Precious Metals IRA

Monday, June 1, 2020

Big Opportunities Ahead for This Financial Company

Big Opportunities Ahead for This Financial Company:

The Canadian banks are often viewed as the safest group of stocks trading on the Canadian markets. However, we may see banks such as TD Bank and Royal Bank of Canada get hit for quite some time as they continue to set aside cash for loan loss provisions. Given the uncertainty in the banking sector, goeasy (TSX:GSY) may be setting up for a prime opportunity.

For the unfamiliar, goeasy has two business segments: easyfinancial, which offers loans to non-prime borrowers, and easyhome, which sells furniture on a rent-to-own basis. Given the tremendous increase in unemployment as a result of the COVID-19 pandemic, more individuals may find themselves turning to one of the services goeasy offers.

The company has realized the opportunity presented to it and has been pulling out all the stops to ensure consumers find its services attractive. The company has kept the goeasy community updated on how it plans to aid consumers through the pandemic. In March, goeasy instituted a doorstep delivery service to individuals interested in its easyhome business.

The decisions by management seem to have paid off for the company, as its financial performance continues to impress investors. During its earnings call on May 6, goeasy reported a record quarterly revenue of $167 million, up 20% over the same quarter last year. Its loan portfolio also grew 33% over the same period last year from $879 million to $1.17 billion. This past quarter also marked the 16th consecutive year of dividend distribution by the company and the sixth consecutive year of dividend increases. All this was during one of the most turbulent financial quarters for the broader market in recent history.

Just as impressive as its financial performance, goeasy reported that it experienced no reduction in personnel during the COVID-19 lockdowns. For comparison, Statistics Canada reported that unemployment rates soared to 13% as nearly two million Canadians lost jobs in April.

goeasy has been one of the best-performing growth stocks in Canada over the past five years. Before the COVID-19 crash, the stock has grown 310.85% since June 2015. The recent market downturn resulted in goeasy stock returning to levels last seen in Q4 2017, after falling over 60%. The company has shown resilience since reaching its bottom, growing more than 130% over the past two months.

While this stock seems like a no-brainer, investors should be warned. Because the company focuses its loans on subprime borrowers, it could be in serious trouble if its clients are unable to repay those loans. However, given the stability and growth by the company, it seems like the risk to reward is worth taking a chance on.

Time will tell if goeasy is able to continue its rapid growth; all indications seem to suggest it will. The company was recently highlighted by Motley Fool writers as a stock to watch in the coming month. Given the evidence on hand, it may be good to consider adding goeasy to your portfolio.

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Fool contributor Jed Lloren has no position in the companies mentioned.

The post Big Opportunities Ahead for This Financial Company appeared first on The Motley Fool Canada.

3 Top Canadian Bank Stocks to Buy in June

3 Top Canadian Bank Stocks to Buy in June:

Close-up Of A Piggybank With Eyeglasses And Calculator On Desk

It was a mixed end of the month for Canadian bank stocks. Profits were down steeply for the quarter compared with last year’s performance during the same quarter. Loan-loss provisions were high, signifying a rocky outlook for the rest of the year. But the overall consensus was that the situation could have been worse. Here are three of the best Big Five banks worthy of your investment today.

Bank stocks are an all-weather play for income

If a drawn out, L-shaped recession emerges, investors might expect to see some kind of federal intervention to save key banks. While there is no indication of this possibility at present, investors should rest a little easier knowing that names like TD Bank are always going to be stoutly defended. TD Bank’s strong presence in the United States puts it on solid footing on both sides of the border.

TD Bank is arguably the most important Canadian bank on the world stage and essential to the domestic economy. Diversification is key when it comes to the current market, and this name delivers. While TD Bank, for instance, could be considered a pure play on financials, its strong presence on either side of the U.S. border brings diversification across North American markets.

A strong sector for rich yields and growth potential

Another top Big Five buy, Scotiabank is strongly tied to the domestic housing market, which could mean good things in the event of a recovery. There’s a potential thesis for a post-pandemic exodus of cooped-up Canadians into a rebooted housing market. Banks could be well positioned to capitalize on a housing rally. Scotiabank also packs growth potential in Latin American markets via its presence in Pacific Alliance countries.

While it’s not the time to be chasing yields, CIBC’s juicy distribution looks safe for the time being. It’s also the richest dividend of the Big Five. Furthermore, CIBC is arguably the Big Five bank most focused on Canada, making it the right choice for any investor seeking a pure play on the domestic economy. Indeed, CIBC could be a reassuring long-term pick for TSX investors eyeing risk from political and economic unrest beyond Canada’s borders.

