With rising inflation driving up the costs of goods and services, a Scotiabank survey released Monday reveals over half [53%] of Canadians are worried about their ability to pay for day-to-day expenses. The majority (78%)of expect to be spending more on basic necessities like groceries and food, or gas (71%), and 53% expect to spend more on utilities (53%). 47% say these issues are impacting their ability to save for longer-term financial goals and 37% feel it’s impacting their current standard of living. Scotia Economics expects inflation to peak later this summer before starting a slow descent to 3.6% in 2023 and back to target by 2024.
“Canadians are feeling heightened levels of anxiety as a result of inflation: especially younger people and women who were also hardest hit by the pandemic,” said D’Arcy McDonald, Senior Vice President of Retail Payments and Unsecured Lending at Scotiabank via a press release. “The cost of everything is on the rise and Canadians are worried about their ability to afford the essentials such as food and gas. At the same time, there have never been so many jobs in the Canadian economy, wages are picking up, and inflation will come down over time.”
Financial stress hits differently across the country
Where Canadians live dictates how much they believe rising costs will impact their finances and ability to pay their bills. 49% of residents in the Atlantic think inflation is having a major impact on their ability to set and stick to a budget, compared to 36% of residents of British Columbia and Quebec.
When it comes to feeling financial anxiety, 57% of Quebecers are least likely to be concerned about their ability to pay for day-to-day expenses, compared to residents of Alberta (45%), Manitoba/Saskatchewan (44%), Ontario (43%), and the Atlantic (39%).
The young are most impacted and most concerned
Women, younger Canadians, and those with lower household incomes are significantly more concerned about their financial situation over the next few months. Women (44%) are more likely than men (35%) to say inflation and the rising costs of goods and services is having a major impact on their ability to set and stick to a budget.
Canadians between the ages of 18-34 (45%) and 35-54 (46%) say inflation and the rising costs of goods and services is having a major impact on their ability to set and stick to a budget, compared to Canadians 55+ (30%). Continue Reading…
A look at the “Top Dividend” stock list on the TMX website will show an investor a selection of the highest yielding investment funds and stocks available in Canada. That list features some astronomically high numbers on investment funds: yields upwards of 20%. An income-seeking investor might look at those numbers and rush to buy, believing that with a 20%+ yield, their income needs are about to be met.
As attractive as the highest-yielding investments might appear, there are a wide range of other factors for investors to consider when shopping for an income paying investment fund. Investors may want to consider the crucial details of how, when and why that yield is paid as income: as well as their own risk tolerances and investment goals. This article will outline how an investor can assess those factors when deciding what income investment fund is right for them.
Looking ‘under the hood’ of the highest-yielding investment funds
If you see a big yield sticker on an investment fund in excess of 20%, you may want to look more closely at the details of its income payments.
Because income from investment funds is not always solely derived from dividends, the income characteristics will be listed under the term “distributions.” Information like the distribution frequency and the distribution history will tell a prospective investor a great deal about a particular investment fund’s high yield.
Investment funds will pay their distributions monthly, quarterly, or annually. By looking at the distribution frequency of an investment fund, investors can assess whether an investment fund meets their particular cashflow needs.
A useful way to assess the track record of an investment fund is by looking at the distribution history page published on its website. This will show how much income was paid on each distribution. Some funds have very consistent distributions history, while others fluctuate frequently over time. The distributions history can be a useful way to assess the reliability of the income paid by an investment fund.
Assessing these characteristics can be a useful first step in deciding whether an income investment is right for you. But investors should also consider why the yield number next to an ETF is so high.
Is the high-yield number temporary?
The yield numbers next to investment funds on a resource like the TMX “Top Dividend” list reflect the most recent distribution paid by an investment fund or stock. In the case of investment funds, that distribution could have been a one-off ‘special distribution.’
A special distribution could be the result of a wide range of factors. For example, one of the fund’s holdings could have paid a significant dividend that is being passed on to unitholders. Special distributions are often accompanied by a press release. Continue Reading…
In August of 2020 we asked if Canada’s energy dividends were in trouble? Of course that was before energy prices and energy stocks were dominating the headlines. At the time Canadian oil prices were about $30 a barrel and energy dividends were under a lot of pressure due to collapsed earnings.
