Category: Canada

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According to The Wall Street Journal, average 30-year mortgage rates have now surged to 7.1% and home sales for March, correspondingly, fell 4.3%, the largest drop since November 2022. 

Since inflation has also drastically hiked up the costs of basic essentials like food and medicine, stretching dollars to the limit may fall short of covering these necessities, and an additional income stream that can also assist on a monthly basis can mean the difference between being able to keep a roof over one’s family’s heads or facing foreclosure from mortgage default.

24/7 Wall St has published a number of articles about dividend paying stocks as a source of passive income. However, the majority of stock dividends are paid quarterly.  In order to make sure that there is a monthly amount to immediately allocate for a mortgage payment or a hiked home rental, a minimum $750 per month can certainly offer welcome relief. The following dividend stocks can cumulatively deliver a double-digit annual yield disbursed on a monthly basis, for an investment of $10,000 per stock.

Allied Properties Real Estate Investment Trust

Source: Justin Sullivan / Getty Images News via Getty Images

Stock #1: Allied Properties Real Estate Investment Trust (OTC: APYRF)

Dividend: $1.80 ($0.15/month)

Yield: 14.61% annual

Shares for $10,000: 811

Monthly Passive Dividend Income: $121.75

AppleTV’s miniseries, WeCrashed, documented the rise and fall of hyped commercial real estate company WeWork and its charismatic leader, Adam Neumann, portrayed by Jared Leto. While WeWork is a textbook example of a bank (Japan headquartered Softbank) drastically overpaying for a simple business model that was given a new spin by the profligate Neumann, that simple business model is legitimate, and if managed sensibly, can be profitable. Toronto, Canada based Allied Properties Real Estate Investment Trust is one such company demonstrating this.

Registered as a Real Estate Investment Trust (REIT), which mandates that 90% of profits be remitted to shareholders in the form of dividends for tax purposes, Allied Properties REIT provides commercial real estate spaces with knowledge-based (read: technology) company amenities. With buildings in seven different cities throughout Canada, totalling 530 suites and a cumulative 15.12 million square feet of space, Allied Properties REIT is putting the WeWork model to work in a genuine and profitable fashion. Since going public in 2003, the company has never failed to pay its dividend.

Stellus Capital Investment Corporation

Source: Kanchana Imsilp / Shutterstock.com

Stock #2: Stellus Capital Investment Corporation (NYSE: SCM)

Dividend: $1.60 ($0.133/month)

Yield: 11.47% annual

Shares for $10,000: 734

Monthly Passive Dividend Income: $95.58

Participating in both the private corporate debt and equity markets, Houston, TX headquartered Stellus Capital Investment Corp. finances deals for American and Canadian companies with EBITDA between $5 million and $50 million. Their origination underwritings may manifest in several configurations, such as first lien, second lien, unitranche, and mezzanine debt, often accompanied with an equity portion. 

Slate Grocery REIT

Source: VLG / iStock via Getty Images

Stock #3: Slate Grocery REIT (OTC: SRRTF)

Dividend: $0.864 ($0.072/month)

Yield: 10.94% annual

Shares for $10,000: 1,265

Monthly Passive Dividend Income: $91.16

REITs that specialize in providing commercial space for tenants in specific industries can often create very profitable niches for their businesses, especially if the locations are accessible and the businesses are essential. Slate Grocery REIT has selected the retail food and grocery business as its targeted industry, and their properties now are occupied by national grocery chains in shopping malls across the continental US. 

Although Slate Grocery REIT is a Canadian company, its properties are entirely in the US. Its locations can be found all along the Eastern Seaboard, from New Hampshire all the way to Florida, as well NY, PA, MD, VA, KY, TN, OH, MI, IN, IL, WI, MN, ND, UT, AL, TX, CO, and CA.

Pennant Park Floating Rate Capital Ltd.

Source: Davel5957 / iStock via Getty Images

Stock #4: Pennant Park Floating Rate Capital Ltd. (NYSE: PFLT)

Dividend: $1.23 ($0.10month)

Yield: 10.82% annual

Shares for $10,000: 892

Monthly Passive Dividend Income: $90.16

PennantPark Floating Rate Capital, Ltd. is a Business Development Company (BDC) that operates out of Miami Beach, FL. As a registered BDC, it engages with primarily US based and a limited number of non-US companies in providing secondary direct secured loans, mezzanine  debts, and equity investments, primarily in the form of 3-10 year floating rate debt instruments. 

In general, PennantPark will consider financings and investments of between $2 million and $50 million in unrated companies. It will also buy secondary market high-yield bonds, preferred stock, and distressed debt of public companies above $250 million market cap that have a proven history of adequate liquidity. 

