I have no issues with these folks, and neither should anyone reading this. They’re simply taking advantage of a government program they qualify for. There’s nothing wrong with that.

There’s a number of different situations this could entail. Perhaps this CERB recipient is a young person living at home. Maybe their spouse has a good job and their salary was saved anyway. Or maybe they’re a soon-to-be retiree with a paid-off house and an ample portfolio.

No matter what the situation, you owe it to yourself to put any unneeded CERB cash to work in an intelligent way. The potential benefits are enormous, especially if you’re young. In fact, just $12,000 in CERB money invested over the long haul can be enough to make you a millionaire.

No, that’s not a typo. You read that right. Let’s take a closer look at how you can make this happen.

A CERB millionaire

You’ll need a few things to go right in order to become a CERB millionaire.

You’ll need a long investment horizon, stocks that can return approximately 12% annually, and room in your TFSA, so you don’t have to worry about taxes. These three conditions alone will eliminate a lot of people.

But there are still millions of Canadians who could potentially turn their $12,000 CERB benefits into a nest egg of $1 million or more. All they need to do is invest the $12,000 today and hold for 40 years at a 12% annual return. That’s enough to get to $1 million.

Even if you don’t earn the magical 12% return needed to elevate yourself to millionaire status, investing your CERB cheques will certainly benefit your future self. $12,000 invested for 40 years at an 8% return is still more than a quarter-million dollars. That’ll come in handy at some point.

One stock to help you get there

It’s silly to put all of your cash in one stock; most investors already know that. But I’d be okay with an investor putting their CERB money in one stock under one important condition: that they already have a diverse portfolio.

If the point is to become a CERB millionaire, then we must be a little aggressive and shoot for higher returns.

One way for investors to judge a stock’s potential return going forward is to look at what it has done previously and see whether it can continue to repeat that kind of growth. All you’re asking management to do is continue executing, which isn’t an unreasonable thing.

One stock I think can continue its excellent performance is Mainstreet Equity (TSX:MEQ), a real estate company that owns smaller apartment blocks in various Western Canadian markets. The majority of the portfolio is focused on Calgary and Edmonton, but it also has holdings in Saskatchewan and British Columbia.

The business plan is as simple as it is powerful. Mainstreet buys apartment buildings that need a little bit of TLC. It fixes up these properties and then refinances them. The cash pulled out is then used as a down payment for additional property.

This simple business has generated some outstanding returns. Over the last 20 years, Mainstreet has delivered returns of 1,788.89%, which translates into a 15.75% compounded annual gain. That’s enough to turn an initial $10,000 investment into something worth $188,870. It’s been an excellent long-term hold.

There’s no guarantee Mainstreet will earn equivalent returns going forward, of course. But I like CEO Bob Dhillon and his team’s chances. All the company needs to do is replicate its business plan in other markets. Expanding into places like Winnipeg or pushing further into British Columbia look to be great places to start.

Mainstreet also doesn’t pay a dividend — a move that keeps cash inside the company for quicker expansion. This should also help fuel growth going forward.

The bottom line

If you invest any unneeded CERB payments smartly — like in Mainstreet Equity shares — you could very well turn free government cash into something worth seven figures. Your future self will thank you.

The post Canada Revenue Agency: How CERB Can Make You a Millionaire appeared first on The Motley Fool Canada.

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It’s also a great summer to worry about your investments. After all, markets are still turbulent, as investors worry about COVID-19 and its impact on the economy. Will the virus’s much-feared second wave decimate the stock market again? Or will stocks continue to march higher?

Let’s take a closer look at three stocks you’ll want to buy in July — names that could have significant short-term moves higher.

Chartwell

Chartwell Retirement Residences (TSX:CSH.UN) is well positioned to have some serious upside in July.

COVID-19 has decimated Canada’s seniors. It got so bad that provincial governments are looking into how various long-term-care operators failed their clients. Many investors are speculating these operators will be punished, perhaps severely.