Today, that price has more than tripled and has been above $100 and now sits near $92 (May 2022). You’ll notice when you compare the Western Canadian Select price to Brent (closer to $105) just how much Canada’s energy dividends and earnings would benefit from not having to discount relative to world price! That said, that gap in price has been closing. And the generous oil prices have fuelled incredible earnings and dividend growth.
source: https://oilprice.com/oil-price-charts/
Those higher oil prices are wonderful for Canadian oil producers, mostly operating or active in the Canadian oil sands, but many of the producers also have global operations. They have already become free cash flow gushers. More investors, fund managers and retail investors are going along for the ride.
Over the last year, the returns for the TSX Capped Energy Index are more than 90%. If we go back to the start date of this Canadian energy stock series (August 2020) the energy index is up over 300%.
On my site, I had suggested last October that investors consider Canadian oil producers.
I offered …
“The Canadian energy sector has been beaten up. Foreign investors have given up and so have many Canadian investors. Where there is incredible pessimism there can be incredible rewards. But there is certainly no guarantee that the pessimism for the Canadian energy patch is not deserved.
That said, it is also certainly possible that the pessimism has jumped the shark. There may be incredible value in the energy sector for Canadian investors.”
Canadian investors who went against the flow were rewarded handsomely, and it was not as big a risk as many would think. The macroeconomic and energy-specific story was quite simple.
Economic activity and energy usage was certain to pick up as we made our way through the pandemic. Canadian energy producers were made more lean and mean by the tough years in the energy patch. They had already spent the required amounts (CAPEX investments) to make their oil projects viable and profitable at lower oil prices. If prices do get to $50 a barrel and more, they have a license to print money.
As you can tell from the chart above, if you’re a risk averse dividend investor, Canada’s pipeline’s are a much more stable bet (although potentially with much less of an upside) over the medium- and long-term.
Mike Heroux – the man behind DSR – is a CFA and has been studying Canada’s dividend players for several decades. His free webinars on the value of the mid-stream pipeline companies (they’re not building any more of them) versus the mercurial nature of the oil companies themselves really makes sense. You can read our full Dividend Stock Rocks review here.
Visit DSR Now & Get Our Exclusive Discount
The Long-term Strength of Energy Stock Dividends
The story on energy stocks has evolved, in that our green desires do not match the energy reality. Today there are reasonable fears of an energy crunch that could turn into an energy crisis. The renewable energy transition will take a decade or two.
In the meantime we have increasing demand for oil and gas and greatly decreased CAPEX: there’s little desire to look for more oil and gas. In fact, it’s politically unfashionable to suggest that we need more oil and gas, or to spend the time and money necessary to find and produce more oil and gas.
That sets up a secular and positive trend for traditional oil and gas. It is an unfortunate reality.
The story goes back to the most basic economic principle: supply and demand.
On the bullish side, Eric Nuttall, portfolio manager at NinePoint Partners, suggests it is a generational investment opportunity. Eric often reminds us that the free cash flow that many of these companies produce is beyond generous, it is ridiculous. They can quickly pay down debt, buy back shares and return more value to shareholders by way of generous dividend increases.
The Big Oil Stocks Idea
Looking at returns for Canada’s “Big 3” oil stocks over the last year have been eye-opening.
Here is the portfolio income chart from that post, with a hypothetical starting amount of $10,000. It is an equal weight portfolio of The Big 3. We see that there was no oil drought, no oil recession for the investor that went ‘big’ with their Canadian energy stock selection.
Source: Portfolio Visualizer
The big oil stock consideration was and is Canadian Natural Resources (CNQ), Suncor (SU) and Imperial Oil (IMO). In Million Dollar Journey’s post on the top Canadian Dividend Growth Stocks you’ll find ‘The Big 3’.
In August of 2020 I noted that the dividends had held up reasonably well.