Fortitude Gold Corporation

Source: TomasSereda / Getty Images

Stock #5: Fortitude Gold Corporation (OTC: FTCO)

Dividend: $0.48 ($0.04/month)

Yield: 10.37% annual

Shares for $10,000: 2,159

Monthly Passive Dividend Income: $86.42

Fortitude Gold Corporation is a gold and silver mining company headquartered out of Colorado Springs, CO. With ownership of five gold mine properties in Nevada, its flagship project is the Isabella Pearl, which is 10,400 acres. Fortitude’s proven reserves can potentially yield up to 220,000 oz. of gold and 1.3 million oz. of silver. 

At the time of this writing, Fortitude just announced their latest findings in the East Pit of Isabella Pearl: “Within an 80-foot-wide zone of 1.73 grams per tonne gold we intercepted a record high gold grade for the East Pit of 4.77 grams per tonne gold over 15 feet,” stated Mr. Jason Reid, CEO and President of Fortitude Gold.

Gladstone Capital Corporation

Source: monsitj / iStock via Getty Images

Stock #6: Gladstone Capital Corporation (NASDAQ: GLAD)

Dividend: $1.98 ($0.17/month)

Yield: 9.41% annual

Shares for $10,000: 473

Monthly Passive Dividend Income: $78.42

McLean, VA based Gladstone Capital Corporation is a registered BDC that also has a private equity component. On the BDC side, Gladstone originates debt financings in a variety of configurations, including senior term loans, revolving credit lines, secured first and second term liens, unitranche loans, senior or junior subordinated loans, and mezzanine loans, as well as common stock, preferred stock, and/or warrants. Use of proceeds can include, growth capital, acquisitions, refinancings, change of control, and buy & build strategies. Industry agnostic, Gladstone qualification criteria for prospective financing deals from $7 million to $30 million is for company sales between $20 million to $100 million and $3 million to $25 million EBITDA. 

On the private equity side, Gladstone will participate in acquisitions, buyouts, or recapitalizations. Its preferred exit strategies can manifest in IPOs, third party strategic acquisitions, or comparable market transactions.

Nexus Industrial REIT

Source: Leonid Andronov / Getty Images

Stock #7: Nexus Industrial REIT (OTC: EFRTF)

Dividend:  $0.48 ($0.04/month)

Yield: 9.34% annual

Shares for $10,000: 1,964

Monthly Passive Dividend Income: $77.83

Nexus Industrial is a growth oriented REIT with a total 117 property portfolio of Industrial, Office and Retail oriented commercial properties located across Canada. The cumulative rentable square footage equates to 12.4 million. 

Nexus holds 87 Industrial properties (including one mixed-use location) in Alberta, British Columbia, Saskatchewan, Ontario, Quebec, Manitoba, and New Brunswick, with one in the Northwest Territories. 

Nexus’ 15 Office properties are in Quebec and New Brunswick. Its 17 Retail properties (including one mixed-use location), are in Quebec and British Columbia. 

Boston Pizza Royalties Income Fund

Source: Margarita-Young / iStock Editorial via Getty Images

Stock #8: Boston Pizza Royalties Income Fund (OTC: BPZZF)

Dividend: $0.98 ($0.081/month)

Yield: 8.55% annual

Shares for $10,000: 868

Monthly Passive Dividend Income: $71.25

While Tim Horton’s (named after the Canadian NHL hockey all-star player) is recognized as Canada’s most popular fast food chain, the ironically named Boston Pizza has been Canada’s #1 casual dining chain, with hundreds of franchises and sales of around $1 billion annually. 

Boston Pizza was founded in 1964 by Greek immigrant Gus Agioritis. Retired Royal Canadian Mounted Police officer Jim Treliving opened the first Boston Pizza franchise in British Columbia in 1968, and would then partner with accountant George Melville to launch a string of 15 additional franchises across B.C. by 1983. From there, the chain would spread throughout Canada, to eventually go public on the Toronto Stock Exchange and list its ADRs on the OTC Market. 

In addition to serving in-house pizzas, pastas, salads, appetizers and desserts, Boston Pizza restaurants also have Sports Bars, which generate lots of group meals and beverages during televised sporting events. 

