If you went all-in on stocks a week ago, you are probably feeling pretty good right about now. The governments are bailing everyone out so no one feels any pain. Bad companies are being supported. Highly levered individuals are going to get money, so they can keep making irresponsible decisions. The perpetual motion machine of debt keeps going.
So, what is the end game in all this? Is this the new normal? Should we just expect this level of volatility going forward? After all, the volatility comes from our massive debt loads and the vulnerability that puts into the system. If it wasn’t the virus, it would have been something else that set off this volatility.
This is the exact reason why you want to take advantage of these times of chaos to buy shares in solid, dividend-paying companies. Solid companies, preferably with predictable earnings growth, let you ride out these storms with relative comfort.
Two core companies
With the market shooting up as it is at the time of this writing, it is harder to recommend TD Bank (TSX:TD)(NYSE:TD) and Fortis (TSX:FTS)(NYSE:FTS). They were such compelling buys a few days ago and are much less so today. This is not a function of the companies themselves, but rather is a reflection of the higher valuations they are commanding after only a few volatile days of upward movement.
Nevertheless, even at these levels, both Fortis and TD are still definitely worth buying if you have not yet added them to your portfolios. Both have very attractive dividend yields, with Fortis’s yield at 3.85% and TD’s still at just over 5% at the time of this writing. If you can lock them in at these yields, you are still getting decent income from these stocks.
There is also the possibility of dividend growth ahead in the future. In the case of Fortis, the company has maintained a solid upper-single-digit growth rate in its payout for decades. The growth is supported by its regulated utility businesses. These give clear visibility for upcoming increases.
TD is slightly riskier in that it is more likely to be impacted by a global economic slowdown than Fortis, but it is still quite solid. The yield has grown at a steady clip for many years. Just a month ago, the bank raised its payout by 7%, adding to a long streak of dividend increases.
Although both the United States and Canada are both impacted by the fallout from the coronavirus, the fact that these companies are diversified across both regions is still beneficial. They both get a portion of their earnings in the form of U.S. dollars, so they are able to benefit from the strong currency when the earnings are converted back in Canadian dollars.
It is also possible that one country may be more heavily impacted by the virus. The geographic diversification may mean that their earnings from one area may be more accretive than earnings from another.
The bottom line
It can be nerve-wracking to watch your portfolio dip precipitously during times of stress. No one is immune to the ups and downs of the market. Even the solid dividend payers, as we have seen during this crisis, can get cut in half in a heartbeat. The key is to know why you own something and to be resolute to stick with it when times get tough.
Companies like Fortis and TD are stocks you should have as a key component of your Canadian dividend portfolio. These are steady businesses with long histories of quality operations, dividend payments, and growth. There are not many excellent times to buy stocks like these, so take advantage of them when the opportunity arises.
There’s nothing better to an income investor than the sight of dividends rolling into your account. But the old saying goes there are two things certain in life – death and taxes… and the latter can result in some of those precious dividends slipping through your fingers and into the taxman’s pocket!
But did you know that dividends from Canadian-based companies are eligible for special tax credits? For further details on this – and to find out the name of the single most tax-efficient account to hold your US stocks in! – simply click the link below to grab your free copy of our new report…
Fool contributor Kris Knutson owns shares of FORTIS INC and TORONTO-DOMINION BANK.
Air Canada to reduce workforce by 16,500 as it parks planes during COVID-19 – Financial Post
Air Canada will send home 15,200 unionized employees and 1,300 managers due to the “unpredictable extent and duration” of the COVID-19 pandemic.
Canada’s largest airline announced Monday it will place the unionized members on off-duty status and furlough the managers as it reduces capacity by about 85 to 90 per cent from April through June. It intends for the cuts, which will come into effect on or about April 3, to be temporary.
“To furlough such a large proportion of our employees is an extremely painful decision but one we are required to take given our dramatically smaller operations for the next while,” Air Canada chief executive Calin Rovinescu said in a statement.
“I understand and regret the impact this will have upon our employees and their families.”
Rovinescu and chief financial officer Michael Rousseau will forgo 100 per cent of their salaries, while other senior executives will take a 25 to 50 per cent pay cut. Board members agreed to a 25 per cent pay cut. Other managers’ salaries will be reduced by 10 per cent.
On Monday, Prime Minister Justin Trudeau announced the government will subsidize 75 per cent of wages for companies that lose 30 per cent of their revenue during the shutdown. It’s not yet clear how Air Canada could benefit from this, but the airline said it will assess how the subsidy could affect its workforce reduction plans.
Trudeau also acknowledged the airline industry has been “extremely hard hit” by the pandemic and said the government will do more to help the industry, but did not reveal any details.
