Weekend Reading – Financial dividends are coming
Big news this week folks, financial dividends are coming and some are already here!
Banks and many other Canadian financial institutions (think some life insurance companies too) have been sitting on mountains of cash over the last year or so – probably until now.
As of this week, Canada’s banking regulator has “cleared the way for banks and insurers to raise dividends and resume share buybacks.”
Peter Routledge, head of the Office of the Superintendent of Financial Institutions (OSFI), says the reasons for the ban that was implemented early in the pandemic “no longer stand.”
What does this mean for investors, like me, that hold hundreds of bank shares and lifeco shares in their portfolios?
Financial dividends are coming. If you haven’t been already loading up on bank shares, the time is now.
According to various reports, Canada’s largest banks (all big-6) could raise their dividends as much as 25% now that regulators have allowed them to do so.
Now, I personally can’t see higher dividends to that unprecedented level, but I could see some raises in the range of 15-20% from banks like National Bank (NA), Royal Bank (RY), TD Bank (TD), and maybe Bank of Montreal (BMO) in particular, which would be rather epic to my portfolio and semi-retirement dreams.
In fact, some raises (along with share buybacks) have already begun:
Manulife Financial raises quarterly dividend by 18% after ban on increases lifted. The extra payment results in a quarterly dividend of 33 cents per share to share, and Manulife also announced a plan to buy back up to 39 million shares, or about 2% of its shares.
More incredible news for shareholders is on the way…
Dividends are great but watch out for Canadian home bias!
Recently, my friend Dale Roberts wrote about the cost of having too much Canadian home bias in your portfolio.
While I would agree, for the last 10-years, it’s hard to beat what the U.S. stock market has done (including trouncing the Canadian market using low-cost ETF XIU as a comparator) do remember that earning over 9% in any 10-year run, even if some of your portfolio is in a broad basket of Canadian stocks is still very good.
Lessons learned in diversification
When it comes to my own portfolio, certainly in the early years of starting this blog, I too was guilty of too much Canadian bias. I focused almost exclusively in the late-2000s on owning Canadian stocks like Enbridge (among others) as I ditched my big bank advisor and became: My Own Advisor.
Some further reading on that:
Yet as I built my Canadian dividend stock portfolio, earning juicy dividends and some benchmark-beating XIU returns along the way, I did recognize there is a HUGE investing world out there beyond Canada. So, over time, I have seized some opportunities to own some U.S. stocks and low-cost U.S. ETFs to bolster my returns and diversify away from Canada – just in case.
Further reading: Lessons learned in diversification.
It is in closing that while investing beyond Canadian borders is quite smart to increase potential long-term portfolio returns, investing right at home isn’t so bad at all.
Keep those financial dividends flowing….
Millennial Revolution wondered if she should spend more now. Some interesting reflections from this early retiree that probably make you answer “yes”:
“Since I stopped working, I’ve been the healthiest in my life. I used to have to wear a wrist brace from carpal tunnel, take anti-anxiety and anti-depressants back when I was working. Since retiring, I’ve lost the wrist brace, stopped taking any pills. And because we bought back our time we can hike, swim, and eat healthy home-cooked organic food daily. In fact, after Wanderer’s checkup, his doctor diagnosed him as “obnoxiously healthy”.”
It’s always fine reading in the MoneySense weekly wrap-up: making sense of the markets.
My friend Barry Choi loves travel hacking – here is his guide for lazy people!
Mike Heroux (you know, The Dividend Guy…) shared his largest holding this week.
Juicy dividend income updates from the blogosphere:
Incredible work over at GenY Money.
Whoa Dividend Daddy, quite the income-level and purchases, as in over $13,000 in a month?!
In case you missed it, I posted my own new all-time high monthly dividend income update. Financial dividend increases pending!
Finally, staying with dividends the guys at Stocktrades shared their top Canadian bank stocks to buy now as financial dividends start flowing in.
A thanks to Rob Carrick once again for putting yours truly content in The Globe and Mail. To quote Rob:
“Want income…want growth?
Dividend ETFs might be what you’re looking for. Here’s a look at some top choices.” Indeed.
Over at Cashflows & Portfolios, we piggy-backed on a previous TFSA post to share how soon you can retire by only maxing out your RRSP. The answer is: early!
Congrats to the winners of Sandy Yong’s book: The Money Master. I interviewed Sandy and giveaway six (6!) copies of her book here.
Sandy wanted to share, because she’s so nice, that for every single reader that didn’t win – use Sandy’s coupon code CYBERSALE21 from Octover 30 to November 30, 2021 to receive an additional $2 off the printed copy when you make a purchase.
Speaking of books, I have MORE giveaways next week planned so stay tuned for that and my interview with the author. I’m looking forward to publishing that…
More FREE content
How I invest in dividend paying stocks is always found here. I’ll have another juicy dividend income update soon!
Looking for free calculators, tools, or even my support? Check out my Helpful Sites page here.
I also run a site with my partner called Cashflows & Portfolios, a site dedicated to free content for any age but also low-cost services about how to drawdown your retirement portfolio and provide personal, tailored answers to these time-tested questions:
- How much can I safely spend in retirement?
- Will I run out of money?
- What accounts should I drawdown first?
- What is the best drawdown order for tax efficiency?
- When should I take CPP or OAS?
- How much will my estate be taxed?
- And more!
Save, Invest, Prosper with BMO and other Deals!
As always, check out my Deals page.
On that page:
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All my best,