Surging dividend stocks, RRSP strategies and conservative portfolio gains: 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.

My dividend portfolio is surging – now it’s time to go shopping

At the start of the year, John Heinzl predicted that most of the companies in his Yield Hog model portfolio would raise their dividends in 2020. Less than two months into the year, seven of the portfolio’s 20 companies (there are also two exchange-traded funds) have announced dividend hikes. The companies (and their percentage dividend increases) are: BCE (5 per cent), Brookfield Infrastructure Partners (7 per cent), Canadian Utilities (3 per cent), Manulife Financial (12 per cent), Restaurant Brands International (4 per cent), Royal Bank of Canada (3 per cent) and TC Energy (8 per cent).

Finding bargains in the stock market has become a challenge after the recent run-up in share prices. As stock prices have climbed, dividend yields have dropped, which means every new dollar invested generates less income than it used to. He has decided to go “off the board” and add 65 units of a security that he believes is still attractively priced – namely SmartCentres Real Estate Investment Trust. Here’s why.

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There is no ideal RRSP investment – so here’s what to focus on

Right now, many Canadians are asking themselves some variation of this question: “What’s the perfect RRSP investment?” The short answer is none, Gordon Pape writes. There are flaws in every security you might consider for your registered retirement savings plan, from low return to high risk. But there are many that offer a reasonable combination of risk and return, and that’s where you should focus your attention. What should you look for? Here are four guidelines: long-term performance, consistency, fees and risk.

The RRSP deadline is March 2: What you need to know about saving for retirement – and building a financially secure future

Rob Carrick’s 2020 ETF Buyer’s Guide: Best U.S. equity funds

There were no bad choices for ETF investors in the U.S. equity category last year, Rob Carrick writes. Every exchange-traded fund listed in the U.S. equity instalment of the 2020 Globe and Mail ETF Buyer’s Guide made between 20 and 30 per cent in the 12 months to Jan. 31, and the three- and five-year returns were all in double digits.

Want a likely path to investing disappointment? Buy a U.S. equity ETF based on those backward-looking return numbers. Dig into the other data in the Buyer’s Guide if you want to understand how these ETFs might behave in the future. Check the weighting in tech stocks, for example. If this high-flying sector falters, a tech-heavy ETF would be vulnerable. Check the fees – the drag on returns caused by fees is much more tangible in weak or down markets than in years when everyone makes double-digit returns.

More from Rob Carrick: Have a defined contribution pension plan? Here’s how to make the most of it

Gordon Pape: My conservative portfolio has gained almost 10% over the past six months

In February 2013, Gordon Pape created a model registered retirement income fund portfolio for his Income Investor newsletter. Its twin objectives are income generation and capital preservation. The focus is on low-risk assets that provide decent cash flow. The portfolio gained almost 10 per cent in the latest period, a very strong six-month gain for a conservative portfolio. Every security made a profit, with the best results coming from Pembina, BCE, the Brookfield partnership, and the Utilities ETF. Here are the current positions with a commentary on how they have fared since August.

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His preferred shares are longtime losers – should he sell?

The latest story of an unfortunate preferred share investing experience comes from a reader who owns three different preferred share issues, all from blue-chip players in the financial sector, Rob Carrick writes. “I have held these preferred shares for a number of years and these stocks have been in the loss column for a long time,” this reader writes. “I do not see them moving in a positive direction. My question, should I sell them now?”

Here’s the argument for keeping these shares: They reliably pay dividend income and there’s little risk of that changing. In a taxable account, this dividend income benefits from the dividend tax credit and thus produces a better after-tax return than bond or GIC interest.

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Here’s the argument for selling: Buying individual preferred share issues is one of the most difficult tasks in investing at the best of times. Today, with interest rates acting in ways that confound most observers, it’s harder than ever to get a good outcome from individual pref shares. Rising rates are bad for perpetual preferred shares (they pay a steady dividend) and falling rates hurt the price of rate reset preferreds (the dividend is adjusted every five years to reflect changes in interest rates).

What investors need to know for the week ahead

In the week ahead, bank earnings season continue with Bank of Montreal and Bank of Nova Scotia releasing results Tuesday, followed by Canadian Imperial Bank of Commerce on Wednesday, and Toronto-Dominion Bank and National Bank of Canada on Thursday. Other companies posting earnings include SNC-Lavalin, George Weston, Aimia, Algonquin Power & Utilities, Maple Leaf Foods and Transcontinental.

Economic data on tap include: Canadian wholesale trade for December (Monday); U.S. new home sales for January (Wednesday); Canada’s current account balance deficit and U.S. real GDP for the fourth quarter as well as U.S. durable goods orders for January (Thursday); Canada’s real GDP for the fourth quarter, Canada’s industrial product and raw materials price indexes for December plus U.S. personal income and consumption for January (Friday).

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