With inflation still simmering and central banks like the Federal Reserve taking a breather on interest rate hikes, Canadians are rethinking how to make their money work. High-interest savings accounts and guaranteed investment certificates (GIC) remain safe options. Yet yields are starting to look less attractive as policy rates flatten.
That opens the door for dividend-paying investments, especially income trusts. But recent changes from the Canada Revenue Agency (CRA) mean investors need to think twice about how investments affect taxes. So before we get into a dividend stock pick, let’s look at how the new CRA rules affect Canadian investors.
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Recent changes
The biggest change relates to trust reporting. Previously, only certain trusts needed to file a T3 return. As of 2024, most express trusts, those with a clear declaration, are now required to submit T3s along with a new Schedule 15. This includes detailed information on all beneficiaries, trustees, and settlors.
The purpose is to increase transparency and reduce tax avoidance, but it also puts more paperwork and administrative burden on those involved in trust structures. Fortunately, publicly listed income trusts like those traded on the TSX are exempt from this requirement. So if you’re holding a stock like Chemtrade Logistics Income Fund (TSX: CHE.UN), you’re in the clear from these extra filings.
What’s more impactful for some investors is the change to the capital gains inclusion rate. Beginning June 25, 2024, the inclusion rate jumps from 50% to 66.67% for capital gains above $250,000 in a year for individuals and for all gains inside most trusts and corporations. That means investors who rely on long-term capital appreciation could face higher tax bills. This shifts attention toward regular income instead of big one-time gains, making dividend stocks more attractive from a planning perspective.
Why Chemtrade works
With these changes in mind, dividend income becomes more appealing. You know what you’re getting, and it’s taxed differently depending on whether it’s eligible or return of capital. One stock that fits the current environment well is Chemtrade Logistics. It offers a steady payout, isn’t directly impacted by the new trust filing rules, and fits into a portfolio looking for income while the Fed pauses.
Chemtrade is a Canadian income fund that supplies industrial chemicals and services for water treatment, petroleum refining, and pulp and paper processing. It’s not flashy, but it’s dependable. The dividend stock has long-term supply contracts and operates in sectors that are often overlooked but remain essential. That stability has allowed it to maintain a strong dividend over time. As of writing, Chemtrade offers a dividend yield of around 6.2%, paying $0.69 annually, with the dividend stock trading around $11.
In its most recent earnings report, Chemtrade posted strong results. Revenue for the quarter came in at $467.3 million, beating estimates and increasing from $430.2 million the year before. Earnings per share (EPS) hit $0.12, ahead of analyst expectations. The dividend stock also reaffirmed its full-year guidance, showing confidence in cash flow stability. Importantly, the payout ratio remains below 70%, giving some breathing room even if revenue softens.
Bottom line
What makes Chemtrade especially compelling right now is its role as a stable income provider. With bond yields unlikely to rise much further and tax changes making capital gains less appealing, this type of income fund becomes more valuable. It offers regular monthly income, benefits from infrastructure and chemical demand, and is structured in a way that avoids the CRA’s more burdensome filing rules.
So while the Fed takes a break and CRA rules reshape the tax landscape, Chemtrade Logistics Income Fund is worth a serious look. It offers an attractive yield, strong earnings, and a structure built for today’s investing climate. For Canadians looking to protect their portfolios while still earning a healthy return, this dividend stock could be a smart hold.
