Quote:
Originally Posted by Map Maker
Added to my TD stockpile. 5% dividend and prospect of capital gain. Better than a GIC.
IMO.
|
Agree, when you consider the difference in tax treatment: that 5% dividend is about the same as 9% interest if you hold both in taxable accounts. That and you don't pay capital gains tax till you actually sell and the tax is on only 50% of the gain. With the prospect of rate drops even a year out, Banks, Utilities and Pipelines will be back in favour due to the dividends. TRP is over 7.2% and sustainable, and Telus 6.4%, BCE 7.9% etc are way up there on yield too.
At my age, I don't need the pot to grow fast (if I was 30 again I would have a different investment mix), but the steady monthly income is really nice to have. Since these companies increase their dividends 3 or 4% every year, which is more than most pensions, even Defined Benefit with COLA (Cost of Living Adjustments) clauses, it also helps to keep up with inflation. (At 7% your money doubles every 11 years, but at 3% inflation your spending power is cut in half every 22 years as well, and when inflation on what most people spend most of their money on actually buy, groceries, mortgage or rent, car expense, insurance, property tax, payroll deductions etc is running 12 to 18% like it has the last few years, your buying power gets cut in half in 4 to 6 years.)