Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.
Gordon Pape: Here’s my latest advice on what portfolios should look like right now
In a column Gordon Pape wrote in April, when the market meltdown of late March was still fresh in everyone’s mind, he advised a portfolio mix that included a large cash position, high-quality bonds and limited equity exposure. A reader took that advice and then watched in frustration as stock markets rallied.
At the time, he advised being very selective, commenting it was a stock-picker’s market. He writes now: Going forward, would I make changes? No. I’d stay the course. We need to face reality. We are experiencing the worst economic collapse since the Great Depression and no one knows where or how it will end. Your stocks should focus on the 10 cornerstone issues I outlined here and here. The time to be more aggressive is when we get a treatment/vaccine. We’re not there yet.
This TSX tech stock has raised its dividend for 12 straight years and is near record highs thanks to video conferencing
Two types of software companies dominate the list of Canada’s most valuable technology stocks, Sean Silcoff writes. There are those that generate most of their growth by expanding sales, such as Shopify. And others that are consolidators such as Constellation Software, which gobble up slow-growing or declining businesses.
Enghouse Systems is firmly in the second camp. The low-profile Markham, Ont., company specializes in paying low prices for troubled businesses that supply good quality software used in contact centres, telecommunication networks, transportation systems and for video conferencing. Enghouse quickly fixes the operations, enabling it to recoup the investment, typically within its target period of five to six years.
The profitable company has generated steady shareholder returns including 12 consecutive years of dividend increases. Still, Enghouse yields just 0.77 per cent – partly a function of a stock price that has doubled in the past year, hitting a record high of $77 on June 5 after reporting fiscal stronger than expected second-quarter results. Read more about the company here.
Pandemic personal finance tool: How to use those emergency savings
The pandemic’s impact on jobs and incomes has been sharp and unprecedented, Rob Carrick writes. While many households have lost income, others are in the fortunate position of being fully employed and have also cut their spending, thanks to physical distancing. This tool shows how money saved during the pandemic can improve your financial situation over the short and long term, if put into savings or investments. Emphasize savings if your job situation is uncertain and consider investments if you’re financially secure.
Read more: What you need to know about managing your finances during the pandemic
The case of the $500,000 RESP: How should we withdraw the money?
Readers ask John Heinzl for advice on how to withdraw the small fortune in equities amassed in a registered education savings plan. He responds: Let’s go over some RESP basics before we dig into the details. When a beneficiary starts postsecondary school, there are two types of RESP withdrawals the subscriber (the person who opened the RESP) can make: a refund of contributions, and an Educational Assistance Payment (EAP).
A refund of contributions consists of funds that the subscriber originally deposited into the account. These withdrawals are tax-free and can be paid to the subscriber or to the beneficiary.
EAPs work differently. They consist of government grants and investment earnings such as dividends, interest and capital gains that have accumulated in the account. EAPs are taxed in the beneficiary’s hands, which is usually an advantage because students often have minimal income and – thanks to various tax credits – pay little or no tax. But there are rules regarding the size and timing of EAPs. Read more about it here.
More from John Heinzl: Shopify, Empire and more investing stars and dogs for the week
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Annuities cure stock market anxiety, but you better hustle if you want one
Stocks have been at their erratic worst this year – falling like a brick, rallying back and then stumbling again at mid-month, Rob Carrick writes. Annuities are insurance contracts that work like this: Pay a life insurance company a lump sum amount, get a set monthly payment for as long as you live.
A couple of veteran insurance advisers have reported an uptick in demand for annuities since stocks crashed in March. Don’t delay if you’re interested because annuity payments are almost certainly headed lower. As of mid-month, $100,000 put into a non-registered annuity could have produced annual income of $5,068 for a 65-year-old woman. The same annuity bought in February would have paid $5,255, which means payouts have dropped by 3.5 per cent. Prepare for more declines ahead.
More from Rob Carrick: Savings rates drying up as a shaken nation rethinks the stock market, risk and the value of safety
What investors need to know for the week ahead
In the week ahead, new Bank of Canada governor Tiff Macklem is set to give a speech on monetary policy in the context of COVID-19 by video conference on Monday. Economic data on tap include: U.S. existing and new home sales for May (Monday and Tuesday, respectively); Canada’s survey of employment, payrolls and hours for April and U.S. durable goods orders for May (Thursday); U.S. personal spending and income for May (Friday).
Companies releasing their latest financial results this week include BlackBerry, Accenture, Nike, Walgreens Boots Alliance and Corus Entertainment.
Looking for more money ideas and opinions?
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- The hidden danger in breaking free from a do-nothing investment adviser
- Income splitting comes to the fore during COVID-19 era
- Chair invests over $2-million in this Canadian bank stock
- RBC: ‘Just the beginning of COVID-19 impact on Canadian household finances’
- Insider Report: Four dividend stocks that are being bought