I disagree. Yes, this will lead to a bunch of uncomfortable questions. It’s likely the industry will have to change. But I think the top companies in the space will emerge from these challenging times relatively unscathed.

One reason why I prefer Chartwell today versus its peers is the company’s main focus is in the retirement residences side, a part of the industry with less regulation than long-term care. More scrutiny will be focused on that part of the sector, leaving Chartwell relatively better off.

I also don’t believe we’ll see any major changes in the industry. It’s a much better solution than the alternative, which is getting family to care for vulnerable seniors.

This all translates into a short-term catalyst that could push shares higher as soon as July. Once Chartwell appears to be out of the woods, the stock should get a nice pop on investor speculation. And if it takes a little longer than expected, investors are treated to a 6.7% dividend yield.

Imperial Oil

Imperial Oil (TSX:IMO)(NYSE:IMO) is a buy in July because it’s likely the price of oil will increase very soon.

Oil has two important catalysts that should drive it higher in the short term. It’s summer driving season. With international travel off the table for the next few months at least, folks will be taking more road trips. Demand for oil will also increase as the economy strengthens.

Imperial Oil is the right way to play this trend, because it offers plenty of downside protection if the thesis is wrong. The company is largely content to ride out this current weakness, mostly investing in its existing oil sands production. It has the balance sheet strength to be patient, too. And its downstream earnings are the perfect way to play a driving recovery.

Investors also get a nice dividend as they wait. Imperial Oil shares currently yield a robust 4.1%.

Great Canadian Gaming

Like the other two stocks on this list, Great Canadian Gaming (TSX:GC) offers a compelling combination of short-term catalyst and long-term excellence. This combines to make Canada’s largest casino operator a compelling buy in July.

Great Canadian Gaming should benefit over the short term, because it’s finally opening casinos again. If casino traffic in the United States is any indication, there should be ample demand at these facilities. Even if folks don’t go back to gamble, at least these casinos can open up restaurants and bars.

The company is also an excellent long-term growth story. It’s in the process of redeveloping many of its Toronto-area casinos that were acquired a few years ago, doing things like adding additional gaming space, new restaurants, and even hotels to select properties. When done, many of these locations will be world-class properties.

Great Canadian Gaming doesn’t pay a dividend today, but the company is using excess cash to buy back undervalued shares. That should turn out to be a terrific move.

The bottom line

If you’re looking for interesting stocks to buy in July, I’d check out Chartwell, Imperial Oil, and Great Canadian Gaming. These stocks should do well over the short term, yet they’re excellent enough to hold for a very long time as well.

The post Buy Alert: 3 Great Stocks to Buy in July appeared first on The Motley Fool Canada.

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I’m the first to admit these folks might be onto something. COVID-19 is still a big part of our lives. Cases continue to climb in most areas in the United States, although deaths have stayed much lower than expected. This has caused much speculation, as investors guess a new wave of lockdowns will be coming.

There has also been plenty of disappointing economic data. Jobless claims keep ticking higher. Consumer confidence is considerably weaker. And the underlying economic numbers confirm we’re officially in a recession. No wonder everyone is bearish; evidence of a weak economy is everywhere.

And yet, despite all this, stocks have been resilient. Market indices in both Canada and the United States are up significantly compared to March lows. Certain sectors — like technology, gold, and consumer staples — are actually higher than a few months ago. This does not jive with economic reality, leading many investors to one obvious conclusion. Stocks are overvalued and we’ll have another stock market crash soon enough.

I couldn’t disagree more. Here are three reasons why all the bears calling for a stock market crash are dead wrong.

A forward indicator

Many investors make the same error. They assume the stock market reflects reality as it stands today. This is a common mistake — something I’ll admit I fell for in the past.

But it’s just not true, no matter how much investors might wish for it. How stocks perform today reflects the market’s expectations for the future. Sharp moves in either direction mean the existing narrative has been disrupted, and investors are forced to quickly adapt to a new reality.

Even though economic numbers still look bleak in the near term, investors are shrugging off this weakness in favour of a more medium-term outlook. The market is saying they see a future a few months from now where COVID-19 has faded but is still a threat. That seems like a pretty reasonable expectation to me.