Canadian Natural Resources (CNQ) had maintained its dividend and offered a yield of almost 6.3%.
Imperial Oil (IMO) has maintained its dividend and at the time delivered a yield of almost 3.8%.
After a dividend cut of 55% Suncor (SU) was down to a yield of 3.7%.
But the free cash flow is now feeding sweet dividend increases, or should we say dividend gushers.
In April of 2021 CNQ increased its dividend by 10.6%, followed by 25% and 27.7% increases
In July of 2021 IMO increased its dividend by 22.7% followed by a 25.9% increase
In December of 2021 SU increased its dividend by 100% (in June of 2022 they gave it another 11.90% boost.
The Canadian Energy Stocks Dividend Growth Scorecard
From the time of the first energy stock article on MDJ.
CNQ, 0.425 to 0.75 an increase of 76.5%
SU, 0.21 to 0.47 an increase of 123%
IMO, 0.22 to 0.34 an increase of 54.5%
The Big 3 offered an average of 84.7% dividend growth over less than a 2-year period.
I had suggested that the oil and gas sector has the potential to be the greatest source of dividend growth within the Canadian market. That is playing out in spades. Of course Canadian investors were also keeping an eye on Canadian bank stocks.
Regulators had forced the banks to suspend dividend increases and share buybacks during the pandemic. Those restrictions were removed, and we were treated to double digit dividend growth for Canadian banks and financials.
We expect more dividend growth announcements this month.
What if you had Investedin the Big 3 Oil Stocks?
From that time of that post you would have seen some generous and growing income. That said, you would also have total returns that would have almost tripled the total returns compared to the TSX Composite.
Source: Portfolio Visualizer
You’ll also see the pipelines in there. Those are my two pipe holdings, Enbridge (ENB) and TC Energy (TRP). You’ll find those companies in the portfolio that focuses on Canadian Wide Moat Stocks and are stellar Canadian dividend all stars.
They matched the returns of the market for the period. They have been offering a wonderful inflation hedge as well. While the pipes don’t have the torque of the energy producers, they have delivered returns of over 16% in 2022, to the end of April.
Source: Portfolio Visualizer
Back in 2020, I had suggested that I would stick with being a toll taker, collecting tolls and dividends by way of those pipelines that move the oil and gas around North America. Of course, Enbridge and TC Energy are much more diversified and do have energy producing operations as well. Continue Reading…
With recent market volatility, investors are demanding solutions that stay afloat during market ups and downs. When looking at behavioural finance studies around loss aversion, an interesting finding arises that people’s fear of loss is (psychologically) twice as powerful versus the pleasure they experience from gains. This is one reason we have seen investors pulling money out of the markets in the past couple months. In reality, this may be a disservice to themselves, if they could just stay invested in a solution that could ease those bumps in the road, they would be better off. Low Volatility investing is one such solution.
So, what is Low Volatility (Low Vol) Investing? Well, it is an approach to investing that allows one to gain equity exposure for some possible growth in their portfolio while providing downside protection.
The chart below (long-term historical performance of the MSCI ACWI – global equities) perfectly demonstrates this. Low Vol is sitting a little bit higher than the broad market (from a returns aspect) but, yet significantly reducing risk. Low Vol sitting at around 10%, whereas the average equity risk is approx. around 15%.
Measuring Low volatility and BMO ETFs’ Approach
Low-volatility is a type of factor-based investing, which is a process that is repeatable and disciplined in its execution. Therefore, in order to invest in this manner, you need to use metrics to identify between what is considered a low volatility stock vs. a high volatility stock. There are a lot of different approaches in the market. The two most prevalent are the Low Beta and Standard Deviation methodologies.
