Category Archives: news

April

Market Update – January 2024

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Market Update                                                                                                                    January 2024

From July highs to October lows to a strong year end rally, this was the year in markets…

                                                                           2023

TSX (Canada)                                                   8.12%

SPX (US)                                                            24.23%

Nasdaq (US largely tech index)                   43.52%

The Best and Worst Performing Sectors in 2023 (visualcapitalist.com)

Click here to download/print the PDF

U.S. ten year treasury yields continue to recede and in sync, the U.S. dollar, as attention is focused on anticipated interest rate cuts.  I think for current market valuations to hold in the U.S. we will need to see those interest rate cuts become reality while earnings continue to grow. 

Here in Canada, markets managed to turn from a negative in October to a positive rally for year end.  However, the discount between the Canadian market and the U.S. remains the largest in decades.  Arguably, the weaker Canadian market may also be the best value proposition given attractive dividend yields and low valuations.

TFSA contribution room allowed this year moves to $7,000 in cash or equivalent value of securities.  Use your TFSA for growth stocks.  TFSAs are less conducive to monthly income needs as a result of the need to deregister each time you withdraw.    

It is not what you get – but what you keep.  Remember that dividends are taxed the least in taxable accounts, followed by capital gains (which are half taxable) followed by the worst taxation of any investment income – interest income.   Income from selling calls, is taxed as capital gains.

Graduated Federal tax rates:

  • 15% on the first $53,358 of taxable income
  • 20.5% on taxable income over $53,359 up to $106,717
  • 26% on taxable income over $106,717 up to $165,430
  • 29% on taxable income over $165,430 up to $235,675
  • 33% on any taxable income over $235,675

Graduated BC tax rates:

  • 5.06% on the first $45,654 of taxable income
  • 7.7% on taxable income over $45,654 up to $91,310
  • 10.5% on taxable income over $91,310 up to $104,835
  • 12.29% on taxable income over $104,835 up to $127,299
  • 14.77% on taxable income over $127,299 up to $172,602
  • 16.8% on taxable income over $172,602 up to $240,716
  • 20.5% on taxable income over $240,716

Alberta graduated tax rates:

  • 10% on the first $142,292 of taxable income
  • 12% on taxable income over $142,292 up to $170,751
  • 13% on taxable income over $170,751 up to $227,668
  • 14% on taxable income over $227,668 up to $341,502
  • 15% on taxable income over $341,502

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial.

 

Happy New Year!

Best regards,

National Bank Financial

Rob Hunter

Senior Wealth Advisor

 

Sources: Technical Speculator, Stockcharts.com, BNN, Bloomberg, Globe & Mail, Visual Capitalist 

National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Canadian Investment Regulatory Organization (CIRO) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

This information was prepared by Rob Hunter, a Senior Wealth Advisor with National Bank Financial. The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete.

The opinions expressed are based on our analysis and interpretation of these particulars and are not to be construed as solicitation or offer to buy or sell the securities mentioned herein. National Bank Financial may act as financial advisor, fiscal agent or underwriter for certain of the companies mentioned herein and may receive remuneration for its services. Rob Hunter, National Bank Financial and/or its officers, directors, representatives, and associates may have a position in the securities mentioned herein and may make purchases and / or sales of these securities from time to time in the open market or otherwise.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department.

The securities mentioned (inclusive of option strategies) in this article are not necessarily suitable to all types of investors.  Please consult your investment advisor to discuss investment risks. All prices and rates are subject to change without notice. Stocks typically fluctuate in value. Stock values can go to zero.

Selling calls against stock (Covered Writing): Shares may need to be sold at the strike price of the option at any time prior to expiration. If the calls are assigned, further opportunity for appreciation in the underlying security above the strike price is foregone.

Risk/Reward of the strategy = Strike price minus the purchase price of the underlying plus the premium received from the sale of the call. The maximum loss is the same as holding a long position less the premium received.

The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, New Brunswick and Quebec.

National Bank Financial is a member of the Canadian Investor Protection Fund.