Investors were unfazed by last week’s news that the Big Five had seen huge year-on-year drops in profit. Part of the reason for this bullishness may be two-fold. First, a run of bad quarters was already baked into the market. Second, making provisions for bad loans, while confirming a dire outlook for the rest of 2020, strengthens the Big Five banks to the tune of $11 billion collectively.

This loss provisioning helps to make Canadian banks better long-term investments. It should also be noted that the Big Five banks were far from unprofitable during their most recent quarter. Altogether, the nation’s five largest moneylenders have raked in $5 billion since February. It’s notable that none of the Big Five reduced their dividends last week. This should help to reassure passive-income investors of the longevity of their investments.

Some of the best stocks on the TSX have never been better value. The Motley Fool has rounded up the following highlights…

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Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

The post 3 Top Canadian Bank Stocks to Buy in June appeared first on The Motley Fool Canada.

Price Analysis 6/1: BTC, ETH, XRP, BCH, BSV, LTC, BNB, EOS, XTZ, ADA

Price Analysis 6/1: BTC, ETH, XRP, BCH, BSV, LTC, BNB, EOS, XTZ, ADA:

Tension between China and the U.S. is increasing and if the current trade deal is scrapped Bitcoin could be a major beneficiary.

This Market Is Unstoppable — New All-Time Highs Ahead

This Market Is Unstoppable — New All-Time Highs Ahead:

We saw in April and May that, despite one economic setback after another, the market continued to climb higher.

And now, even with record high unemployment and civil unrest across the country, stocks are poised for an even bigger rally.

One where the major indexes will return to their February highs … and then keep on soaring upward.

In today’s Market Insights video, my colleague Ian King and I discuss why this market is unstoppable … and how you can position your portfolio now to make the biggest profits later.

Best of Good Buys,

Jeff L. Yastine

Editor, Total Wealth Insider

America 2.0: Trials Make Us Stronger

America 2.0: Trials Make Us Stronger:

We’re not perfect. We have never been perfect.

But the great thing about this country is our drive.

Sure, we make mistakes. But America has the desire — and strength — to do better.

And we will.

Saturday’s SpaceX launch brought us together when we needed it the most. It ignited our sense of adventure.

And it was a true launch of America 2.0.

If you’re having a hard time staying positive or you need a glimpse of America united to shoot for the stars, watch today’s Market Talk.

See how we will overcome these trials to make our country stronger than ever:

Regards,

Paul Mampilly

Editor, Profits Unlimited

Warning: House Prices Could Drop 18% – and These REITs Could Drop Further

Warning: House Prices Could Drop 18% – and These REITs Could Drop Further:

Canada’s housing market is a national sport. House prices have been relentlessly surging for over a decade. Now, with unemployment at a record high and an ongoing pandemic, Canada’s housing market could finally deflate.

The Canadian Mortgage and Housing Corporation (CMHC) has forecast falling home prices of to 18 per cent in the 12 months ahead. That’s the worst-case scenario. CMHC’s base case forecast was a 9% drop.

It’s also worth noting that these forecasts are for average prices across the country. Expensive markets such as Toronto or Vancouver could experience deeper declines in value. That, of course, is bad news for homeowners and real estate investors. However, it also impacts dividend investors who rely on real estate investment trusts (REITs).

REITs are tax-advantaged structures for rental income. These listed securities can offer better dividends than traditional stocks because they can access more leverage and extract more free cash flow from rents. If the housing market collapses, leverage tightens and rental income is squeezed.

Residential REITs with higher leverage or more exposure to major cities could be at the most risk. Here are two REITs that could probably decline faster than the national housing market.

Northview Apartment REIT

Northview Apartment REIT (TSX:NVU.UN) stock dipped when the COVID-19n outbreak began, but has since recovered all its lost value. In fact, the stock is now 13% higher than at the start of the year. Investors seem to be optimistic that the housing market will hold up better than expected.

However, Northview’s portfolio looks overexposed to some vulnerable markets. More than a third of its multifamily units are located in Ontario. Nearly 10% are in Toronto and its surrounding areas, which are at the apex of the housing market crisis. However, several thousand units are in what I would call university towns.

The housing markets in Guelph, Kitchener and Hamilton, hinge on the arrival of university students. This year, of course, universities have switched to virtual classes, which means student arrivals will plunge. International student arrivals could disappear altogether, putting pressure on these overvalued housing markets.

