Back in June, I’d discussed whether the Canada Emergency Response Benefit (CERB) could become permanent. Historically, social programs in Canada and throughout the developed world have started out as temporary before being readjusted into a long-standing fixture. The ruling Liberals had already flirted with the idea of a guaranteed income when they were voted into power in 2015.
How the CERB has provided a financial lifeline to millions of Canadians
As of early June, more than eight million Canadians had received the $2,000/month CERB payment. Pressure mounted on policymakers heading into the summer. The CERB was set to expire for millions of recipients in July, while unemployment rates were still hovering in the mid-teens. Justin Trudeau announced in the middle of June that the government would extend the program by an additional eight weeks.
Now, many millions will see their payments run out in September. Once that happens, recipients who qualify for employment insurance will be forced to transition to that program. However, EI is not as generous as the CERB. Moreover, many workers may not qualify for EI in this unique environment. This could set up a financial catastrophe for Canadians in late 2020.
Many Canadians support an extension
In a recent poll conducted by Maru/BLUE, 48% of respondents said that the government needs to reduce spending and shut down the CERB regardless of the impact on individual Canadians. Meanwhile, 52% of respondents opposed shutting down the program. A significant majority of respondents in Ontario, roughly 80%, were against shelving the benefit.
There are momentous decisions on the horizon for the government in 2020. Leaders will have to contend with an ongoing pandemic, an economic reopening, and millions of citizens who are on the ropes financially. In the poll, 21% of respondents said that if CERB payments were shut down, they could lose their homes. There will be no easy answers moving forward. Instead of worrying about what they cannot control, investors should explore ways to construct their own income stream.
CERB recipients: Make sure you plan ahead
Earlier this month, I’d discussed how CERB recipients could find ways to generate income after the program expires. One of my favourite angles is to stash income-generating equities in a Tax-Free Savings Account. Unlike the CERB, you will generate income without having to pay any tax. This is worth celebrating.
Emera is a Nova Scotia-based energy and utility company. Its shares have climbed 1.4% in 2020 as of close on July 21. The stock has been a steady and reliable source of dividend income in the face of the COVID-19 pandemic. Better yet, its shares last had a favourable price-to-earnings ratio of 15 and a price-to-book value of 1.5. It offers a quarterly dividend of $0.6125 per share, representing a solid 4.4% yield.
CERB recipients may also want to turn to Enbridge, a North American energy giant. Enbridge has delivered dividend growth for 24 consecutive years. It currently offers a quarterly dividend of $0.81 per share. This represents a tasty 7.7% yield.
