There are some unique opportunities in every investment market, and we’re not talking about artificial intelligence and lithium mining here, but the joys of some sources of high income.
Ways to make more income from your investments
High-interest savings funds and ETFs
There’s no need to lock money in a guaranteed investment certificate when you can access funds daily and still earn around 4.5 per cent for Canadian cash and five per cent on U.S. cash. Purpose Investments Inc., Ninepoint Partners LP, CI Financial Corp., Horizons ETFs Management Inc. and others all offer this option as the modern equivalent to a money market fund.
This is a great option for corporate money that is often sitting in bank accounts earning zero, but also a good option for personal money as well. If interest rates fall, these returns will fall, but we don’t see that happening for several months.
Specifically, those that generate yields to maturity in the range of 4.5 per cent to 5.5 per cent.
One that we own is a Laurentian Bank of Canada bond that comes due June 3, 2024. It has an annualized yield to maturity in 13 months of 5.35 per cent. There are many others that will yield in this range from fairly solid companies with maturity dates in the six-to-24-month range.
Specifically, those that generate yields to maturity in the high six-per-cent range for reasonable risk.
The Canadian high-yield universe is small (43 bonds) and yields 7.47 per cent on average, but this is impacted by some larger distressed issuers.
A couple that are interesting and maybe a little lower risk are the Parkland Corp. 4.375-per-cent, March 26, 2029, bond that is yielding 6.78 per cent, and the Cascades Inc. 5.375-per-cent, Jan 15, 2028, bond that is yielding 6.75 per cent in U.S. dollars.
These can generate dividend income with yields in the range of 5.75 per cent to 6.9 per cent. One that we use is a George Weston Ltd. straight preferred that pays 6.15 per cent. Straight preferred means it pays a fixed dividend that doesn’t move or get reset over time.
Another one is a BCE Inc. rate reset preferred share that has a current dividend yield of 6.86 per cent. A rate reset usually means the dividend will be adjusted every five years based on the five-year Bank of Canada rate plus a specific rate.
Beaten down REITs and MICs
Some real estate investment trusts and mortgage investment corporations are yielding nine per cent to 11 per cent. Some examples might be Timbercreek Capital Corp., a publicly traded MIC whose stock price is down almost 15 per cent over the past year and is currently yielding 8.94 per cent.
Many capital market arms of the banks and insurers put together specialized structured products that yield 9.2 per cent to 13.2 per cent. These can cover off a wide range of investments.
For example, you can earn 9.2 per cent annually (interest paid monthly) as long as the S&P/TSX Capped Utilities index is trading no worse than negative 30 per cent. The utilities index mostly holds hydroelectric names such as Hydro One Ltd. and Fortis Inc., and has been among the more secure parts of the stock market.
As you can see from this list, high yields are available. As the yields get higher, the risk level tends to increase, so it is important to truly understand the risks on these investments so that you are going in with your eyes open.
At the same time, high yield is sometimes more a function of buying in at the right time. There is another high-income investment that is a bit of a touchy memory for some.
At the moment, we don’t know exactly where we are in the market cycle. That can only be answered in a couple of years when looking back. But there are better yields out there today than there have been for a long time.
Sometimes, you don’t have to time things perfectly; you just have to be directionally correct. It is starting to feel like this current investment market is providing us with a high-yield window that may be around for a period of months, but these don’t tend to last for too long.
Ted Rechtshaffen, MBA, CFP, CIM, is president and wealth adviser at TriDelta Financial, a boutique wealth management firm focusing on investment counselling and high-net-worth financial planning. You can contact him directly at firstname.lastname@example.org.
Governments are continuing to push investment into clean energy amid the global energy crisis – News – IEA
The amount of money allocated by governments to support clean energy investment since 2020 has risen to USD 1.34 trillion, according to the latest update of the IEA’s Government Energy Spending Tracker. Around USD 130 billion of new spending was announced in the last six months – among the slowest periods for new allocations since the start of the Covid-19 pandemic.
This slowdown may be short-lived, however, as a number of additional policy packages are being considered in Australia, Brazil, Canada, the European Union and Japan. Already, government spending is playing a central role in the rapid growth of clean energy investment and expanding clean technology supply chains, and is set to drive both to set to drive both to new heights in the years ahead. Notably, direct incentives for manufacturers aimed at bolstering domestic manufacturing of clean energy technologies now total around USD 90 billion.
At the same time, governments continue to increase spending on managing the immediate energy price shocks for consumers. Since the start of the global energy crisis in early 2022, governments have allocated USD 900 billion to short-term consumer affordability measures in addition to pre-existing support programmes and subsidies. Around 30% of this affordability spending has been announced in the past six months.
These measures have had a major role in moderating price increases for end users, but the energy crisis nonetheless took a toll on many people’s budgets. According to the IEA’s latest data on end-user prices across 12 countries, which together represent nearly 60% of the global population, the average household spent a higher share of its income on energy in 2022 as energy prices outpaced nominal wage growth. On average, households in major economies spend between 3% and 7% of their incomes to heat and cool their homes, to power appliances and to cook – though shares are higher for low-income households. In most major economies, the share of income spent on energy moved up by less than 1% thanks to government interventions.