Better-than-expected results

Everyone is focused on how crummy economic numbers have been. It’s easy to see why; it’s a little bit like watching a train wreck. You just can’t look away.

But investors must remember that numbers aren’t enough on their own. We must judge the numbers based on expectations. If expectations are terrible, and the actual numbers come in slightly better, that’s a win. Stocks will rally based on beating expectations.

We’re still at the point where expectations are incredibly low. As long as the actual numbers are a little better, stocks will continue to rally. It seems simplistic, but it’s the truth.

Still many good buys

I simply don’t understand investors who lament the lack of cheap stocks out there. I’m seeing bargains virtually everywhere.

Take Genworth MI Canada (TSX:MIC), Canada’s second-largest mortgage default insurer. This has consistently been an excellent business over the years, as Canadian homeowners pay their mortgages without issue.

Some folks are incredibly bearish on the Canadian real estate market for the rest of 2020, but something completely different is playing out. The real estate market is red hot today, as agents across the country report strong sales numbers. And it looks like CERB and other stimulus programs will help homeowners make it through today’s tough economy unscathed. This is all good news for Genworth.

Shares are quite cheap on a few different metrics. They trade at just 6.5 times trailing earnings, although I’m the first to admit 2020’s earnings won’t be as high as 2019’s. Still, I predict earnings will be back to normal in just a couple years, which means shares are quite cheap based on normalized earnings. And you have to like the 6.8% dividend yield, which is an excellent payout. Shares trade considerably under book value as well.

The bottom line

It must be frustrating for folks who missed the bottom, but we must face facts. There will be no stock market crash in the latter half of 2020. The economy should continue to recover, and investors will start buying many of Canada’s cheap stocks as they get more bullish.

The post Get Aggressive: 3 Reasons Another Stock Market Crash Is NOT Coming appeared first on The Motley Fool Canada.

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One reason is that so much of the world’s media is in the U.S. This translates into a large amount of attention lavished upon these billionaires, especially those that seek out the spotlight. Many U.S. billionaires — like Warren Buffett — end up earning such vast fortunes that we can’t help but pay attention.

There’s also the sexiness factor. Many of Canada’s top billionaire families have been steadily working for generations now, quietly building up vast fortunes in businesses that have been around for a long time. While it’s a winning strategy, it’s not nearly as exciting as building the next social media giant from the ground up.

Let’s take a closer look at three ways Canadian billionaires have made their fortune — easy-to-follow tips you can easily embrace in your own portfolio.

Focus on staples

Many of Canada’s top billionaires have made their fortunes focusing on staples, the kinds of items you consume on an everyday basis.

The Weston family focused on food, turning Loblaw (TSX:L) into Canada’s top grocer. The family’s holdings also include Weston Foods, one of North America’s top bakeries, as well as extensive real estate. There’s nothing sexy about any of these businesses, but they do produce ample total returns over time.

Loblaw shares have quietly been an excellent performer over the long term. Over the last 10 years — if you reinvested all your dividends — shares compounded at a 9.71% annual clip. That’s enough to turn a $10,000 initial investment into something worth more than $25,000.

Even though Loblaw doesn’t have much expansion room left today, the company still has growth avenues. It can gain market share by improving its online ordering options. And it can move into other businesses, as it has already with financial services and real estate.

Diversify

Many of Canada’s richest made their fortunes focusing on the family business, only pursuing outside investments after they were already incredibly wealthy. That has never been the case with Jim Pattison, a Vancouver-based billionaire has practiced diversification since the early days of his empire.

Today the Jim Pattison Group owns assets like car dealerships, grocery stores, outdoor advertising, radio stations, and food manufacturing, among others. It also has stakes in a handful of major Canadian stocks. None of these assets are particularly sexy, but Pattison’s long-term focus and relentless push forward has vaulted him to a net worth that is estimated at US$5 billion.

