Yes, I think think this is the first time I’ve called on The Cars for a lyric. But certainly, let the good times roll. Most everything is working these days, and that’s more than good. That’s why we invest, to make money. We should always be aware of the risks but I think it’s healthy to celebrate the success. We’ve had to wait a while as I’ve penned on this blog. Not much has happened the last two plus years, we’ve been treading water. Those stalls are totally normal, and we invest along the way setting the table for the next surge in share prices. Let the good times roll on the Sunday Reads.
From last September, the waiting is the hardest part and the most profitable time for investors. From that post …
At times investors have to wait. We build and springload the portfolio waiting for the next aggressive move higher. In fact, these holding periods can be beneficial, we are loading up on stocks at stagnating or lower prices.
While U.S. stocks have done much better, we see Canadian stocks TSX 60 (XIU) move to new all-time highs as well. Here’s a 5-year chart. 9.6% average gain per year.
Mo Mentum, is he back?
And as I reported (and was demonstrated) throughout 2023, momentum can be a powerful force. Gains and confidence begets more good times. Are we in for more in 2024?
The run for U.S. stocks has been incredible. There’s nothing to suggest that this will stop. The U.S. appears to be the last developed nation standing when it comes to true and lasting economic growth and innovation. From day 1 on this blog I have suggested that while the U.S. has its “issues” that’s where they keep most of the best companies on earth.
As always, past performance does not guarantee future returns.
And now AI (artificial intelligence) is poised to add a potentially game-changing productivity boost, the U.S. might even increase its advantage.
Last week’s Sunday Reads … Artificial intelligence and your portfolio.
Nice to see my semiconductor ETF (CHPS) up another 5% this past week.
And it has been hard to stay up to date on the bitcoin run …
On Sunday morning bitcoin is above $62,000. That could change in either direction in a hurry of course. For me investing in bitcoin has been a no-brainer. But always to each his or her own. It appears to be on its way to becoming a recognized and accepted portfolio asset.
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I greatly trimmed my position in the RRSP near the previous top, keeping it to about 1%, then moved on to rebuilding in the TFSA (now above 20% weighting). The TFSA is a better place for the asset, though I wish I had kept my RRSP weighting at 2% and just trimmed along the way. There is nothing wrong with a big RRSP account, ha.
More Sunday Reads
Banker on Wheels offers the weekly reads and podcasts highlighting – what happens when you invest at the start of a bear market?
On the retirement front Christine Benz from Morningstar looks at the safe withdrawal rate in retirement.
Bob at Tawcan delivers a January portfolio report that shows $7000 in dividend income for the month. That’s a good haul of course. Though I often suggest that investors take a total return approach to retirement funding. And Bob is on board with that often suggesting it is “total return for the win”.
Our retirement portfolio success comes down to our total returns and risk level. It’s also crucial to have your investment accounts working in concert with the greater financial and cash flow plan. You can head to Cashflows & Portfolios for that all-important optimized cash flow plan. You’ll discover the optimal order and rate of account harvesting in retirement – RRSP/RRIF vs Taxable vs TFSA vs pensions vs government programs vs other income.
Mutual funds limp into RRSP season
I guess enough Canadians read my post – how to invest this RRSP season.
Advisor.ca says mutual funds limped into RRSP season. Canadians continue to sell down mutual funds as ETF assets continue to gather. That’s a wonderful trend, but certainly things are not moving fast enough. There is still almost $2 trillion in mutual funds – most of them are high-fee and very poor performing investments.
Even the not-so-bad ones often take a turn for the worse. I have been keeping track of the RBC Select Portfolios. Not so good compared to creating an ETF portfolio.
On TD mutual funds …
All said, a very solid option on the mutual fund front is the Tangerine Portfolios. They are index-based portfolios at more reasonable fees. Here’s the Tangerine Global ETF Portfolios. They hold individual ETFs, but are in a mutual fund wrapper. I was an advisor and trainer with Tangerine for several years.
Here is the week in review from Dividend Hawk. You’ll find the Hawk’s favourite blog posts, plus a look at the earnings and investment stories of the week. We also shared those nice RBC dividends this past week.
Canadian banks batten down the hatches
Sailing metaphors work well when describing investment risk. There’s bad weather, unexpected weather, storms and even hurricanes that can severely damage the unprepared investor. When it comes to preparation …
You don’t fix a ship in a hurricane
Mawer Investments
It’s the same for the big Canadian banks who are preparing for loan losses from consumers and businesses. They each set aside hundreds of millions of dollars, they’re called provisions for credit losses – PCL. The big banks reported earnings last week, and they were certainly battening down the hatches. We’ll borrow from Dividend Hawk’s summaries of the earnings reports.
And all said, it was a solid quarter, all considering.
Royal Bank of Canada
RY reports first quarter Non-GAAP EPS of C$2.85, 6% below last year’s result but C$0.06 more than expected. Revenue was up 6.3% to C$13.49 billion, just missing the C$13.45 billion expected by the market. RBC’s PCL stands at $812 million an increase of $282 million compared to a year ago.
