It’s a Sunday smorgasbord with a look at Canadian bank dividend hike(s) potential. We’ll check in with FT at Million Dollar Journey – a wealth building update. Rob at Passive Canadian income pitches in on the dividend update front as well. There’s a Robo roundup at the Globe & Mail. FiPhysician shows why retirees should consider bonds and cash. It was another week of gains for U.S. stocks, following up on the best week of the year. Canadian stocks were down for the week, as were bonds.
From last Sunday – stocks had their best week of the year. Investors are hoping for a strong year end and that typical Santa Claus rally.
The S&P 500 on Friday advanced 1.31% for the week to close at 4,415.24 points, posting gains in four out of five sessions. The benchmark index extended those gains this week as markets remain convinced that the Federal Reserve is done hiking rates.
What’s up for Canadian bank dividends?
In the Globe & Mail Desjardins looks for very modest dividend increases from the Canadian banks …
Desjardins Securities predicts the Big Six banks will raise their dividends by about 3 per cent, on average, when they report fourth-quarter results in late November and early December. Specifically, it expects that Toronto-Dominion Bank (TD) will hike its dividend by 5 per cent, with Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CM), National Bank (NA) and Royal Bank (RY) each raising their payouts by about 3 per cent. The only big bank not expected to raise its dividend is Bank of Nova Scotia, which typically reviews its dividend when it posts second-quarter results in May.
The sleepy Canadian consumer
Canadian tire has laid off 3% of full-time staff and with soft sales at Sleep Country we can see the Canadian consumer is getting tired of spending. From the latest Sleep Country earnings report …
Revenues decreased by $6.2 million or 0.9% from $685.6 million in YTD 2022 to $679.4 million in YTD 2023 mainly due to a decrease in SSS by 7.5% which was partially offset by incremental revenue earned from new stores, wrap stores in 2022 and the acquisitions of Silk & Snow and Casper Canada.
Canadian tire reported a 1.6% drop in consolidated comparable sales as customers continue to shift to essentials and cut back on purchasing discretionary items such as athletic footwear and clothing.
The Lastman’s family Bad Boy Furniture business is closing its doors …
Of course, this soft news or bad news is good news on the inflation fight. This is exactly what the Bank of Canada was trying to achieve. We have less money chasing goods and in theory that can bring down prices and allow inflation to cool.
Studies show that Canadians are looking to spend 18% less on goods this holiday season.
More Sunday Reads
And here’s the portfolio and dividend update on Million Dollar Journey. This is from one of the original dividend investment bloggers, detailing the investment success and path to financial independence.
Rob at Passive Canadian Income offers his October Passive Income Update.
Canadian stock picks
At My Own Advisor Mark gives us the most common investment mistakes. There a good infographic in the post and it is bang on, on how your investment process can get derailed.
At Tawcan, Bob offers his 13 favourite Canadian stocks for 2023 and beyond. And here’s 11 picks from Dan at Stocktrades.ca.
Dan has certainly been right about Shopify and a few other growth picks. Well done.
At Findependence Hub, the unfortunate story on how half of new Canadian families are targetted by financial fraudsters.
And as earnings season winds down let’s check in with Dividend Hawk. He started a position in Essential Utilities (WTRG) and added to the Realty Income (O) Position. Realty offered a very solid quarterly report.
Included in the quarterly reports were a few Canadian companies including the popular TC Energy that I hold.
TRP reports quarterly adjusted EPS of C$1.00, beating analyst estimates by C$0.03 but decreased 6.54% year-over-year. Revenue rose 3.7% to $3.94 billion, topping estimates by $79 million.
Let’s head on over to Banker on Wheels for the weekly mix of posts and podcasts.
Included in the post is a fascinating interactive chart that shows select countries’ share of global market share and global stock market weighting. Also – How anti-obesity drugs are reshaping healthcare and consumer behaviour.
Why retirees hold bonds
At FiPhysician, do we really need bonds in the portfolio? Doc explains why bonds can be superior for the retiree. He starts by suggesting that we hold 2-3 years’ worth of expenses in cash. And then …
But the rest of your “safer money” should be in bonds, not cash. Bonds are better than cash over the long run because they pay higher interest rates than cash does. We are currently in a yield curve inversion, but that is atypical (and the current yield curve inversion is of about average length right now, as well).
The way the yield curve dis-inverts is usually through a recession. With a recession, all interest rates get cut, usually heralded by the Fed cutting short-term rates to increase liquidity and help us out of the recession. And when rates drop, the price of your bonds goes up.
I recently went over the cash options in Canada that includes the wonderful GIC rates at EQ Bank.
And here’s why retirees hold cash, bonds and GICs.
Just my opinion, but longer bonds will be back ‘doing their thing’ in the next recession. I added to positions modestly, a few weeks ago.
Cash and ultra short term bonds pay well, longer bonds offer the potential to provide stock market insurance during any major correction that may be recession-inspired.
A good year to go Robo
In the Globe & Mail (subs), despite tought times it’s been a good year for those who use Canadian Robo Advisors.
In that post, you’ll see once again that Justwealth is Canada’s top Robo Advisor for returns and more comprehensive advice and planning.
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Re: “Desjardins Securities predicts the Big Six banks will raise their dividends by about 3 per cent, on average, when they report fourth-quarter results in late November and early December.”
TD raises their dividend annually, the others biannually. Does this mean Desjardins thinks five of the six will up their dividend 3% with each raise (biannually) and TD 5% (annually).
Correction: Does Desjardins feel RY, CM, BMO & NA will up their biannual dividends 3% each time, TD once by 5% (annual) and BNS 0% the entire year?