Back in June I’d discussed how the emergence of the gig economy would likely force change in investment strategies for younger generations in comparison to their older counterparts. Precarious work, which is used to describe non-standard employment that is insecure, unprotected, and typically low pay, has become more common in the years following the Great Recession. Guy Standing, a British economist who coined the term “precariat” to describe this growing global class, has said that precarious workers may account for over 40% of the adult population in Canada.
According to Standing, policy makers have failed the precariat in Canada and in many other nations in the developed world. This, he surmised, has led to the fracturing of political parties worldwide and the rise of new populist movements. Indeed, Canada has just witnessed what could be a political earthquake after MP Maxime Bernier formally quit the Conservative Party and vowed to form his own in a bid to challenge all three major parties.
These trends are also having a significant impact on savers and investors. A new report from the Canadian Centre of Policy Alternatives revealed that only 40% of Canadians classified as precarious workers have access to pension plans or registered retirement savings plans. Compare this to the 85% of those who identify as secure professionals in the report. Adding to the point in the beginning of this article, 45% of young professionals aged 22 to 34 said a full-time permanent job in their field was almost non-existent for someone entering the profession.
The truth is that those in precarious work will be forced to take a self-directed approach to investing. For those seeking to adjust to this new normal, today we will make a choice between two top stocks on the TSX. Both boast a huge market cap and an attractive dividend yield.
Enbridge (TSX: ENB)(NYSE: ENB)
Enbridge stock fell 1.74% on August 28. Shares have dropped 7.8% in 2018 so far. The stock has stagnated somewhat since benefitting from a surge in oil and gas prices in the late spring and early summer. Broader trends are not the only thing that has gone well for Enbridge.
In the second quarter the company reported net earnings of $1.07 billion, or $0.63 per share compared to $919 million or $0.56 per share in Q2 2017. Enbridge also won approval from Minnesota regulators for its Line 3 Replacement Project. The stock offers a quarterly dividend of $0.671 per share, representing a 5.8% dividend yield.
Canadian Imperial Bank of Commerce (TSX: CM)(NYSE: CM)
CIBC stock has climbed 3.8% over the past month as of close on August 28. In a recent article I’d discussed why CIBC was my pick over Royal Bank going forward. The third-quarter results at CIBC were extremely encouraging, as adjusted profit jumped 20% year-over-year to $1.399 billion and the bank also hiked its quarterly dividend to $1.36 per share, representing a 4.4% dividend yield.
Canadian bank stocks like CIBC could also be a fantastic bet as Canada races to conclude its NAFTA negotiations with the United States this week. News of an agreement should be a fantastic boost for Canada’s overall outlook.
