Investment

Avoid CRA 2020 Taxes With a TFSA Investment

Published

5 years ago

January 28, 2020

For Canadian investors, the Tax-Free Savings Account (TFSA) limit for 2020 stands at $6,000, bringing the total contribution limit for individuals who have never invested in TFSA since its inception in 2009 to $69,500.

For example, if you were 18 or older in 2009 and have never contributed to your TFSA, then in 2020 you can allocate $69,500 to the account. On the other hand, if you have reached the TFSA contribution limit of $63,500 (between 2009 and 2019) then you have an additional $6,000 to invest in 2020.

Investing in a tax-free investment vehicle should be a top priority for investors. The TFSA is a registered account that allows for tax-free withdrawals, while the Registered Retirement Savings Plan (RRSP) has a tax on withdrawals. TFSA should be viewed as a long-term investment account that can be used to create substantial wealth.

But where do you allocate your funds? Currently, the markets are trading at record highs. However, some stocks are still trading at an attractive valuation with significant upside potential.

One such stock is Enbridge (TSX:ENB)(NYSE:ENB).

Enbridge stock is trading 18% below record highs

Enbridge is a Canada-based energy transportation and distribution company. It is engaged in delivering energy and operates through five business segments such as Liquids Pipelines, Gas Pipelines & Processing, Gas Distribution, Energy Services, and Green Power & Transmission.

Enbridge is a domestic giant. With a market cap of $108.9 billion and an enterprise value of $187.96 billion, it’s the largest energy company in Canada. Enbridge stock has returned 12.6% in the last year. It has gained 25% since August 2019, but is still trading 18% below its record highs.

The energy sector in Canada was decimated in 2014 as oil prices crashed due to a strong U.S. dollar and lower demand resulting in oversupply. The global oil prices fell from US$100/barrel in 2013 to below US$50/barrel in 2014. The energy sector is highly regularized in Canada, which means the limited pipeline capacity has resulted in lower regional prices.

Enbridge is North America’s largest pipeline operator with a wide network. Energy producers bank heavily on pipelines to transport oil as it remains the cheapest, fastest and safest way to do so, making Enbridge an enviable long-term bet.

Revenue, growth, and valuation

Analysts expect Enbridge to increase sales by 7.7% to $49.97 billion in 2019 and 0.4% to $50.16 billion in 2020. Comparatively, its earnings are estimated to rise by an annual rate of 6.2% in the next five years.

The stock has a market cap to sales ratio of 2.2, a price to book ratio of 1.77, and an enterprise value to sales ratio of 3.8. It is trading at a forward price to earnings multiple of 20.4, which is reasonable, especially after accounting for a juicy forward dividend yield of 6%.

Enbridge has little leeway to increase dividend payments, as the payout ratio at the end of Q3 stood at 99.83%. The company has a debt balance of $68.43 billion and a large part of its operating cash flow (around $10 billion) will be directed to principal and interest payments.

Enbridge is a stock that has made a strong comeback in the last two years. It is trading at an attractive valuation and might move higher in 2020.

5 TSX Stocks for Building Wealth After 50

BRAND NEW! For a limited time, The Motley Fool Canada is giving away an urgent new investment report outlining our 5 favourite stocks for investors over 50.

So if you’re looking to get your finances on track and you’re in or near retirement – we’ve got you covered!

You’re invited. Simply click the link below to discover all 5 shares we’re expressly recommending for INVESTORS 50 and OVER. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a brief time only.

Source:- The Motley Fool Canada

Source link

Economy

S&P/TSX composite down more than 200 points, U.S. stock markets also fall

Published

1 week ago

September 6, 2024

Anne Joseph

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.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link

Economy

S&P/TSX composite up more than 150 points, U.S. stock markets also higher

Published

2 weeks ago

August 29, 2024

Anne Joseph

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.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link

Investment

Crypto Market Bloodbath Amid Broader Economic Concerns

Published

1 month ago

August 5, 2024

Harry Miller

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.