Your Tax-Free Savings Account (TFSA) is your ticket to a wealthy retirement. Don’t speculate with it because any capital losses you realize within the account won’t be able to offset gains in your non-registered accounts. Do use your TFSA to invest in businesses that you intend to hold over the years (or decades), as the TFSA gives you a tax-free compounding edge that’s powerful but difficult to fathom over the long run.
Over the past few years, you’ve probably noticed the pick-up in volatility. There’s been a lot of dips leading up the coronavirus crash. And this latest September pullback is just another one of what could be many vicious sell-offs that you should get accustomed to.
Indeed, the rate of corrections and crashes has picked up in this ridiculously uncertain market environment. The COVID-19 impact has not only decimated specific industries of the economy, but could pull down even the most resilient ones if the coronavirus recession ends up turning into a long-lived depression.
Now, I’m no doom-and-gloom investor, but I think it’s only prudent to have a “Plan B” in case the economy can’t bounce back in a V-shaped fashion, as many expect it to. Heck, Warren Buffett has been content sitting on his hands while buying gold miners and grocers, as new investors lick their chops over the recent momentum.
If you’re looking to curb your euphoria to gear up for another 10-20% tech-driven correction, consider the following dirt-cheap securities that I think have little downside, as Mr. Market looks to pull the rug from underneath investors once again.
SmartCentres REIT: A 9% yielder to stash in a TFSA
SmartCentres REIT (TSX: SRU.UN) isn’t a stock; it’s a mall-focused REIT that got clobbered over the past year. Shares of the retail property play are already in the doghouse and are in a spot to continue hovering around limbo if stocks fall off a cliff.
As the economy heals from the COVID-19 crisis, SmartCentres could have ample upside with minimal downside risk relative to most other frothy securities out there. The main attraction to the REIT is its bountiful 9% yield, which, while stretched, looks safe, given rent collections shown signs of normalization into the latter month of the last quarter.
Of course, the tides could turn again if COVID-19 cases surge to spark another wave of shutdowns. With the REIT’s Wal-Mart anchor, though, the REIT looks well equipped to deal with another lockdown compared to most other retail REITs. Moreover, the longer-term growth trajectory is still as compelling as ever, with plans to diversify into mixed-use properties that could allow for greater returns on invested capital.
Restaurant Brands International: A battered restaurant stock with room to run in a post-pandemic world
Restaurant Brands International (TSX: QSR)(NYSE: QSR) and many other restaurants have already taken a beating. Given efforts to beef-up the firm’s lacklustre mobile and delivery presence, I think the fast-food kingpin behind Tim Hortons, Burger King, and Popeyes could be in a position to rise out of this pandemic with strength.
Restaurant Brands is feeling the impact of lost sales due to dining room closures, but so too are many of the company’s less liquid peers. If this crisis worsens, Restaurant Brands will be in for more weak quarters, and its dine-in-focused peers could be headed for insolvency.
Moreover, I think there will be a pent-up demand building for Restaurant Brands’ fast-food offerings, as people grow sick and tired of cooking from home. Once COVID-19 can be contained or eliminated, Restaurant Brands could be in a spot to skyrocket to new heights as management looks to put its foot back on the growth pedal.
For now, there’s a juicy 3.7%-yielding dividend to collect while you wait for another crash and boom en route to post-pandemic normalization.