Scotiabank
BNS reports first quarter Non-GAAP EPS of C$1.69, 8.15% below from last year but C$0.08 ahead of estimates. Revenue grew 5.9% to C$8.43 billion, topping estimates C$180 million. Scotiabank has $962 million set aside – PCL, an increase of $324 million.
TD Bank
TD reports first quarter Non-GAAP EPS of C$2.00, 10.3% below last year’s result but C$0.07 more than expected. Revenue of C$13.7 billion beats analyst estimates by C$1.34 million and increased 12.3% versus the same quarter last year. TD has a PCL of $1.001 billion, up from $690 million one year ago.
CIBC
CM reports Q1 Non-GAAP EPS of C$1.81, beating analyst estimates by C$0.15 but decreased 7% year-over-year. Revenue of C$6.22 billion beats analyst estimates by C$150 million and increased 4.9% versus the same quarter last year. Provision for credit losses was $585 million, up $290 million from the same quarter last year.
Bank of Montreal
Revenue of $7.67B was up +50.7% year over year. Adjusted earnings per share (EPS) of $2.56, compared with $3.06, on adjusted net income of $1,893 million, compared with $2,158 million. Provision for credit losses of $627 million, compared with $217 million from a year ago.
National Bank of Canada
Revenue of $2.82B up 4.8% year over year. Net income of $922 million, up 5% from $876 million in the first quarter of 2023. First-quarter diluted earnings per share stood at $2.59 compared to $2.47 in the first quarter of 2023. PCL of $397 million.
Here’s graphic showing the trend for the big 5 …
The banking sector was up modestly for the week. The markets took it in stride.
The banks are up over 20% form the late October 2023 three-year lows.
Scotiabank. Is it richer than you think?
And Scotiabank has come out of the woodshed in recent weeks and months.
The bank was a top performer this past week. Things might be looking up. Profit from the bank’s international banking division increased by 35 per cent from the previous quarter, giving investors a reason to embrace Scotiabank’s operations in Mexico, Colombia, Chile and Peru.
Tangerine also deliverd a record quarter for Scotiabank.
The share price is roughly where it was a decade ago. In terms of valuation, the stock trades at just 10.7 times trailing earnings, making it the cheapest among the Big Six. Based on estimated 2024 earnings, the stock’s price-to-earnings ratio is 10, which trails the peer average.
Make your cash work harder at EQ Bank.
The stock also sports the highest dividend yield among the biggest banks, at 6.5 per cent. That’s well above an average of 4.8 per cent among its five peers.
Energy for our portfolios
I was happy to see that CNQ has reached its debt reduction target and now will return 100% of free cash flow to shareholders. Of course, this was the suggestion (hope) back in 2020 when I first put Canadian oil and gas stocks on the table. The dividend growth and total returns have been ridiculous.
From the quarterly report …
Chief Financial Officer, Mark Stainthorpe, stated “Through the Company’s effective and efficient operations and disciplined capital allocation, we achieved our net debt level of $10 billion in Q4/23, earlier than previously forecasted. As per our free cash flow allocation policy, we will now target to return 100% of free cash flow to shareholders through dividends and share buybacks.”
CNQ was up 11% for the week, 24% over the last year and 158% over the last 5 years – not including the generous dividends.
There’s a week’s worth of good reads at Findependence Hub, I’ll send you there with – A year in review and beyond: navigating curve balls and embracing the future.
And good luck to Dividend Daddy, we’ll check back on this …
Thanks for reading. Don’t forget to follow this blog, it’s free. And feel free to reach out via that Contact Form.
Have a great Sunday and a wonderful week.
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CASHFLOWS & PORTFOLIOS
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OUR SAVINGS ACCOUNTS
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.5% and 3.0%. You’ll find some higher rates on GICs up to 5.2%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.
OUR CASHBACK CREDIT CARD
We make between $40 to $70 every month! And that’s on everyday spending. There are no fees with …
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RE: “The U.S. appears to be the last developed nation standing when it comes to true and lasting economic growth and innovation.”
– borrowing a trillion dollars every 100 days may have something to do with it 😂
TD is of course not the only financial institution to offer mutual funds that are likely to compromise an unsuspecting investor’s financial well being. This one set of TD mutual funds has about $28 billion dollars in assets and typical MERs of 2%. That’s an easy $560 million a year in fees for TD. We own TD shares so in one sense I shouldn’t complain.
Many options are available that provide portfolios similar to the TD Comfort Portfolios at one tenth of the cost (or less). The asset allocation ETFs often discussed on this blog typically have 0.2% MERs. The ETFs are usually more tax efficient as well as offering annual returns that should be 1.8% better than the mutual funds. It’s hard to believe that a recent survey showed that 87% of Canadians don’t know what an ETF is.
Thanks Bob, I appreciate your comment. Keep spreading the word. That’s all we can do.