Not everything Pattison touches has turned to gold, however.. Like any investor, he’s had his share of duds over the years. But his diversification ensured any losses were manageable.

A long-term approach

The dirty little secret of many top billionaire families is they invested for decades before they really became wealthy.

Take the Richardson family, which has quietly built a fortune that is estimated to be worth more than $6 billion. The family got its start when James Richardson emigrated from Ireland in the 1820s. He and his sons formed the company in 1857. It eventually moved to its current home in Winnipeg in the early part of the 20th century, and the family has been focused on growth ever since.

It’s hard to have that kind of long-term thinking, especially today. There are simply too many amazing things to spend our money on. But as the Richardson family has proven, that kind of long-term approach will get you — and your heirs — fabulously rich.

The bottom line

Many of Canada’s top billionaire families have a similar story. They simply focused on the family business and took a long-term approach. You can easily do the same with Canada’s top stocks and a hands-off investment in these great companies.

Take a page out of the billionaire handbook by investing in high-quality stocks that represent ownership stakes in decidedly non-sexy businesses. It’s been repeated time and time again for one simple reason: it works.

The post 3 Top Investing Tips From Canada’s Top Billionaires appeared first on The Motley Fool Canada.

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Fitch Agencies — which is North America’s third-largest debt rating organization — downgraded Canadian government debt from AAA, which is the highest level. Government of Canada debt is now rated AA+. That’s still an outstanding rating, but investors were troubled by the downgrade.

The rating agency had a few reasons for downgrading Canada. Its analysts think Canada won’t recover from the current recession for a little while. Fitch expects poor economic numbers to be the norm until the end of the year or potentially longer.

Fitch is also concerned with the government’s spending spree. This year’s deficit should be in the $250 billion range, a massive number pushed higher by the many stimulus plans put forward by Justin Trudeau and his ruling Liberal party. This should increase the nation’s debt-to-GDP ratio to well above 100% of GDP, which isn’t something any ratings agency wants to see.

Canada’s debt likely won’t stabilize until 2022 to 2024, when it should settle in at approximately 120% of GDP.

Some folks, including government officials, aren’t particularly concerned about Fitch’s downgrade. They point out Canada’s borrowing costs are still incredibly low, and there’s still plenty of investor demand for our bonds. Our credit rating with all three agencies is still quite high as well.

Others are more concerned about what this might mean in the future. Will Canada have to raise taxes to pay for this spending binge?

What higher taxes might mean

I’m hardly a macroeconomic expert, but I can easily envision a future where the burden put on Canadian taxpayers will increase.

The government is lucky to be issuing all this new debt in an era when even longer-term borrowing costs are less than 1%. But it will still cause strain on government finances to service this debt. That burden will be even higher when interest rates rise once again, whenever that might be.

Like any business, the government essentially has two choices. It can balance the books by either increasing revenue or decreasing expenses. It seems unlikely a Liberal government will choose austerity, so there’s really only one option left. Taxes will increase, especially for wealthier folks.

An easy target will be capital gains taxes and dividend taxes, two kinds of income that have advantageous income tax rates associated with them. Many activists have been pushing to increase these taxes for years as a way to help wealth inequality. They may very well get their wish in the next few years.

How will this impact your portfolio?

If the dividend tax credit is eliminated or reduced, I can easily see a rotation out of dividend-paying securities into companies that don’t pay dividends. The most effective way to reduce taxes will be to buy and hold high-quality companies forever.

I can also envision a future when many companies simply eliminate dividends all together. That cash will either be used to buy back shares — which would become a much more attractive way to return capital to shareholders — or used to expand the company.

Many high dividend stocks would take such news particularly hard. When you pay out close to all of your earnings as dividends — like TransAlta Renewables, for example — a higher tax on dividends would eliminate much of the reason to invest in such a stock. That income stream is suddenly less valuable.

The bottom line on higher taxes

Higher taxes could be a reality down the road. We must pay for this stimulus program somehow.