Beta is a risk metric that measures an investment’s sensitivity to fluctuations in the broad market (market sensitivity). The broad market is assigned a beta value of 1.00, an investment with a beta less than 1.00 indicates the investment is less risky relative to the broad market. Low beta investments are less volatile than the broad market and can be considered defensive investments. Over the long term, low-beta stocks may benefit from smaller declines during market corrections and still increase during advancing markets. Additionally, low-beta stocks tend to be more mature and provide higher dividend yield than the broad market. Continue Reading…
Well you might think so, given all of sudden it seems, how far but quickly we’ve come, to where we’re at now, this point in 2022. While on the one hand Age Tech is a coming of age story, in the world at large it is either unheard of, or if it is heard of in some circles, it is either misunderstood or too confusing in its jumble of jargon for everyday people to grasp. Even some in this emerging industry question whether Age Tech is the best term to use. So what’s the story?
Perhaps we should start at the beginning with once upon a time. Simply the story goes, in the 1970s some engineers, industrial designers and gerontologists were curious and asked a question about how technology could join up with the field of aging studies and, as noted in the 2009 publication Defining Gerontechnology for R&D Purposes: they “recognized the need for a conceptual framework.”
Along came the 1980s, the marriage of gerontology and technology: Gerontechnology. Originator of that term in 1988, Jan A.M. Graafmans was part of a research team in Eindhoven University of Technology, “that started an effort to develop a program of research and education in gerontechnology aiming at further integration of engineering sciences with those disciplines already involved in aging studies.” Read his The History and Incubation of Gerontechnology.
As an inter-disciplinary, academic and research field, Gerontechnology established itself in 1997 forming the International Society for Gerontechnology (ISG). Speaking of jargon, at the best of times Gerontechnology is a mouthful to say let alone to understand fast. On the ISG website it is described as “designing technology and environment for independent living and social participation of older persons in good health, comfort and safety.”
Fast forward. My journey with technology and aging began in 2013 when Stanford Centre on Longevity kicked off its Longevity Design Challenge competition. In 2015 I followed Canada’s newly formed technology and aging network AGE-WELL. To appreciate the development of Gerontechnology, I highly recommend the 24 collected papers compiled by editor, Sunkyo Kwon – Gerontechnology: Research. Practice and Principles in the field of Technology and Aging. [cover on the left]
But even then all this did not quite make a coming of age story. Until now. Roughly since 2020, Age Tech has become the fast term that has at least made for an easier conversation starter. The real secret in explaining what it means is the ability to link up the Age Tech talk to the human needs it services. All you need are three examples everyday people can identify with, such as health and home care, mobility and transportation & social connection.
Avoiding the risk of overwhelming you here, to prove that there is a real coming of age marketplace for Age Tech, there are several new resources that can help you quickly do your own research; and no doubt some of you may have experienced some of the products available, even if their brand recognition is low.
Recently published (2022) is the book by Keren Etkin – The AgeTech Revolution. If you want to be bedazzled before you read the book, on Etkin’s website The Gerontechnologist you will find a very busy Age Tech Market Map filled with brand logos under various categories and sub-categories from health and wellness to tech-enabled home care.
Early in March at last AGE-WELL with help from the Centre for Technology Adoption for Aging in the North (CTAAN) published Canada’s Agetech Startup Map (seen at the top of this blog). Actually if you click on the logos on the PDF link you will find the websites for all the brand names featured. On the CTAAN web page for Age Tech you will find links to products listed under six clear topic headings, some more products not listed on the Agetech Startup Map.
If you think this is all hype and are not yet convinced that Age Tech has arrived at its coming of age, then you soon should be convinced after you check out some of what I’ve highlighted here. Try some of this out as a conversation starter next time you meet up with friends to test market awareness as it were. And because I can’t resist I’ll leave you with one more.
Poking around as I do, to see what’s covered on Age Tech in other parts of the world, I found a snappy article What is Age Tech? by Andreea Toma, dated 2020 from a UK based marketing agency Creative Quills (love that name.) Toma’s quill keeps it simple: “AgeTech is an emerging group of technologies which seeks to improve the lives of older adults.”
Mark Venning is a writer, speaker, researcher and advisor on the business, technology, health & social aspects of ageing and longevity which include changing concepts in a longevity society for Age Inclusive Communities. He is an Associate Member of the International Federation on Ageing.
This blog originally appeared on March 15, 2022 and is republished here with his permission.
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