We’re just a few weeks away from closing the book on the 2010s. The next decade will offer new surprises and opportunities for investors, but today I want to talk about more pressing matters.
After December bids adieu, Canadians will have only until March 2, 2020 to contribute to their registered retirement savings plans for the 2019 calendar year.
In November, I’d discussed why TFSA investors should watch out for overcontributions. This also holds true for RRSPs. On that topic, today I want to look at three RRSP stats from Statistics Canada that may surprise Canadians as we look ahead to the New Year. This data was released last year and is from the 2016 calendar year, but it’s still relevant for investors right now.
Contributions are up, contributors are down
Yes, you read that right. In 2016, contributions to RRSPs totalled $40.4 billion, up 3.1% from the prior year. However, the total number of contributors fell 0.9% year over year to just over 5.9 million.
Interestingly, the peak for total contributors occurred in 2007, when just under 6.3 million individuals contributed to an RRSP.
Just how much of an impact the 2007-2008 global financial crisis had on contributors and views toward investing at large is up for debate. In previous articles I’d discussed some troubling statistics regarding Canadians’ knowledge of registered accounts — a trend we hope to see reversed in the coming years.
Half of provinces and territories posted a decrease in contributions in 2016
While provinces like New Brunswick and Quebec posted increases in contributions of 8.5% and 6%, respectively, in 2016, half of Canada’s provinces and territories saw a year-over-year decline.
Northwest Territories and Newfoundland and Labrador reported declines of 4.8% and 4.7%, respectively. Alberta, Saskatchewan, and Nova Scotia also posted a decrease from the prior year.
1 stock for RRSP investors in December
The ability to contribute to an RRSP shouldn’t be taken for granted. Investors should work to carve out the funds to make contributions that will serve them in the long term. That way, they can work to guarantee a comfortable retirement.
Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is a stock I love for RRSP investors. Not only was the bank recently named Canadian Bank of the Year for 2019 by The Banker, but it’s also rewarded investors handsomely over the past decade. This year has been no different.
The bank released its fourth-quarter and full-year results for 2019 on November 26. On an adjusted basis, net income increased to $9.41 billion in fiscal 2019 compared to $9.14 billion in the prior year.
Its Canadian banking segment generated earnings of $4.42 billion over the course of the year, driven by margin expansion, strong wealth management earnings, and solid asset and deposit growth.
The Bank of Nova Scotia’s board of directors approved a quarterly dividend of $0.90 per share, which represents a strong 4.8% yield and puts it on the high tier of Canadian bank stocks in terms of income yield.
The stock possessed a price-to-earnings ratio of 11 and a price-to-book value of 1.4 as of close on December 4, putting it in solid value territory relative to industry peers even as it nears a 52-week high.