 

December

Market Update – December 2023

Posted on

Market Update                                                                                                                    December 2023

Both Canadian and U.S. markets have surged upward in November on anticipation that interest rate hikes may be over.  Earnings season has held some positive surprises including the consumer who is still spending.   Retail sales were stronger than expected in September and more so in October despite economists expecting – nothing. 

Click here to download/print the PDF

Canada’s market remains range bound but has rallied off the Oct 27th bottom in the TSX by 7.3%.  The TSX is +3.7% ytd.

The U.S. market has recovered from seasonal September and October pullback in markets.  The S&P 500 (SPX) has rallied off Oct 27th bottom by 10.7%.  The SPX is +18.75% ytd and within a few points of a new high. 

The Nasdaq (tech index) has recovered from seasonal September and October pullback as well.  The Nasdaq has rallied of Oct 27th bottom by 15%.  The Nasdaq is +36.15% ytd and the best performing market so far this year.

As quarterly earnings season draws toward a close, the Canadian banks start reporting next week.  Perhaps we see more dividend hikes.

TFSA contributions get a boost in 2024.

Individual contribution room jumps to $7,000 for 2024.

Leslie Vieites is Retiring Nov 30th!

I want to acknowledge Leslie’s contribution to my team since joining me over ten years ago, in May of  2013.  You may not know, but working with me was just the tip of the iceberg.  She has been working in the securities industry since December 1986 – for 37 years! Fortunately, she has spent most of her career with us at National Bank Financial – 21 years.  We are going to miss her but extend our very best wishes for a well-deserved retirement. 

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial. 

 

Best regards,

National Bank Financial

Rob Hunter

Senior Wealth Advisor

Sources: Technical Speculator, Stockcharts.com, BNN, Bloomberg, Globe & Mail

National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

The information contained herein has been prepared by Rob Hunter, a Wealth Advisor at NBF. The opinions expressed do not necessarily reflect those of NBF.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed consider a number of factors including our analysis and interpretation of these particulars, such as historical data, and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. Unit values and returns will fluctuate and past performance is not necessarily indicative of future performance. Important information regarding a fund may be found in the prospectus. The investor should read it before investing.

The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed do not necessarily reflect those of NBF.

I have prepared this report to the best of my judgement and professional experience to give my thoughts on various financial aspects and considerations. The opinions expressed represent solely my informed opinions and may not reflect the views of NBF.

Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department. The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, and Quebec. National Bank Financial is a member of the Canadian Investor Protection Fund.


May

Market Update – November 2023

Posted on

Market Update                                                                                                                    November 2023

Seasonally, September/October tend to be the worst months for the market in the calendar year historically and this year was no exception.  That said, the first week of November proved to be the best week for the TSX since 2020.  Sentiment about central bankers being finished raising interest rates proved positive news for markets along with mix of positive earnings surprises as companies report their quarter.

Click here to download/print the PDF

Canada is having a rough time.  Productivity is now the lowest in G7 (about zero) and we just increased our money supply by nearly one third over the last three years.  That is likely telling if you have any sense of a declining standard of living.  We also lack capital investment.  At an economic presentation I attended last week with our Chief Economist, he explained CPP, The Canada Pension Plan has $200 billion allocated in equities around the world and only $10 billion is invested in Canada.  Just $1.7 billion is invested in Alberta. 

My challenge is to balance the need for income with growth in a portfolio.  Canada has a positive history as a dividend paying market.  While growth in Canada is currently flat, I have found exposure to the larger and more diverse U.S. market a great catalyst to portfolios.

By the way, the kind of sideways market illustrated above is usually great for covered call writing as we approach large call option maturities in December and January. 

I want to remind you about the positives of dividend stocks in this environment.  For starters the yields are fantastic relative to fixed income.  Dividends are also taxed at the lowest rate where fixed income (interest) is taxed at the highest rate.  Most importantly, dividends tend to grow in stocks with a history of dividend growth.

Last update, I included a chart on National Bank (NA). 

Investors tend to sometimes forget that dividend growth stocks tend to keep raising their dividends – as many of the banks have done this year despite weakness in the Canadian market.  Anyone who purchased National Bank at $39 ten years ago, today has a dividend yield of approximately 10.46% In a taxable account the dividend tax credit would make that an approximate pre-tax interest equivalent yield of 14.6%.   Not bad, despite banks pulling back near-term about 17% this year. 

