CRA 2020: 3 Ways CERB Could Change Things Forever

The CERB program could potentially shake up the investment climate, allowing many more Canadians to buy stocks like TransAlta Renewables Inc. (TSX:RNW).

Historians will likely look back on 2020 as a momentous year. The COVID-19 pandemic has shaken our societies,  ushering in long-lasting economic changes. In March, the Canadian federal government introduced the Canada Emergency Response Benefit (CERB).

Some experts noted its similarity to a guaranteed basic income. Interestingly, the liberals had attempted a basic income pilot project early in their term. The introduction of the CERB program is a radical experiment that could pave the way to a guaranteed income.

Today, I want to discuss three ways the CERB could change things forever on the financial front. Let’s dive in.

CERB: A permanent passive income

In previous articles, I discussed how important it is for investors to build passive income. This can be a tall order for Canadians who are already dealing with a difficult financial reality.

A guaranteed income could potentially provide much-needed support for Canadians who are falling behind with their regular employment. Moreover, it will provide a chance for these citizens to enter the market, which brings me to the next point.

Here’s why financial institutions are flirting with basic income

The COVID-19 pandemic has made many formerly radical ideas appear more palatable. Interestingly, financial institutions are warming up to the idea of a basic income. Central banks have been called upon to provide a much-needed boost to financial markets on more than one occasion over the past decade.

This has provided a boost to the markets and to various sectors of the economy. Now, many theorize that a direct cash injection to citizens could make the future brighter for financial institutions.

This would boost deposits at top banks. Moreover, it would allow many Canadians to enter the stock market due to increased financial flexibility. For many institutions, this is a desirable outcome. A permanent CERB could provide social stability and a boost to economic growth in the long term.

Another potential passive income stream

With a guaranteed income, Canadians who are granted extra flexibility will also be able to build alternative passive income streams. In 2009, the federal government launched the Tax-Free Savings Account (TFSA).

This new registered account has grown into a favourite for many Canadians. While it’s phenomenal as a launchpad for growth stocks, it can also allow investors to churn out tax-free income indefinitely.

A stock like TransAlta Renewables is perfect for a TFSA. Its shares have climbed 12% year over year as of close on June 30. The stock currently offers a monthly distribution of $0.07833 per share. This represents an attractive 6.4% yield.

A $2,000 investment in TransAlta — the amount of a monthly CERB payment — would net an investor a little over $10 a month going forward.

RioCan REIT is one of the top real estate investment trusts operating in Canada. Its shares have dropped 39% in 2020 so far. As the economy reopens, real estate is poised to rebound.

Now is a good time for income investors to scoop up discounted REITS. RioCan last had a favourable price-to-earnings ratio of 6.9 and a price-to-book value of 0.6.

Moreover, it offers a monthly dividend of $0.12 per share, representing a monster 9.3% yield. A $2,000 investment in RioCan would net investors over $15 a month in dividends.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Dividend Stocks

the word REIT is an acronym for real estate investment trust
Dividend Stocks

This Cheap REIT Pays Dividends Monthly

Killam Apartment REIT (TSX:KMP.UN) pays dividends monthly.

Read more »

Soundhound AI is a leader in voice recognition software
Dividend Stocks

Where Will Telus Stock Be in 5 Years?

Let's dive into the future outlook for Telus (TSX:T) and whether this former dividend star can return to glory in…

Read more »

person stacking rocks by the lake
Dividend Stocks

The Ideal Canadian Stocks to Buy and Hold Forever in a TFSA

Discover two rock-solid Canadian stocks that could help turn your TFSA into a long-term wealth builder.

Read more »

chatting concept
Dividend Stocks

2 Blue-Chip Stocks to Buy in a TFSA and Hold for Life

Two TFSA-ready blue chips offer tax-free compounding, resilient cash flows, and inflation protection for calm, long-term growth.

Read more »

people relax on mountain ledge
Dividend Stocks

What I’d Do With $20K Today to Maximize My Passive Income

By investing $20K in these high-yield dividend stocks, Canadians can generate a monthly passive income of over $112 per month.

Read more »

dividend growth for passive income
Dividend Stocks

Want to Boost Your Income Each Month? 3 Stocks That Can Help

Are you trying to boost your employment income? Here are three dividend stocks that deliver attractive income every single month.

Read more »

Hourglass and stock price chart
Dividend Stocks

2 Canadian Stocks to Buy and Hold for Life in a TFSA

These stocks have increased their dividends annually for decades.

Read more »

dividends grow over time
Dividend Stocks

TFSA Contribution Room Strategies for Canadian Investors in 2026

High-yielding stocks that also look forward to positive industry fundamentals are the stocks to buy for your TFSA.

Read more »