Pro RRSP tips, soaring utilities and dividend growth stocks: What you need to know in investing this week

Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.

Gordon Pape: How to build your RRSP like an investing pro

There are two keys to a successful registered retirement savings plan, Gordon Pape writes. The first is steady growth over time. The second is risk management. A big loss can set you back years and greatly reduce the amount of capital that’s available to you in retirement.

Take a look at how the pros manage the assets in big pension plans. They combine long-term-growth assets with low-risk fixed-income securities. So, what should this tell us about our own RRSPs? Most of us probably need to boost our fixed-income allocations and to add more foreign securities to our plans. How do we do that? Here are some securities to look at.

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Utility stocks have been soaring so far in 2020. Here’s why it may not last much longer

Canadian utilities have sailed through fears about the spread of the coronavirus and the threat of declining global economic activity, David Berman writes. But the stocks are now approaching a hurdle that could prove more difficult to clear. The utilities sector in the S&P/TSX Composite Index increased 8.5 per cent in January. By comparison, the broader index is up less than 2 per cent since the start of the year.

The problem: High valuations make additional gains hard to fathom. The estimated price-to-earnings ratio for Canadian regulated utilities is above 23, which is well above the sector’s 10-year average of 17.8, according to a CIBC World Markets analyst.

Read more: U.S. utilities stocks trump other havens as virus fears spread

Dividend growth is the power behind the gains of these stocks over the past decade

As a company’s dividend growth goes, so goes its share price, Rob Carrick writes. Canadian National Railway, Metro and Bank of Nova Scotia are just a handful of examples.

Canadian investors are dividend enthusiasts for good reason – they provide tax-advantaged gains in non-registered accounts and they’re a big part of the total returns generated by the stock markets. The best dividend stocks offer dividend growth – consistent annual increases in the cash investors receive each quarter. Dividend growth can help you offset the effects of inflation and drive share price growth.

Read more: Companies that hiked their dividends this past week include BCE, Suncor, Intact Financial, BP and Prudential Financial

Preparing your portfolio for after a spouse is gone

A reader who has been diagnosed with a terminal illness asks for advice on moving assets in his and his wife’s joint investing account from stocks to more secure, lower-risk investments. John Heinzl responds: Given that your wife’s investing horizon could be many years, if not decades, I believe it would be a mistake to put the entire portfolio into something ultraconservative such as government bonds or guaranteed investment certificates. As a compromise, consider investing in a low-cost balanced mutual fund that provides a mix of fixed-income securities for safety and equities that offer greater potential for long-term growth. By investing in a fund, your wife won’t have to worry about managing a portfolio of individual securities. He offers a few suggestions plus addresses tax implications here.

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More from John Heinzl: Yield Hog model dividend growth portfolio as of Jan. 31, 2020

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Rob Carrick’s 2020 ETF Buyer’s Guide: Best Canadian bond funds

The performance of bond ETFs in 2019 is a definitive answer to everyone who thinks an investment in bonds is dead money when interest rates are low, Rob Carrick writes. The 13 exchange-traded funds included in the bond instalment of The Globe and Mail 2020 ETF Buyer’s Guide produced an average return of 6.7 per cent in the 12 months to Jan. 31. Honestly, that’s the kind of return you should be shooting for, on an average annual long-term basis, from stocks.

There are a few different bond ETF categories covered in the guide – broad market funds combining corporate and government bonds of short, medium and long maturities, short-term bond funds and funds holding strictly corporate bonds. Passive index-tracking funds and actively managed funds are included.

More from Rob Carrick: What is a good target for long-term RRSP returns?

What investors need to know for the week ahead

Companies releasing their latest earnings in the week ahead include Enbridge, Aurora Cannabis, Canopy Growth, Brookfield Asset Management, Brookfield Infrastructure Partners, Restaurant Brands International, TMX Group, Barrick Gold, Choice Properties REIT, Great-West Lifeco, Hydro One, Manulife Financial, Sun Life Financial, Shopify, Bombardier, Canadian Tire, Fairfax Financial, Kraft Heinz, Telus and Pepsico.

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Economic data on tap include: Canadian housing starts for January and building permits for December (Monday); U.S. treasury budget for January (Wednesday); U.S. inflation figures for January (Thursday); Canadian existing home sales and MLS Home Price Index for January, Canadian new motor vehicle sales for December, plus U.S. retail sales for January (Friday).

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