Don’t dream of bidding goodbye to your nine-to-five job. Plan it! Start investing now with a conservative dividend investing strategy. Many well-established Canadian companies pay out dividends from their profits to their shareholders. By owning shares of these companies, you can earn substantial dividend income over time.
Notably, the dividends you generate don’t necessarily have to replace your nine-to-five job’s income entirely because Canadian dividends are more favourably taxed than your job’s income.
Dividend income is taxed at a lower rate
For example, let’s say, John lives in Ontario and earns $60,000 in taxable income this year. He is subject to an average combined federal and provincial income tax of approximately $12,608 for an average tax rate of a little over 21%. In other words, John’s take-home income is about $47,392. This year, he could earn up to $55,867 in eligible Canadian dividends in his non-registered (or taxable) account without being taxed if the dividends are his only income.
Assuming John is able to earn an average yield of 4.5% from a diversified dividend portfolio today, his portfolio value would need to be about $1,053,156. It follows that the earlier you start investing, the sooner your money can work for you because you can choose from a basket of dividend stocks that increases your dividends over time. To make the compounding faster, you can reinvest your dividends to generate even more dividends.
For example, if you invest $5,000 in Bank of Nova Scotia (TSX:BNS) shares today, you would get a dividend yield of about 6.6%, or income of approximately $330, in your first year. Let’s say the share price grows by 5% per year, and you continue to invest $5,000 at the start of each year. The investment would grow to almost $66,034 in 10 years. And if it were to still yield 6.6% at the time, you would earn about $4,358 in dividend income from your position in year 10. This is just one position. Visualize other safe dividend ideas for your diversified portfolio.
Do you fancy flexible work hours?
You might also prefer to work as a part of the gig economy with flexible hours in (different kinds of) work you enjoy over a nine-to-five job. Contract work and potentially other part-time work could spice up your life and complement your dividend portfolio to make you the income you need. In this case, you can ditch your nine-to-five job sooner than if you were making income only from your dividend portfolio.
Another dividend stock idea
Other than Bank of Nova Scotia, another stock you can rely on for safe passive income is Fortis (TSX:FTS). The utility stock has increased its common stock dividend for 50 consecutive years. It is already ingrained in its DNA to maintain a safe and growing dividend.
The utility holding company is diversified across 10 regulated utilities across Canada, the United States, and the Caribbean. About 93% of its assets are for transmission and distribution of electricity or natural gas. These assets provide essential services to its customers in good and bad economic times, allowing Fortis to make highly reliable earnings throughout the economic cycle. It also maintains a sustainable payout ratio that’s about 75% of its earnings this year. At $54.36 per share at writing, FTS offers a dividend yield of 4.3%.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