2020 Bulkers Ltd.

Source: InfinitumProdux / iStock via Getty Images

Stock #9: 2020 Bulkers Ltd. (OTC: TTBKF)

Dividend: $1.21 ($0.10/month)

Yield: 7.90% annual

Shares for $10,000: 653

Monthly Passive Dividend Income: $65.83

When it comes to maritime bulk vessels, negative events  like the recent Suez Canal supply chain debacle and the horrible 1989 Exxon Valdez oil spill environmental disaster often come to mind. Although it is small with only a six-vessel Newcastlemax fleet, Bermuda headquartered 2020 Bulkers Ltd. is doing its best to set an example of responsible maritime bulk transport. 

If reliance on monthly dividends is something under consideration, it is prudent to remember to monitor one’s portfolio, perhaps more closely than usual. Especially in the current economic climate, where inflation does not appear to have any end in sight and where geopolitical events can trigger domino effects on the economy and banks, it is important to be nimble and willing to make changes whenever warranted. 

Name:	Annual Yield:	Monthly Dividend:
Allied Properties Real Estate Investment Trust (OTC: APYRF)	14.61%	$121.75
Stellus Capital Investment Corporation (NYSE: SCM)	11.47%	$95.58
Slate Grocery REIT (OTC: SRRTF)	10.94%	$91.16
Fortitude Gold Corporation (OTC: FTCO)	10.37%	$86.42
Gladstone Capital Corporation (NASDAQ: GLAD)	9.41%	$78.42
Nexus Industrial REIT (OTC: EFRTF)	9.34%	$77.83
Boston Pizza Royalties Income Fund (OTC: BPZZF)	8.55%	$71.25
2020 Bulkers Ltd. (OTC: TTBKF)	7.90%	$65.83
TOTAL:		$778.40

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Trusted News Since 1995

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Tuesday, April 23, 2024

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When I began my career in the 1980s, the Canadian investing scene was quite insular. Portfolio managers were restricted to holding a maximum of 10 per cent of total assets outside Canada. Investment professionals did not bother with the rest of the world except for watching the S&P 500 index since it led the TSX. It did not seem to concern market participants that they were restricted.

Canada at the time had a strong economy with a standard of living of around 90 per cent to 95 per cent of that of our American cousins, depending how you looked at it. In fact, Ontario was effectively equal to the U.S., as it was strong in manufacturing. Canada had a comparative standard of living without the high crime rates of America, with free (or, at least, taxpayer-funded) health care and an abundance of oil and gas.

Analysis was primitive then. Few had easy access to comparative return figures between global markets, nor did they care, because they were so constrained in their choice of investments. The diversification argument was barely understood and the concept of using correlation analysis to reduce volatility was just something a couple of young nerds like me cared about.

Fast-forward to 2024. The standard of living of Canadians is anywhere from 25 per cent to 40 per cent below that of Americans, based on my calculations that looked at a variety of data that include prices and purchasing power parities, GDP per capita, average incomes, taxes, and costs of living. Taxes always seemed higher in Canada and people complained, but not as obsessively as today. In retrospect, we were whiners back in the early 1980s, without ever realizing how good we had it.

Analyzing relative tax revenue is surprisingly difficult because there are so many moving parts – different types of taxes, rebates, tax credits, accounting conventions, exchange rates, and other complexities. However, from my calculations, the average Ontarian will pay somewhere between 40 per cent and 50 per cent of their lifetime earnings to the government. The average American will pay about 35 per cent, although it ranges widely based on state of residence.

The average American pays slightly more in total taxes than the average Canadian but, based on median incomes, earns significantly more. This leaves Canadians overall with only between 50 per cent to 60 per cent of the after-tax income of Americans. Deduct the higher costs for housing, food and gasoline in Canada, and the picture gets very depressing.

Canada’s recent federal budget contained $20-billion in tax increases over the next five years. Capital-gains taxes are going up, which is an anti-investment policy. This reality leads us to ask the question: Why would a rational person invest in Canada if they did not have to? Canada is about as welcoming to investment capital as a fox is in a hen house. Canada only makes up 2 per cent of world gross domestic product, compared with the U.S. at 26 per cent. Frankly, we’re small potatoes. In fact, being significantly overweight in Canadian investments lessens diversification. Much of our stock market is concentrated in banks and resources.

Lacklustre GDP per capita growth in Canada over the past several years and the anti-investment bias that seems to be endemic in this country has coincided with poor long-term equity returns relative to the U.S. For the 10 years ended March 31, 2024, the total return of the S&P/TSX was an annualized 8.13 per cent, compared with the S&P 500 at 14.64 per cent, in Canadian dollars. This is significant as $100,000 invested in the Canadian market would be worth $218,505. The same amount invested in the U.S. would grow to $392,068, or almost 80 per cent more.

