Times are tough for everyone. Businesses, employees, freelancers, and investors — everyone is suffering from the market downturn that the pandemic has brought with it. The government is trying to help as much as it can. It’s injecting significant sums into businesses to keep people on the payroll. The CRA has also contributed by delaying the tax filing and tax payment deadlines.
Now you have till June 1st to file your taxes, and September 1st to pay them. The date for self-employed individuals hasn’t been changed, since it was already in June, but the payment date is September 1st for everyone. This has been a blessed relief for many Canadians, whose finances were disturbed by the pandemic and current market conditions.
If you are one of the lucky people that didn’t suffer any financial losses in the current crash, this tax delay might offer some quality investment opportunities. Chances are, you have a bit of cash lying around for tax. But now that the taxes are delayed, you can find better uses for that cash.
A telecom giant
Telus is one of the three telecom giants in the country as well as a Dividend Aristocrat with a 15-year history of increasing dividends. In terms of market cap, it’s the smallest of the three ($28.5 billion). But its growth has been relatively consistent, and out of the three, it has the largest discount right now — it’s almost 19% from its yearly high. It’s trading at $22.42 per share and offering a juicy yield of 5.14%.
Telus increases its payouts on a bi-yearly basis. In the past five years, the company has increased its payouts by 32%, and its five-year returns have been 31.3%. Adding a stable aristocrat in your portfolio when it’s at a discount can boost your dividend returns significantly.
A diversified company
Exchange Income Fund is another aristocrat that was hit hard by the pandemic — mostly because its portfolio is highly exposed to the airline industry, which has been one of the most prominent victims of the virus. The company has kept up with its usual dividend payments, despite the share price going almost 53% down.
Currently, the yield is at a mouthwatering of 11.26%. As a Dividend Aristocrat, we can count on the company’s motivation to keep up its streak. But it’s uncertain to say how long will the aviation business continue to suffer and how long EIF can keep up without slashing it dividends.
The Canadian government has taken quick action to provide its citizens with relief and should be applauded for its actions. The CRA delay for the tax filing should further help ease the burden from COVID-19.
While it’s highly unfortunate if you suffer any capital losses in this market crash, one thing can make the burden a little bit lighter: you can offset any capital gains that you have, by the capital losses you suffered. If not, you can carry it forward or backward and apply them on different year’s returns.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Adam Othman has no position in any of the stocks mentioned.