Author: John Heinzl

Open this photo in gallery:

I have more than $50,000 of unused tax-free savings account contribution room that I am planning to use up now that I have inherited some cash. However, I am nervous about the global economy and wonder if it would be better to hold off until the dust settles with all the tariffs. What do you recommend?

While I understand your desire to avoid short-term losses, the problem with waiting “until the dust settles” is that stocks could be trading higher by then. As counterintuitive as it may seem, if you’re a long-term investor the best time to put money to work is when headlines are overwhelmingly negative and people are full of fear. This is often when stock market valuations are most attractive.

Stock indexes are already well off their highs. As I’m writing this on Friday, the S&P 500 and Nasdaq Composite Index, for instance, are down 8.6 per cent and 12.5 per cent, respectively, from their peaks earlier this year, indicating that markets have already priced in at least some of the damage that trade wars are expected to inflict on the economy and corporate earnings. A pullback in the “Magnificent Seven” tech stocks has also contributed to the downdraft.

Canada’s benchmark S&P/TSX Composite Index has held up comparatively well, with a drop of about 4 per cent from its record high in January. This reflects, among other things, the Canadian index’s relatively light weighting in technology and strength in Canadian gold producers as bullion prices have hit record levels amid the economic and geopolitical uncertainty.

If you’re nervous about investing the entire $50,000 all at once, you could dollar-cost average by deploying, say, $5,000 each month over the next 10 months. But studies have shown that investing a lump sum usually produces superior returns. That’s because, over the long run, the market generally rises. Sure, you might get unlucky and invest right before a market downturn, but you might also catch an uptrend.

More important than your timing is how you plan to invest your money. Buying a basket of well-established companies that pay rising dividends – such as Canadian banks, pipelines, utilities, power producers and real estate investment trusts – can help to control your risk. If you’re not comfortable owning individual stocks, investing in exchange-traded funds that track major Canadian and U.S. indexes is a great solution.

Finally, remember to focus on the long run. Nobody knows where stock prices are heading next week or next month, but over longer periods markets tend to rise as companies churn out growing profits. As Warren Buffett famously said: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

Regarding your recent articles on Plaza Retail Real Estate Investment Trust PLZ-UN-T, perhaps you’ll explain how you can champion a stock that has a share price 30-per-cent lower than it was 10 years ago?

First, let me correct your math.

On Friday March 14, 2025 – the date of my most recent column on Plaza – the units closed at $3.79 on the Toronto Stock Exchange. Ten years earlier, on Friday March 13, 2015, the units closed at $4.36. That’s a decline of about 13 per cent, not 30 per cent.

But looking solely at the price decline over the past decade is misleading, because Plaza – like most REITs – also pays a monthly distribution, which currently yields about 7.4 per cent on an annual basis.

Including distributions, and assuming they were reinvested in additional units, Plaza’s total return over the past decade was 64.4 per cent, or about 5.1 per cent on an annualized basis. That’s not going to win any stock-picking contests, but it’s hardly a disaster. In fact, it’s about average for the REIT sector over the past 10 years.

And let’s not forget that the past decade included the COVID-19 pandemic and a sharp rise in interest rates, both of which were major headwinds for REITs, many of which cut their distributions. Plaza did not.

But that is all in the past. The only thing that matters now is how Plaza will perform in the future. As I said in my previous columns, many analysts have a favourable view of Plaza, citing its strong base of tenants, growing demand for retail space, rising rents and solid pipeline of development projects.

Now, ask yourself a question: All else being equal, would you rather invest in a company when its share price is high, or when it is low? I don’t know about you, but when I’m at the grocery store I always look for items that are on sale. It’s the same for stocks.

To be clear, I’m not expecting huge capital gains for Plaza or any of the other REITs I own. I buy them primarily for the steady income they produce and consider any capital growth a bonus. There are risks with any investment, so be sure to do your own due diligence before investing in any security.

In February, you mentioned in your column that you purchased additional Brookfield Infrastructure Partners LP BIP-UN-T units for your model Yield Hog Dividend Growth Portfolio. Since then, the units have dropped by about 14 per cent. With the sharp decline, should I still hold on to BIP.UN?

You’ll have to decide that for yourself, but I have no plans to sell. A drop of that magnitude isn’t unusual, and certainly nothing to be alarmed about, given the tariff turmoil and geopolitical uncertainty buffeting markets. Brookfield Infrastructure’s business remains sound, its units yield an attractive 6 per cent, and I expect that the partnership’s cash flow and distribution will continue to grow for many years to come.

Disclosure: the author owns units of PLZ.UN and BIP.UN personally, and holds BIP.UN in his model Yield Hog Dividend Growth Portfolio. View the portfolio online at tgam.ca/dividend-portfolio

E-mail your questions to jheinzl@globeandmail.com. I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.