Fortunately, investing beyond our border is easy to accomplish with low-cost exchange-traded funds. Non-registered accounts may not receive the benefit of the dividend tax credit in some cases, but the upside potential could still be worth it.

There is an enormous number of foreign ETFs investors can choose from. There is the SPDR S&P 500 ETF Trust SPY-A, which is a staple, and a number of similar currency-hedged versions if one prefers.

Some offshore equity exposure in advisable – the U.S. may not always be an outperformer. The JPM International Research Enhanced Equity ETF JIRE-A is a diversified portfolio of companies domiciled outside of the U.S., and although an ETF, it is actively managed in a conservative manner.

Given the global geopolitical situation and the rise in military spending, it would be prudent to hold some defence stocks. The iShares Aerospace & Defense ETF ITA-A gives the investor diversified exposure. It has gained almost 25 per cent since the Oct. 7 attacks against Israel.

Bonds should also be in any diversified portfolio. The iShares Global Government Bond Index XGGB-NE ETF, which is hedged back into Canadian dollars, is one that I like. It has a U.S. Treasury weighting of about 40 per cent. The rest of its bond exposure is spread out across the globe, with less than a 2-per-cent weighting to Canada. Government bonds are better insurance against severe bear markets than corporate bonds – and I feel stock markets are due soon for a significant pullback. I also think the extra yield corporate bonds offer right now relative to their risks are rather thin.

The poet Maya Angelou once said: “When someone shows you who they are, believe them the first time.” For me, it’s easy to see that the current government of Canada sees its role as a wealth distributor and not a wealth facilitator. Income redistribution is favoured over investment and productivity even if it results in more income decline. Many of their policies are signalling that Canada is not a good place to invest.

This is likely to continue for years, as even with a change in government, it will take a long time to reform tax and regulatory legislation and alter the maladaptive policies instituted over decades. It might take a generation to restore Canada’s reputation as a good place to invest.

In the meantime, Canadian investors should maximize their foreign exposure and consider having minimal exposure to Canada – or none at all.

Tom Czitron is a former portfolio manager with more than four decades of investment experience, particularly in fixed income and asset mix strategy. He is a former lead manager of Royal Bank of Canada’s main bond fund.

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Good evening, let’s start with today’s top stories:

The federal government and Ontario will announce a multibillion-dollar deal this week with Honda Motor Co. Ltd. that would see the company build a comprehensive electric-vehicle chain in the province, according to sources familiar with the project.

The deal with Honda includes a standalone battery manufacturing and a retooled car assembly plant, as well as facilities for both cathode materials and separator components, according to three sources. The battery and assembly plants will be in Alliston, Ont., where the company already manufactures vehicles.

Speaking at a First Nations conference in Toronto this morning, Ontario Premier Doug Ford said the size of the investment will surpass other electric-vehicle deals in the province. The higher dollar figure will owe to Honda’s investment going much further across the supply chain than Volkswagen or Stellantis.

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Talks to deal with plastic begin in Canada tomorrow. Here’s what’s at stake

This week in Ottawa, delegates from 174 countries will meet in the hopes of stemming the plastic tide, as Canada hosts the fourth session of the Intergovernmental Negotiating Committee on Plastic Pollution, or INC-4.

That committee, which falls under the umbrella of the United Nations Environment Program, was set up in 2022 with the goal of crafting an international, legally binding plastics treaty by the end of 2024. The Ottawa session is the last set of negotiations before the fifth and final session, scheduled for November in South Korea. So, the stakes are high, with delegates under pressure to nail down terms to regulate a substance used in everything from cars to medical equipment while coming up with ways to ensure that less of it winds up in oceans or landfills. Environment reporter Wendy Stueck breaks down what else to expect.

More Earth Day reads:

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Chinese institute compiled profiles of Canadian MPs of Chinese descent

A research institute in China that is affiliated with the ruling Communist Party’s foreign-influence operations compiled extensive profiles of Canadian members of Parliament with Chinese ethnicity, two sources say.

The sources say this Chinese institute used large-scale data analytics and artificial intelligence to create detailed profiles in 2022. There are fewer than 10 MPs of Chinese descent in Canada’s House of Commons. The operation to gather information on these MPs was first detected by the Communications Security Establishment, Canada’s secret signals intelligence agency, and shared with the Canadian Security Intelligence Service.

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This is the best matzo you’ve never had

For eight days in the spring, Jews honour their ancestors’ escape from slavery in Egypt. Passover’s allegorical meal, the seder, tells the exodus story with each ingredient. Parsley dipped in saltwater represents tears shed by the enslaved Jews. Charoset, a fruit and nut paste, signifies the mortar used to construct the Pharaoh’s buildings. Matzo has two meanings: The unleavened bread illustrates how the hastily fleeing Jews had no time for their bread to rise, and it also symbolizes their suffering – hence its nickname, the “bread of affliction.”