These tax increases could easily target wealthy investors. Although I wouldn’t start to get too excited yet, I can certainly envision a world where investors will see their tax burden increase. Maybe investors need to start paying a little more attention to politics, just so they can protect their portfolios.

The post Investors: Does This Event Mean (Much) Higher Taxes? appeared first on The Motley Fool Canada.

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The devil is in the details, of course. What exactly separates a good stock from a bad one? In a world where every investor has unique ideas, it’s really hard to separate the good companies from the mediocre.

We must also think about valuation. Some argue valuation no longer matters, especially when we consider the impact low interest rates have on the market. While valuation will always play a role, it certainly matters less than it did before.

These days investors are far more concerned with metrics like growth potential, profit margins, and return on invested capital.

Let’s take a closer look at three great Canadian stocks, high-quality names that also trade at a pretty reasonable valuation.

Telus

Canada’s telecom stocks are the epitome of fantastic businesses. These companies have little competition, get high returns on invested capital, and have excellent margins. But I think Telus Corporation (TSX:T)(NYSE:TU) is the best of the best.

Why do I like Telus so much? The main reason why I like it better than its peers is the lack of a media division. Telus has done a better job sticking to internet, wireless, cable, and home phone, while its two main competitors have diversified into media. Media is an okay business, but it’s not nearly as good as telecom.

Telus also has solid growth potential. It should benefit from a continued push to 5G wireless internet, which will help usher in a new era of smart connected devices.

It also has potential to acquire smaller competitors or push further into the health care field. In fact, Telus’s health care division has already gotten a big boost with so many doctors moving to virtual visits.

Combine that with the stock’s 5.2% dividend yield and excellent total return over the last decade and it’s official. Telus is an excellent name that you’re going to want to own over the long term.

Canadian Apartment Properties REIT

Canadian Apartment Properties REIT (TSX:CAR.UN) is one of Canada’s largest owners of residential property. It also owns assets like manufactured home parks and apartments in Ireland and the Netherlands. It translates into more than 30,000 apartments in Canada alone, with a significant part of the portfolio located in the Toronto market.

This is an excellent place to be over the long-term. Toronto has a number of things going for it, including being the destination of choice for choice for many new immigrants, a natural green space that will help keep property prices high, and a strong position in both finance and tech. Toronto real estate has performed well for decades now and is poised to continue its stellar run.

Today is an excellent buying opportunity to load up on this excellent REIT. Shares are off some 20% over the last few months and the dividend yield is a solid 2.9%.

National Bank of Canada

Many investors own a Canadian bank or three in their portfolio. After all, these companies have a history of excellent performance and collectively own the domestic banking market.

Even though the Big Five banks get all the attention, the best investment in the sector might be National Bank of Canada (TSX:NA), the sixth-largest bank in Canada.

National Bank boasts better growth potential than its peers, as it’s really concentrated in Ontario and Quebec. It can either grow domestically or continue its international expansion. Less than 10% of National Bank’s earnings come from its international division, much less than any of its rivals.

The company consistently posts excellent financial results, including its efficiency ratio and its return on equity. It has a solid balance sheet as well, which is important in today’s tumultuous world. It has a higher trailing price-to-earnings ratio as most of its peers, but shares are still cheap at just 10.4 times earnings. And shares also offer a succulent 4.6% dividend yield.

The bottom line

Don’t make investing too complicated. Just load up on great stocks like Telus, Canadian Apartment Properties, and National Bank and let them take care of it. You’ll be glad you did.

The post If You Don’t Buy These 3 Stocks Today, You’ll Be Kicking Yourself Later appeared first on The Motley Fool Canada.

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This misstep wasn’t on purpose, of course. Most of these folks worked diligently throughout their career and always intended to save money. But life has a way of interfering with even well-laid plans. Things always come up — like having to move for work, kids needing financial help, or other unforeseen circumstances.

Many unfortunate people end up decimating their retirement savings early because of unplanned health issues that force them away from the workforce. They want to work, but their body won’t cooperate.

No matter what the reason, having to face a retirement with only OAS and CPP is a tough future. But I also believe that most retirees can get through it with a little bit of sacrifice and innovative thinking.