Market volatility is normal in the stock market.  Accept it.  Think two years – not two weeks.

Rising interest rates may be squeezing the economy in part – which is the intention of central bankers, but most economists expect interest rates to fall in the first half of the next year.

Best wishes as we head into winter. 

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial. 

 

Best regards,

National Bank Financial

Rob Hunter

Senior Wealth Advisor

 

Sources: Technical Speculator, Stockcharts.com, National Bank Economics, Bloomberg, Globe & Mail

National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

The information contained herein has been prepared by Rob Hunter, a Wealth Advisor at NBF. The opinions expressed do not necessarily reflect those of NBF.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed consider a number of factors including our analysis and interpretation of these particulars, such as historical data, and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. Unit values and returns will fluctuate and past performance is not necessarily indicative of future performance. Important information regarding a fund may be found in the prospectus. The investor should read it before investing.

The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed do not necessarily reflect those of NBF.

I have prepared this report to the best of my judgement and professional experience to give my thoughts on various financial aspects and considerations. The opinions expressed represent solely my informed opinions and may not reflect the views of NBF.

Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department. The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, and Quebec. National Bank Financial is a member of the Canadian Investor Protection Fund.


 

trump-pic

Market Update – October 2023

Posted on

Market Update                                                                                                                    October 2023

September is historically, the weakest month of the calendar year and this year was no exception.

That said, dividend yield is currently on sale in the Canadian market with the current pullback, especially in interest sensitive groups like telecommunications, utilities, REITS. 

That said, even the Canadian bank stocks are paying great income.

*Remember that dividend income from Canadian corporations is subject to a dividend tax credit in taxable accounts.  For instance, TD currently paying 4.83%, has a pre-tax interest equivalent yield of approximately 6.76%. 

**Dividends are taxed the least where interest bearing securities are taxed the most.  The big bonus is exposure to long-term growth in the stock (which I highlighted in my last Market Update).

While short-term pullbacks create opportunity, history suggests that investor do much better as a bank owner versus a depositor. 

Click here to download/print the PDF

Here are other examples from other sectors… Enbridge is paying 8.2% and BCE 7.67%    

Markets remain volatile in the second half of the year, based on a tug of war between inflation and interest rates.  We currently believe that central banks are likely close to, if not finished raising interest rates but also believe it will be longer than previously estimated before we see interest rates start to fall again.  You may recall inflation moved up in August in Canada.  

For more information on our economic outlook, be sure to consider our Economic Event October 30th in Victoria if you live on the Island.  We will be hosting National Bank’s Chief Economist, a Q&A followed by a tea.  Please call Maureen for details at 250 953 8415.

Market summary year to date (YTD):

The TSX here in Canada is down <2%> YTD

The SPX (S&P500) in the U.S. is up 10.65% YTD

The Nasdaq (tech index) in the U.S. is up 26% YTD

We are currently considering taxable gains within portfolios.  Should we find an opportunity for tax reduction this year, a member of our team will be in touch with you.

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial. 

 

Best regards,

 

National Bank Financial

Rob Hunter

Senior Wealth Advisor

 

Sources: NBF Economics, Reuters

National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).

The information contained herein has been prepared by Rob Hunter, a Wealth Advisor at NBF. The opinions expressed do not necessarily reflect those of NBF.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed consider a number of factors including our analysis and interpretation of these particulars, such as historical data, and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. Unit values and returns will fluctuate and past performance is not necessarily indicative of future performance. Important information regarding a fund may be found in the prospectus. The investor should read it before investing.

The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed do not necessarily reflect those of NBF.

Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department. The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, and Quebec. National Bank Financial is a member of the Canadian Investor Protection Fund.


 

960x0

Market Update – August 2023

Posted on

Market Update                                                                                                                    August 2023

Markets – year to date.

The U.S. markets have recovered remarkably this year, though they have been consolidating since the end of July and have lacked breadth.  They have rallied largely on tech/AI related names versus the stocks of the broad index. The S&P 500 (SPX) is up 13.8% YTD and the Nasdaq (blue) is up 26.98% YTD.