Ahead of Passover, Alexis Steinman visited a French factory working overtime for a deliciously thick bread.

There, a machine the size of a football field noisily whirred and thumped. Lined with a mix of knobs, wheels and dials like a Rube Goldberg contraption, the dough fed into one side of the machine was magically transformed into golden-brown matzo on the other end.

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ALSO ON OUR RADAR

Immigration: Asylum claims by international students have risen nearly 650 per cent in the past five years, figures obtained by The Globe and Mail show, as experts warn that the study-permit system is being exploited as a way to enter and remain in Canada.

Donald Trump’s hush-money trial: The prosecution cast his actions as election fraud in opening arguments Monday, painting his efforts to suppress accusations of infidelity as far more than a mere personal indiscretion or paperwork technicality.

Israel-Hamas war: Israeli troops fought their way back into an eastern section of Khan Younis in a surprise raid, residents said on Monday, sending people who had returned to abandoned homes in the ruins of the southern Gaza Strip’s main city fleeing once more.

Analysis: As deadline nears, global pandemic treaty talks hobbled by delays and quarrels, writes Geoffrey York.

Gildan: The Canadian clothing maker is reshaping its board of directors as it seeks to choke off a proxy campaign by dissident shareholders ahead of its annual meeting next month.

Capital-gains questions: Own a cottage or investment property? Here’s how to navigate the new capital gains tax changes.

MARKET WATCH

Stocks higher with major corporate earnings on tap

Wall Street stocks ended higher on Monday following a market sell-off in previous sessions as investors eyed a busy week for quarterly results from key companies that would provide a glimpse of the U.S. economy’s health. The TSX also rose, but underperformed due to a pullback in the materials sector.

The S&P 500 gained 43.37 points to end at 5,010.60 points. The Nasdaq Composite gained 1.11%. The Dow Jones Industrial Average rose 0.67%. The Toronto Stock Exchange’s S&P/TSX composite index ended up 64.59 points at 21,871.96, its fourth straight day of gains after it hit a near six-week low last Tuesday.

The loonie was 0.4% higher at 1.3695 to the U.S. dollar, or 73.02 U.S. cents, adding to its winning streak since Wednesday and trading at its strongest level since April 12.

Got a news tip that you’d like us to look into? E-mail us at tips@globeandmail.com. Need to share documents securely? Reach out via SecureDrop.

TALKING POINTS

Toronto’s police chief has disqualified himself from that job

“Was Chief Demkiw crossing his fingers that, despite the evidence presented during the case, Mr. Zameer would be sent to prison anyway? That a man would be wrongfully convicted? That justice wouldn’t be served?” – Robyn Urback

The Bloc’s fake freakout over halal mortgages is ridiculous

”Halal mortgages are already available in many countries, including the U.S., Britain, Israel – and Canada. They are no more a threat to the secular state than laws about labelling kosher pickles or Quebec’s statutory Easter holiday.” – Campbell Clark

Danielle Smith launches what could be her biggest broadside yet at Ottawa

”The Premier said that the legislation is needed to ensure a break from Liberal ideology, to monitor whether the province is getting a fair share of per capita funding, and because Ottawa is treading too much on provincial turf.” – Kelly Cryderman

LIVING BETTER

Is decaf coffee bad for your health? Here’s what to know

Like coffee just for the taste but don’t want to deal with the caffeine hit? Decaf coffee is one option, with 97 per cent of caffeine removed. But recent news may have left some worried about the safety of decaf, with advocacy groups in the United States petitioning the U.S. Food and Drug Administration to ban the use of methylene chloride in the decaffeination process owing to cancer concerns. Here’s where Health Canada stands on the chemical and how to avoid it when choosing decaf.

TODAY’S LONG READ

Shades of green: In environment coverage, The Globe’s green evolution has been a steady but imperfect process

In this excerpt from A Nation’s Paper: The Globe and Mail in the Life of Canada, a collection of history essays from Globe writers past and present (coming this fall from Signal/McClelland & Stewart), Gary Mason chronicles The Globe’s advocacy for environmental solutions backed by science. “The paper has often struggled to balance local interests and global concerns,” he writes.

Evening Update is written by Sierra Bein and Maryam Shah. If you’d like to receive this newsletter by e-mail every weekday evening, go here to sign up. If you have any feedback, send us a note.