTSX.
Also on The Hub, BMO looks at tax loss harvesting season.
Here’s the recent returns for Canadian sectors and styles.
Warren Buffett’s dividends
Here’s a very interesting thread on Warren Buffett’s top ten dividend streams.
Mark is down south, tanning up, so he offers the travel tips edition for his weekend reads.
Let’s check in with the weekly report on Dividend Hawk. You’ll find some very useful links to the Canadian bank reports, TC Energy and other stories from south of the border.
On FiPhysician a very thoughtful post on how to boost your happiness in retirement. A joyful retirement is a grateful one. From that post, and well said …
The opposite of scarcity is having enough, not abundance.
And yes there is some science to the suggestion …
Expression of gratitude increases serotonin, norepinephrine, and dopamine in the brain. Further, gratitude decreases stress, anxiety, and depression.
On The Retirement Manisfesto a look at the bucket strategy in a bear market. On Twitter I had suggested that retirees might consider a dedicated inflation hedge so that we can laugh at inflation.
Keeping an eye on the economy
John Mauldin says the economy is a changin’. From that post …
The “new economy” we’ll face as the 2020s unfold won’t just be a more intense version of the old one. It will be fundamentally different—profound, irreversible, and rapid evolution beyond anyone’s ability to resist.
Lance Roberts offers lessons from the Nifty Fifty – the FAANG stocks of their day.
We don’t know what the future holds but I still like this playbook that Lance offers …
Most importantly, investors should begin to prioritize companies that have, and continue to have, strong balance sheets, resilient cash flows, and high levels of visibility into future growth. Companies with solid business models and a focus on shareholder stewardship (read dividends) will play a more critical role than companies with outsized future growth promises.
Quality and profitability never goes out of style. It might continue to be very important heading into 2023 and beyond. As a semi-retiree I take comfort in my version of an all-weather portfolio with that quality and blue chip skew.
Thanks for reading. Be sure to follow this blog. It might lead to much more favourable wealth creation and wealth preservation. Enter your email address in the Subscribe button. Please feel free to reach out with any questions or concerns – use the Contact Form.
Stick to the investment plan folks.
When you cut the crap …
You will earn a break on fees by way of many of these partnership links.
CANADA’S TOP-RANKED DISCOUNT BROKERAGE
Cut the Crap Investing readers can earn a break on fees at Questrade by way of that partnership link. At Questrade, you can buy ETFs for free.
Here’s Canada’s top-performing Robo Advisor, Justwealth.
Consider Justwealth for RESP accounts. That is THE option in Canada with target date funds that adjust the risk level as the student approaches the College or University start date.
RETIREMENT FUNDING PLANNING
The self-directed investor might consider the service provided by Mark Seed from My Own Advisor. He runs Cashflows & Portfolios where they will provide options for that optimal retirement funding strategy. That service is provided for a very reasonable fee.
If you do head to Cashflow & Portfolios, be sure to tell them Cut The Crap Investing sent ya.
OUR SAVINGS ACCOUNTS
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.0%. You’ll find some higher rates on GICs, recently updated and increased to 3-4%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.
OUR CASHBACK CREDIT CARD
We make between $50 to $70 every month! And that’s on everyday spending. There are no fees with …
Last month we received $75 in cashback cash. We are spending too much, ha.
While I do not accept monies for feature blog posts please click here on the mission and ‘how I might get paid’ disclosures. Affiliate partnerships help me pay the bills for this site. That will allow me to keep this site free of ads and easy to read.