Northview also has a sizable debt burden. Net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) was as high as 10.1. While the debt coverage ratio was 1.60. These risks don’t seem to be priced into the REIT’s elevated stock price.

InteRent REIT

InterRent REIT is similarly exposed to vulnerable markets. Two-thirds of its portfolio is concentrated in the Greater Toronto Area or Montreal. While Montreal’s housing market isn’t as overheated as Vancouver or Toronto, it’s relatively overvalued.

Rents in Montreal’s downtown are dropping faster than anywhere else in Canada. Average one- and two-bedroom apartment rents declined 5.2% and 2.6%, respectively, in April. The flood of Airbnb units entering the long-term rental market is the prime reason for this plunge in tourist-heavy Montreal.

The stock price has recovered its losses and is flat year to date. However, a housing market crash focused on Canada’s largest cities could be detrimental to InterRent’s book value and rental income.

Bottom line

The housing market is due for a correction, and prices in Toronto and Vancouver could face steeper declines. REITs focused on major cities or with too much debt could magnify the incoming crash.

Before I forget…

The 10 Best Stocks to Buy This Month

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Which Housing Crash Will Be Worse: Vancouver or Toronto?

Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned.

The post Warning: House Prices Could Drop 18% – and These REITs Could Drop Further appeared first on The Motley Fool Canada.

CERB Warning: Make $8000 in Dividend Income Instead

CERB Warning: Make $8000 in Dividend Income Instead:

Various Canadian dollars in gray pants pocket

Canadians are frantically searching for cash these days. The COVID-19 pandemic has brought not only disease to our doorstep, but also financial strain. Layoffs, business closures, and even the collapse of industries are just some of the things affecting the economy.

It’s left many looking for relief, and the Canadian government offered it up with the Canadian Emergency Response Benefit (CERB).

CERB isn’t for all

As of writing, almost 15 million Canadians applied for the CERB. That’s over $40 billion in benefits paid so far. With the benefit set to continue until at least August, that leaves even more opportunity for Canadians to sign up.

But there’s now a word of warning being passed around. Actually, several words. While the CERB might look like free money, it certainly isn’t. In the first place, if you aren’t eligible the Canada Revenue Agency (CRA) will come knocking.

Not tomorrow, but eventually you will have to pay back every cent of that $8,000 in cash from the 16 weeks you collected it. If you are eligible, that money still must be claimed on your taxes, or again you’ll pay up later. And finally, the more people sign up, the more we all have to pay in our taxes moving forward.

Granted, there are absolutely people out there who desperately need the CERB. So please let them have it. If you don’t, you can’t still bring in $8,000 in cash this year. And the great news? Using your TFSA means it’ll all be tax free.

Dividends galore

If you have the cash on hand, you can certainly bring in $8,000 in dividend income by choosing the right stocks. Luckily, most stocks are trading at a significant discount right now. That leaves the ability to bring in even more passive income than you normally would. That’s way better than the CERB, because now you can bring in that income every year, not just once.

The stocks I would consider are ones that are likely to be around now and after the market crash. Enbridge Inc, Canadian Imperial Bank of Commerce and Slate Retail REIT are all great choices in this case.

Enbridge is a pipeline company with long-term contracts, which means its dividends will be secure for decades to come. On top of that, it has a growth portfolio for the next few years that should see its share price and dividends increase regularly. CIBC is another great option as one of Canada’s Big Six Banks, with the highest dividend yield of the banks.

It has a lot of room to grow, and is a great price because of its exposure to the housing industry at the moment. Finally, Slate REIT has been hit because of its ownership of retail stores. But when the dust settles, this stock should see a huge upside that should boost its already significant dividend yield.

Bottom line

By choosing these stocks, here’s how your dividend income portfolio could look if you and your partner use your combined TFSA contribution room. Investors could put $37,450 into CIBC for $2,500 in dividend income, $33,844.48 for another $2,500, and $22,352.31 for $3,000.

That would bring in $8,000 of passive income each year for an initial investment of $93,646.79. That’s $8,000 every year, whereas CERB can only give you 16 weeks.

With that extra TFSA contribution room, here are some cheap stocks to buy up now.

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Fool contributor Amy Legate-Wolfe owns shares of ENBRIDGE INC. The Motley Fool owns shares of and recommends Enbridge.

The post CERB Warning: Make $8000 in Dividend Income Instead appeared first on The Motley Fool Canada.