The prime minister and senior government officials have been working with Canada’s major passenger airlines as they seek help during the crisis. Ottawa has already agreed to provide Toronto-based Porter Airlines with $135 million in commercial financing, but has yet to reveal a comprehensive package for other airlines including Air Canada, WestJet Airlines Ltd., Transat A.T. and Sunwing.
To help deal with plummeting revenue, Air Canada is also looking to cut $500 million in costs and capital spending. It will draw down about $1 billion in operating lines of credit for additional liquidity and suspended its share buyback program on March 2.
Air Canada is working with Ottawa to repatriate Canadians abroad. It will continue to operate a select number of flights after April 1, pending further government restrictions, as well as operating cargo-only flights to ensure movement of goods, such as medical supplies.
Air Canada employed about 33,000 people at the end of 2019, according to financial statements.
Air Canada employs about 4,400 pilots. It’s not clear how many pilots will be affected by the decision, but last week the Air Canada Pilots Association reached a deal with the airline to reduce pilot pay, allow pilots to retire earlier and plan for a maximum of 600 redundancies in the coming months.
Pilots placed on furlough will continue to accrue seniority and service and will be recalled in order of seniority, the ACPA said in a statement.
The International Air Transport Association predicts airlines around the world will lose US$252 billion in revenue due to the COVID-19 pandemic.
Coronavirus: Air Canada to lay off 16,500 workers amid COVID-19 pandemic – Global News
Effective this Friday, the layoffs of 15,200 unionized workers and 1,300 managers will last through April and May amid drastically reduced flight capacity from the Montreal-based airline.
“To furlough such a large proportion of our employees is an extremely painful decision but one we are required to take given our dramatically smaller operations for the next while,” chief executive Calin Rovinescu said in a statement.
The carrier has halted most of its international and U.S. routes in response to the global shutdown.
States from Sweden to China to the United States have rolled out aid packages for the airline sector over the past month as borders closed and travel demand plummeted amid the spread of the novel coronavirus.
Air Canada said its cost reduction scheme aims to save least $500 million. It includes a pledge from both the CEO and chief financial officer Mike Rousseau to forego 100 per cent of their salaries, while the rest of the executive team will give up between 25 per cent and 50 per cent.
The company will draw down about $1 billion in lines of credit to provide additional liquidity for a carrier that has a $7.3 billion cash cushion to fall back on — more than the most profitable U.S. carrier, Delta Air Lines.
Leon’s Furniture to lay off nearly 50% of workforce
Earlier this month Air Canada’s flight attendant union said 5,149 cabin crew would be temporarily laid off due to the COVID-19 outbreak. The newly announced layoffs do not include the earlier job reductions.
The pandemic has cost thousands of jobs in the airline sector. Transat AT Inc. has laid off at least 3,600 flight attendants while WestJet has seen 6,900 departures including early retirements, resignations and both voluntary and involuntary leaves.
WestJet said Monday it is cancelling all transatlantic and U.S. routes until May 4, extending its 30-day suspension by two more weeks.
Both Air Transat and Porter Airlines have halted all flights.
© 2020 The Canadian Press
TSX down amid oil rout while Wall Street inches up in early trading – Global News
Canada’s main stock index was down in early trading on Monday as the price of oil slid to its lowest level since 2002. In the U.S.. however, stocks opened higher on Monday as President Donald Trump followed last week’s massive fiscal stimulus by extending his stay-at-home guidelines, leaving investors guessing at their economic impact.
In Toronto, Canada’s benchmark S&P/TSX composite index was down 56.86 points at 12,630.88.
In New York, the Dow Jones Industrial Average rose 41.44 points, or 0.19 per cent, at the open to 21,678.22.
Coronavirus outbreak: Kenney calls for coordinated tariffs with U.S. in response to ‘predatory dumping’ of Saudi oil
The S&P 500 opened higher by 17.51 points, or 0.69 per cent, at 2,558.98. The Nasdaq Composite gained 81.08 points, or 1.08 per cent, to 7,583.46 at the opening bell.
On the currency market, the Canadian dollar traded for 70.57 cents US compared with an average of 71.14 cents US on Friday.
The May crude contract was down US$1.37 at US$20.14 per barrel and the May natural gas contract was down 2.3 cents at US$1.65 mmBTU.
The June gold contract was down US$10.80 at US$1,643.30 an ounce and the May copper contract was down 0.65 of a cent at US$2.17 a pound
— With files from the Canadian Press
© 2020 Reuters
Coronavirus economy: Recession or depression? – Aljazeera.com
Air Canada to reduce workforce by 16,500 as it parks planes during COVID-19 – Financial Post
Letter: Media needs to press for analysis of decisions made about COVID-19 – MorinvilleNews.com
Iran anticipates renewed protests amid social media shutdown
Popular Richmond BBQ spot speaks out about coronavirus rumours after man collapses outside restaurant – Vancouver Is Awesome
Real Estate Board of Greater Vancouver reports January housing sales up 42.4 percent
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