If this is your future, let’s look at a few strategies you can use to make it a little more palatable.

How much can you expect from just OAS and CPP?

The first thing I should mention is retiring on just OAS and CPP is much easier if you’re married.

We’ll assume both you and your spouse collect average CPP payments and maximum OAS payments, which combine to approximately $1,300 per month. Add in other government programs — like the Guaranteed Income Supplement, among others — and a couple who want to retire on only OAS and CPP benefits are looking at an income approaching $3,000 per month.

While that isn’t enough to live in luxury, it’s still a nice start — especially if we combine it with a few other strategies.

Sell the house

Many folks took their retirement savings and used that cash to pay off the mortgage. They’re facing decades with only OAS and CPP for income sources, but at least the house is paid off.

The solution to this dilemma is easy, although I know most retirees won’t want to entertain it. The way to maximize your dollars in this scenario is to sell the property and move into something smaller.

You can really put dollars in your pocket by moving to a smaller city. There are dozens of small-to-medium sized cities in Canada where you can buy a condo for $250,000 or less. Unfortunately, this may involve moving a few hours away from your friends and family.

Say you net $250,000 from this transaction and put that cash to work in the BMO Canadian Dividend ETF (TSX:ZDV), which yields a solid 5.5% today. That would increase your income by nearly $14,000 per year.

A smaller house would also decrease your living expenses. Everything from taxes to utility costs would end up being lower.

Check out subsidized housing

If you don’t have a house to sell, don’t fret. There are still ways to decrease your living expenses.

Many cities offer subsidized housing for seniors. These apartments are usually in high demand, so many city folk will apply to live in similar housing in smaller towns.

My small town — population 8,000 — has close to 100 subsidized apartments, with many of those reserved for seniors. There are wait lists, but folks who have limited income are usually vaulted to the top of the list.

These programs are generally income based, but don’t sweat it if you have some investment income. These rules are designed to keep rich folks out, not people with a small investment portfolio.

Get a job

This may not be an option for many retirees, but getting a job is an excellent way to stretch your income, even if you make just a few hundred dollars per month.

Common jobs for older people including driving school buses, bagging groceries, or even doing a little part-time work in your previous career. Getting out of the house is excellent for your long-term health, too.

The bottom line

I won’t sugarcoat it. Surviving your golden years solely on OAS and CPP won’t be easy, especially if you’re single.

But it’s certainly possible if you take steps like selling your paid-off home, using government programs like subsidized housing, or working a little bit. Heck, maybe you’ll even make enough to spoil the grandkids.

The post Retirees: Can You Survive on Just OAS and CPP? appeared first on The Motley Fool Canada.

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This is a future strategy, of course. It’ll take decades of compounding for your TFSA to pass the million-dollar mark, but it’s certainly possible if you invest smartly, save regularly, and make sure you’re not robbing the account to help pay for life’s little emergencies.

At that point, turning your TFSA into a passive income machine is easy. You simply invest it in a portfolio that yields 4% and withdraw the income every year. A $1 million TFSA will generate $40,000 in annual income at a 4% yield. That might not be enough to retire on a few decades from now, but it’ll still be a great start.

Some folks aren’t that patient, however. They need to use their TFSAs to generate passive income today. Although they won’t be able to generate enough to retire on today, they can still use their TFSAs to have a nice income stream.

Here’s how you can use your TFSA to make $100/week in sweet passive income.

The easy way

Some people have been saving in their TFSAs for years now, diligently putting the maximum aside since 2009. Many of these TFSAs are now worth $100,000 — or more.

This makes earning a decent amount of passive income from the account relatively easy. If you have $100,000 in your TFSA, then you only need to earn a 5.2% yield to turn that capital into a $100/week passive income stream.

One stock that would fit well in that portfolio would be Telus (TSX:T)(NYSE:TU), the telecommunications giant that has been a dividend growth stud over the last decade or so. Telus features a fantastic moat, the ability to raise prices over time, and growth potential as it rolls out its ultra-fast 5G network over the next couple of years.