Click here to download/print the PDF

The Canadian market is the laggard this year. The Canadian market is currently experiencing it’s largest discount to the U.S. market in over twenty years.  While the values are currently weak the yields attainable from dividend paying stocks are quite favourable.  The TSX is up 2.23% YTD.

Both Canadian and American markets have been consolidating since the end of July.  This is not to surprising given the run up this year in the U.S. (prior to August).  While earnings were pretty good for the last quarter, technically, we are about to enter September/October which are not always, but more often, historically, the two worst months of the year in the stock market.  Inflation in Canada had fallen substantially from a year ago to 2.8% in June but ticked up again to 3.3% in July. 

Interest rate sensitive sectors in Canada like telecommunications, Utilities and Real Estate REITs are trading lower in anticipation that our central bank may raise rates again in September.   

Is now the time to add fixed rate interest bearing securities?

The case for GICs (deposits).

  • The yields sound attractive compared to a year ago, BUT whenever you buy interest bearing securities you pay tax at your top marginal tax rate.
  • Interest draws the highest tax consequences where dividends draw the lowest tax.
  • You have zero chance of capital appreciation.

The case for bonds.

  • Like deposits, interest attracts tax at your top marginal tax rate.
  • As interest rates rise in the market, bond prices typically fall so that their yields are more attractive. The reverse happens as interest rates fall.
  • There is potential for capital appreciation when interest rates fall.
  • Either way, while bonds tend to fluctuate in value between issue and maturity dates, they always mature at the same price they were issued – par value $100.

The case for dividends.

  • Dividends are taxed at a much lower rate than interest for all investors.
  • The yields available today are significant – some shares paying above 6%.
  • The Government allows you to claim a dividend tax credit when you own Canadian dividend paying corporations in a non-registered account. For instance, a dividend of 6% would have an approximate pre-tax interest equivalent yield of 8.4% because of the dividend tax credit. (You would need a GIC at 8.4% to get the same after-tax income from a 6% dividend.)
  • Dividend growing companies tend to increase their dividends over time.
  • You have the potential for capital growth owning the dividend paying stock.
  • Ten years ago, National Bank (NA) was trading at about $39/share. At writing, it trades at about $100.33/share.  The stock growth equates to 156% over that period or an average 15.6% per annum.  But that is just the growth of the stock.  National like most banks pays a dividend and like most, it has continually raised the dividend.  Today it pays $4.08 in dividends/share which equates to 4.06% on the current price of the stock.  Had you bought National ten years ago at $39, that growing dividend yield today, would equate to ($4.08/$39) 10.46%.  In summary, the above example represents a 15% average growth in the stock over the last ten years, plus a current dividend yield today of 10.46%.

Here is a chart of how the big six Canadian banks have performed over the last ten years.  

*Historical performance is no guarantee of future performance.

I think the value side of the market is here in Canada right now from the perspective of yields and current pricing. 

Best wishes for the remainder of the summer.

I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial. 

Best regards,

National Bank Financial

Rob Hunter

Senior Wealth Advisor

Sources:  Stockcharts.com, Technical Speculator, Reuters, Bloomberg

National Bank Financial is an indirect wholly owned subsidiary of National Bank of Canada. The National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX). 

This information was prepared by Rob Hunter, an Investment Advisor with National Bank Financial. The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete. 

The opinions expressed are based on our analysis and interpretation of these particulars and are not to be construed as solicitation or offer to buy or sell the securities mentioned herein. National Bank Financial may act as financial advisor, fiscal agent, or underwriter for certain of the companies mentioned herein and may receive remuneration for its services. Rob Hunter, National Bank Financial and/or its officers, directors, representatives, and associates may have a position in the securities mentioned herein and may make purchases and / or sales of these securities from time to time in the open market or otherwise. 

The opinions expressed herein do not necessarily reflect those of National Bank Financial. 

Several of the securities mentioned in this article may not be followed by National Bank Financial’s

Research department. The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, and Quebec. National Bank Financial is a member of the Canadian Investor Protection Fund.


 

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