The Motley Fool

$8,000 CERB Has Now Increased to $12,000

Millions of Canadians would be in financial ruin by now were it not for the Canada Emergency Response Benefit (CERB). The emergency aid is the pillar of the government’s COVID-19 Response Plan. A lifeline is necessary to arrest the unemployment as a result of the pandemic. Also, the program is in effect for up to 24 weeks after the extension in June, jumping from a total of $8,000 to $12,000.

The massive spending for the entire stimulus package could push the federal deficit in fiscal 2020 to $343.2 billion. As of July 19, 2020, the total dollar value of CERB benefits paid is almost $61 billion.

A key risk to recovery

Since April 2020, the C.D. Howie Institute has been calling on the government to make plans to gradually wind down CERB, if not adjust its current form. After five months, the program is still in effect, as the circumstances of millions mirror those witnessed in March. The recommendations take the health-related fears of workers into account.

However,  the advice is for people to look beyond 2020 and take a longer-term approach to job prospects. It might be time to tweak the program so it won’t impede economic recovery. CERB has done its part to cushion the blow of COVID-19. The government’s plan to reopen the economy will have to include a gradual winding down of the program.

Same long-term view

In the stock market, investors are adopting a long-term view approach. If you’re after permanent financial sustenance, not temporary like CERB, there are good long-term buys. Telecom giant BCE (TSX:BCE)(NYSE:BCE) tops the list because the telecommunications business is enduring and essential for generations to come.

Another reason to choose this $50.53 billion telecom and media company is earnings consistency. Never go for a company with fluctuating earnings. Over the last three years, the top and bottom lines of BCE are consistently increasing. The average revenue and net income are $23.38 billion and $3 billion, respectively.

Furthermore, BCE is a dividend all-star whose dividend growth streak is 11 years. The current share price is less than $60, while the yield is a rewarding 5.96%. If your long-term financial goal is to raise at least $100,000 in 20 years, invest $31,500 in BCE.

Similarly, the $1,877.40 in annual income is recurring and permanent. By investing in fantastic stocks like BCE, you can shield yourself from future emergencies without having to rely on programs like CERB.

Conclusion

Financial ministers and economic development ministers in several provinces are raising concerns regarding the structure of CERB. It could hamper economic recovery if workers in the private sector are unable to return to work just yet. Employers, mostly small- and medium-sized businesses, can’t reopen safely for business because of the difficulty in rehiring or finding workers.

Canada’s total spending on CERB alone could top $80 billion with the program extension. If you qualify for it, make sure you receive your share. Don’t just rely on the CERB forever: build assets the future by buying stocks like BCE.

Speaking of the effect of CERB on the economy...

Looking for the Next Potential Netflix? We’ve Got You Covered with These 3 Free Stock Picks

Motley Fool Canada's market-beating team has just released a new FREE report that gives our three recommendations for the Next Gen Revolution.
Click on the link below for our stock recommendations that we believe could battle Netflix for entertainment dominance.

Click Here to Get Your Free Report Today!

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.