Telus shares currently yield a hair over 5%, which fits in really well with the yield needed. The dividend should continue to creep up over time too, which is will help ensure this passive income stream keeps up with inflation over the long haul. The payout is sustainable too, even if the COVID-19 slowdown lasts for years.

The harder way

I won’t sugarcoat it. If you’re starting your journey today and you haven’t yet invested in a TFSA it’s going to be harder to generate $100 per week in passive income. You’ll need to get significantly more yield, which means your stocks are more likely to cut their dividends.

In order to generate $100 per week in passive income from a freshly invested TFSA worth $69,500, you’ll need a 7.5% yield. That’s a high yield, especially in today’s world of low interest rates.

But it certainly isn’t impossible to get that kind of sustainable dividend. Many of Canada’s top REITs, for instance, offer payouts that high. One of my favourites today is NorthWest Healthcare Properties REIT (TSX:NWH.UN), which owns health-related real estate across Canada, Europe, Brazil, Australia, and New Zealand.

NorthWest’s portfolio includes medical office buildings, hospitals, clinics, seniors living buildings, and long-term care facilities. Some of these assets have been impacted by COVID-19 and its impact on the health care sector, but over the long term this real estate should perform just fine.

Meanwhile, investors get to pick up shares at a bargain. In 2019, this REIT generated $0.92 per share in adjusted funds from operations, a number that should slowly go up over time. Shares trade at approximately 11 times this number today, a very attractive valuation. The stock also yields a sustainable 7.5%, making it an excellent choice for TFSA passive income seekers.

The bottom line

Whether you’ve been putting cash aside in your TFSA for years or you’re just starting out today, it’s very possible to generate a decent amount of passive income from your account. While $100 per week might not seem like a life-altering amount of money, every bit helps.

The post How You Can Earn $100/Week in TFSA Passive Income — Today! appeared first on The Motley Fool Canada.

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First, it’s a little bit complex, something that only relatively experienced investors can pull off. The option market is a scary place for someone who doesn’t know how it works. Anyone can figure it out over time, but there’s definitely a learning curve there.

Second, if you manage your own covered call portfolio, there’s a certain amount of active management involved. You must find suitable covered call candidates, figure out the best call options to use, and so on. This takes at least a little bit of work and at least a little bit of expertise.

Still, despite these downfalls, I firmly believe any investor looking for a little extra income needs to take a look at a covered call strategy. You can get eye-popping yields (we’re talking 15% or more here) while giving up only a little upside potential. That’s an excellent way to diversify your portfolio and your income sources.

Fortunately, investors can have their cake and eat it too. Here are two ways to passively invest in covered calls, collecting a nice income stream without having to do any work. You just sit back, relax, and think about spending your dividends.

The BMO way

Bank of Montreal has several covered call ETFs that trade on the Toronto Stock Exchange. I personally own the BMO Canadian High Dividend Covered Call ETF (TSX:ZWC), which uses the strategy to deliver solid yields.

This is an actively managed fund, which means there’s a team of smart people scouring the market for the best covered call opportunities. Top holdings are the same kinds of stocks you’ll see in any Canadian dividend fund. This comes with a relatively high management fee — at least for an ETF, checking in at 0.65% — but it’s well worth it to diversify your portfolio.

The income stream is the real reason to own this ETF, of course, and the BMO Canadian High Dividend Covered Call ETF doesn’t disappoint. The current yield is an excellent 8.7%. Unlike other high-yield stocks that don’t really offer safe dividends, this ETF can actually boast a history of dividend growth. The payout has increased by almost 10% since it debuted back in 2017.

The Canoe way

On the surface, the Canoe EIT Income Fund (TSX:EIT.UN) is very similar to the BMO ETF we just looked at. Both funds use an active management approach to choose the best stocks for a covered call strategy, and both funds own a similar range of stocks. The only difference is the Canoe fund also owns some U.S. blue-chip stocks.

