How to Invest Extra COVID-19 Stimulus Cash

Canadian investors can invest their COVID-19 stimulus checks in stocks like Molson Coors Canada Inc (TSX:TPX.B)(NYSE:TAP).

| More on:
Index funds

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Turbulent market times like this are great opportunities to buy top stocks on the Toronto Stock Exchange. People become fearful and overreact to market news like falling profits. Luckily, the COVID-19 health crisis is only temporary, and stock market investing is a long-term endeavour.

Don’t get caught up in the fear of loss. Now is the time to buy high-return stocks to hold for the next 10 to 20 years. Molson Coors Canada (TSX:TPX.B)(NYSE:TAP) is one of those great stocks that took a huge dip this year.

COVID-19 decreases on-premise sales

The first three months of the year didn’t go as well as planned for Molson Coors Canada. Coronavirus restrictions halted the hospitality and service industry.

Molson Coors CEO Gavin Hattersley commented in the 2020 first-quarter earnings:

“Like everyone else, the full impact and what our new normal looks like going forward is still uncertain, but coronavirus has had, and will have, a material impact on our business. We will continue to navigate this challenging time by first protecting our employees and mitigating the short-term risks, and second ensuring that we position the business to compete and win in the long term.”

Molson Coors stock dipped along with the general market in March 2020. The stock rebounded quicker than the market throughout April. Unfortunately, this market correction was short-lived.

TPX.B Chart

When Molson Coors reported first-quarter earnings on April 30, the market value of the company’s stock fell further. Company management was honest about the substantial decrease in on-premises sales of beverages. Orders from the hospitality industry sank and at-home consumption did not make up the difference.

COVID-19 reduced on-premises sales to zero according to the earnings press release. For a company whose on-premises sales comprise 23% of its total revenue source, this hit impacted shareholder profits significantly.

Looking forward to a Molson Coors stock rebound

The good news is that these effects will not last forever. People will go back to bars and restaurants. When that happens, Molson Coors’s stock price will most likely return to normal along with the firm’s revenue.

It is crucial to remember at times like these that this is a temporary shock rather than a permanent condition. Molson Coors hasn’t suffered any major blows to its brand. Nor has the company fallen prey to the competition.

The company is still as fundamentally strong as it was prior to this crisis where it matters: branding and consumer loyalty.

Should you buy Molson Coors stock?

If you are wondering how to invest your extra cash, Molson Coors stock is a good option. It has hit a 52-week low recently and might be bottoming.

You can easily earn income for your TFSA or RRSP by investing your extra cash in dividend stocks like Molson Coors. Today, the dividend yield is 6% at the share price of around $46.

Canadian investors should watch this stock for a technical basing pattern. On a chart, basing patterns look flat after a sustained downtrend. This will tell you that the stock has likely reached the bottom, and it is a good time to buy.

Do you know about your CERB options?

The economy may be faltering, but Canadians still have the cash to save. Many Canadians are receiving extra cash from the Canada Revenue Agency in response to the health crisis.

Canadians can receive up to $2,000 per month from the Canada Emergency Relief Benefit. Moreover, students can receive up to a $5,000 Canada Student Service Grant. Meanwhile, parents can receive an extra $300 from the Canada Child Benefit.

This money can go along way toward meeting your expenses. If you have any money or uninvested savings, now is a good time to put that money to work for you.

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 Debra Ray has no position in any of the stocks mentioned.

More on Dividend Stocks

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

1 U.S. Stock to Buy That Could Make You a Millionaire

Even though tech stocks are usually the go-to growth picks in the US stock markets, there are quite a few…

Read more »

Increasing yield
Dividend Stocks

My 3 Favourite TSX Dividend Stocks Right Now

These dividend stocks have been a favourite for a while, but even more so now that they trade at such…

Read more »

funds, money, nest egg
Dividend Stocks

New Investors: The 2 Best Options To Earn Regular Passive Income!

You can earn high passive income with dividend stocks like the Toronto-Dominion Bank (TSX:TD)(NYSE:TD).

Read more »

Dividend Stocks

This Canadian 6%-Yielder’s On Sale, But Not for Long!

SmartCentres REIT (TSX:SRU.UN) is a wonderful high-yielding REIT that has a higher yield and lower valuation than most its peers.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

This 1 Canadian Dividend Stock Could Help You Earn Over $100 Per Week in Passive Income

This dividend stock won’t disappoint you if you want to earn reliable passive income in Canada -- equivalent to more…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

TFSA Passive Income: 2 Monthly Dividend Stocks for Canadian Retirees to Buy Now

Retirees seeking tax-free monthly dividends can now buy high-yield stocks at cheap prices for a TFSA focused on passive income.

Read more »

financial freedom sign
Dividend Stocks

3 Selloff Stocks That Could Help Set You Up for Life

Here are three selloff stocks to buy for those who believe that these companies can growth through a rising interest…

Read more »

money cash dividends
Dividend Stocks

Passive Income: Get Over $430 in Dividend Income Every Month

These two top dividend stocks could provide substantial monthly cash flows to supplement your active income.

Read more »