At the pump, consumers felt the impact more acutely, especially in emerging markets and developing economies, where transport fuels accounted for the joint largest increase in household spending in 2022 alongside food. Without government intervention, this would have been much higher. This was the case in Indonesia, where the average household total energy expenditure would have tripled in 2022 were it not for affordability support.
Early numbers for 2023 show that wholesale energy prices are easing. However, retail prices are unlikely to fall as quickly. High prices are already making clean energy technologies more cost competitive, notably electric vehicles and heat pumps, which saw record sales in 2022. As high prices persist, the uptake of clean energy technologies is set to accelerate further, hastening the emergence of the new energy economy.
Brexit scaremongering proven wrong as London seals major investment in Europe – GB News
The UK attracted the highest amount of inward direct investment in 2022, extending its lion’s share of the European market to more than a quarter.
Releasing figures sure to infuriate pro-EU activists, the annual Ernst & Young (EY) attractiveness survey found foreign investors flocked to the City to fund 46 financial services projects last year, up from 39 in 2021.
By comparison, second place Paris enticed foreign investment for 35 finance proposals, sliding from 38 in 2021, while Madrid secured 22 foreign investment projects compared to 29 in 2021.
Anna Anthony, UK financial services managing partner at EY, said: “Investors recognise the strength, gold-standard governance and resilience of the UK’s financial system and see it as the preferred destination for growth, innovation and access to top talent.”
The Square Mile continues to be a beacon of prosperity
Overall, the UK attracted foreign investment to 76 financial services projects in 2022, a 17 per cent rise on the 63 projects in 2021.
It puts clear blue water between the UK and France, which recorded 45 projects in total, down 15 on 2021 figures.
Andrew Griffith, economic secretary to the Treasury, told City AM: “We have a tremendous track record of attracting the brightest and best companies in the world built on the long standing competitive advantages of the UK and its attractiveness as a place to do business.”
The UK has topped EY consultancy’s finance foreign direct investment table every year since the research started, including every year since the 2016 Brexit vote.
Andrew Griffith pictured second to the right
Likewise, London has led the European city table since it was first recorded in 1986.
America was the biggest source of foreign investment in financial services in Europe last year, accounting for 21 of the UK’s 76 projects in 2022.
Financial services investment projects created 2,603 jobs in the UK last year, a rise of four per cent on 2021.
Across Europe, 10,700 new jobs were created in financial services, of which 1,700 were recorded in France.
EY’s home in Canary Wharf at 25 Churchill Place
Cushman and Wakefield
Chris Hayward, policy chairman at the City of London Corporation, said: “London continues to lead Europe in attracting foreign direct investment in financial services, and the sector is proving resilient despite the global challenges facing the UK economy.”
Hayward added: “That is good news for every household, because a strong City creates the wealth and jobs that support the economy and fund our public services.”
EY has undergone a UK leadership shake up recently following a collapse in the consultancy firm’s plan to break up its audit and consulting operations globally.
The break up blueprint, coined ‘Project Everest’, attracted fierce internal criticism and was eventually abandoned but not before it had cost the firm £480million worth of internal work.
On the back of ditching the radical overhaul, EY has shrunk the UK executive committee from 13 to eight and announced that it will cut 3,000 jobs in the US.
The big four consultancy firm reported record levels of growth for its UK business in November 2022, with UK revenues up 17.2 per cent and UK fee income increasing to £3.23billion from £2.75billion.
Investment grade will boost realty
The local property market stands to reap significant benefits, both short-term and long-term, from a likely credit rating upgrade to investment level for Greece.
Industry executives say that would be a very positive development, as, after 14 years, the Greek real estate market will return to the “elite” of investment destinations and it will become easier to attract foreign investment groups and funds.
“There is an objective problem right now regarding the implementation of investments by a number of institutional investors, as there are rules that prohibit the placement of funds in countries below investment grade. In other words, even if there was an investment opportunity and they were willing to take the risk, such an investment would be cut off by the investment committee of the respective group, because it is not allowed to invest in countries that do not have a positive credit rating,” Tassos Kotzanastassis, ULI global management committee executive and CEO of international real estate investment management company 8G Group, tells Kathimerini.
Securing investment grade means the Greek property market will get back on the “radar” of large institutional investors and state groups that have a long-term investment horizon. This is a development that contradicts speculative moves by a portion of institutions that have been placed in Greece, with a purely short-term horizon, aiming to secure a quick profit and exit from the country.
However, as Kotzanastassis warns, new investments from large foreign funds should not be expected, at least not immediately. “In this period, at the international level, there is significant uncertainty and investors appear restrained. Many are looking for investment opportunities in the form of distressed assets,” he emphasizes.
One of the market’s perennial problems is it is shallow, so it is difficult to create economies of scale that maximize the return on an investment. Another key point is that all foreign investors of this scope are looking for properties with green characteristics, in the context of the ESG policy they follow. Such properties are still rare in this market, constituting a very small minority in relation to the total stock.
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