If they’re so similar, then how can the Canoe fund yield an astronomical 13.2%, a payout that is approximately 50% higher than offered by the BMO ETF? And this is after investors pay a management fee of more than 1%, which is much higher than the other ETF we just looked at.

The answer is one word: leverage. The Canoe EIT Income Fund uses borrowed money to goose its returns. But we must remember that leverage is a double-edged sword. It’s great when things are going well, but it causes big declines when the market suffers.

I’m also confident the Canoe fund can maintain its yield over the long term. The payout — which is currently $0.10 per share each month — has stayed the same since 2009. Additionally, this fund hasn’t missed a payout since debuting on the Toronto Stock Exchange back in 1997.

The bottom line

Both of these covered call funds are excellent ways to diversify your portfolio while getting a nice income stream. In fact, a position in the two would deliver an over 10% yield on your money. That’s an excellent payout, especially in today’s low interest rate world.

The post Diversify Your Portfolio With These 2 Yielders of Over 8% appeared first on The Motley Fool Canada.

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It doesn’t take a genius to figure out why so many investors are desperately looking for the next Shopify. They take one look at the technology company’s long-term returns and are instantly enthralled.

After all, a $1,000 investment in Shopify on its initial public offering would be worth more than $34,000 today. That’s the kind of performance that can make or break a portfolio.

What would separate the next Shopify from its peers, anyway? Unfortunately, there’s no single formula that will allow investors to pick 100-baggers. We must use educated guesses to try and find the next huge growth stock. This name will have a huge addressable market, with potential to dominate it.

It’ll also have potential to expand into related businesses and acquire competitors, too. And it’s likely to have a fanatical CEO in charge, with that person likely owning a whole bunch of shares.

But there’s more. The next Shopify needs to be a business with loads of growth potential in a sector like technology, which offers almost limitless ability to scale. It should also be relatively small today, as most large-cap stocks have already almost reached their potential. Oh, and this stock must also be publicly traded, since it’s pretty hard for regular investors to put their cash to work in private companies.

Whew. Needless to say, that’s a long list.

Rather than try and find the next Shopify, I have a bold suggestion. Investors should just buy Shopify shares instead. Here’s why.

Still massive growth potential

Shopify recently made headlines for becoming the most valuable stock on the Toronto Stock Exchange, a status that hasn’t been kind to other stocks that have reached the lofty perch. In fact, that’s usually a good time to sell.

But it’s easy to see why Shopify could be different. The company’s main product is software that helps online retailers hit their goals and sell more products. We’re still in the early innings of a massive trend that will see more retailers create an online presence — never mind product manufacturers using the internet to cut out the middleman and sell directly to consumers.

Remember, only some 10% of consumer purchases are made online here in Canada. There’s still massive growth potential for e-commerce here, never mind the rest of the world. If you’re looking to start up an online retailer or expand your physical storefront online, Shopify’s software is pretty much your only choice. It offers hundreds of different apps to make life easier.

Shopify has barely scratched the surface of its potential in other areas. Its capital division — which uses real-time sales data to help it make lending decisions — could easily be worth billions. The payment processing subsidiary also has huge potential, both online and with physical retailers. Its software can also be used to help physical retailers keep better track of inventory and sales trends.

But there’s more. The company is rapidly becoming an expert in shipping and logistics, expertise it can pass onto retailers. The massive amounts of data it generates makes Shopify an attractive partner for other huge online retail operations. And Shopify is obsessed with treating its customers right — a trait that will always be in demand.

The bottom line on the next Shopify

Rather than try to find the next Shopify, the solution is simple: investors should just buy Shopify shares.

Shopify still has loads of growth potential. Yes, its valuation is sky-high, but Shopify’s valuation has been excessive ever since its IPO. It obviously doesn’t matter.

There’s no reason to reinvent the wheel here. Shopify has built a very impressive organization. The next Shopify — if you can even find it — won’t be nearly as good.

The post Forget About Finding the Next Shopify (TSX:SHOP): Do This Instead appeared first on The Motley Fool Canada.

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