The Canada Child Benefit (CCB) will be paid to eligible taxpayers beginning on Thursday. Individuals may receive these payments at different times, depending on whether they have opted into direct deposit with the CRA. If you are in the enviable position of not immediately needing the extra cash, consider these two stocks that should benefit from the start of a new school year.
Telus
Telus (TSX: T)(NYSE: TU) is one of the Big Three telecom companies in Canada. Telus also owns Koodo Mobile, a discount mobile carrier that is marketed quite heavily to students. Telus is unique among Canadian telecom companies in that Telus doesn’t have a media division or major investments in Toronto’s professional sports teams. This has proven to be a blessing during 2020, when media production and professional sports were halted.
Telus tends to be a favourite among dividend investors. Telus currently pays a quarterly dividend of $0.29125 per share. This results in a dividend yield of almost 5%. Furthermore, Telus has been consistently raising the dividend for over 20 years.
Telus had been raising the dividend twice annually every Q2 and Q4, for the past 10 years. However, Q2 2020 did not come with a dividend raise. Telus will likely continue raising the dividend, although maybe not at the pace of the past 10 years.
Apart from being a very stable company with both income and capital appreciation potential, Telus has exposure to the fast-growing healthcare IT sector, via Telus Health. Telus Health does not comprise a significant portion of Telus’s overall business. However, Telus Health can certainly grow into a much bigger piece over time. Telus therefore offers investors a good mix of income and growth.
Air Canada
Air travel is an essential component of the start of a school year for many university and college students. Students from across the country, and the world, come to various schools in Canada to begin their studies. Many of those trips are made with Air Canada (TSX: AC).
The school year in 2020 looks a lot different than school years of the past. Many schools have transitioned to an online model, at least for the fall semester. Air Canada will undoubtedly see a drop in demand for the months of August and September, compared to last year, as less students travel to schools. Unfortunately, Air Canada has struggled with low demand in general this year.
Air Canada’s revenue in Q2 2020 plunged approximately 90% compared to the same quarter last year. However, the airline has also trimmed operating expenses by over 50% compared to Q2 2019. Air Canada slashed approximately 50% of jobs and suspended 30 routes while closing 8 regional airport stations.
These moves should help Air Canada slow the cash hemorrhaging. However, Air Canada will eventually need demand to significantly pick back up for the company’s share price to be able to soar back to pre-pandemic levels. Unfortunately, nobody can predict when that will happen.
Takeaway
Make sure to keep an eye out for the CCB this week. If you do end up in the enviable position of having extra cash this month, consider adding Telus or Air Canada to your portfolio. The two have very different risk profiles currently, but both offer significant long-term return potential for patient investors.
