The federal government’s announcement of the Canada Emergency Response Benefit (CERB) program was a relief to millions of Canadians, as they lost their jobs amid the lockdown. The traditional Employment Insurance (EI) could not provide financial aid to everybody, and the government stepped in with the lifesaving relief program.
The Canada Revenue Agency (CRA) was initially tasked with distributing CERB for 16 weeks, totaling $8,000 to each eligible applicant. After two extensions to the program, CERB will end on September 26, 2020, and each CERB applicant can receive up to $14,000 over the 28 weeks.
As the CRA pays out the last CERB on September 27, I would recommend building a personal replacement instead of continuing to rely on financial aid from the federal government.
CERB eligibility periods
CRA follows CERB eligibility periods when disbursing the benefits. Each eligibility period lasts four weeks for which you can receive $2,000 if you qualify. By the end of the eligibility period, applicants need to reapply for the CERB. The CRA checks whether the individual qualifies before paying the next $2,000.
The final eligibility period for CERB is from August 30, 2020, to September 26, 2020. Beyond that, the government has set CERB alternatives that you can receive if you still do not have a job. I would recommend bolstering your own financial position by creating passive-income streams that can earn you passive income, similar to CERB.
You may choose to go with the government aid currently. Still, setting the pieces in place now can help you improve your financial freedom in the future.
Creating your own CERB
The pandemic and CERB will help Canadians understand the need for securing their financial positions after the pandemic. A CERB-like payment is possible if you invest in a portfolio of reliable and high-yield dividend stocks that can continue to pay you for decades.
You need to look for companies that don’t just have a high dividend yield. The companies need to have a history of providing shareholders with regular payouts. The companies must also be able to navigate periods of financial uncertainty without fear of going belly up and offer capital growth beyond dividends. Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is always a name that comes to mind to this end.
Scotiabank is one of the oldest financial institutions in the country. It has a history of paying its shareholders their dividends consecutively for the past 187 years. It is a well-known stock for long-term investors. The third-largest bank in Canada, it has persevered through several periods of economic uncertainty and paid its shareholders their dividends throughout.
The COVID-19 pandemic may impact its short-term health. However, Scotiabank is always a reliable long-term bet. The bank is well capitalized to ride out the wave and come out stronger on the other side.
At writing, Scotiabank’s share price is $55.32, and it is paying its shareholders at a juicy 6.51% dividend yield. Suppose you have $400,000 as investment capital, and you purchase Scotiabank shares with it. The dividend yield can help you earn $26,040 per year, which translates to $2,170 per month.
Foolish takeaway
Creating your own CERB requires the prerequisite of having substantial capital. You may not have the money to make enough passive income to replace CERB right now. However, you can invest how much you can afford in a portfolio of stocks like BNS and grow your wealth. Gradually, you can get to the point that it can earn you the passive income you need. I think BNS could be an ideal investment to consider.
