Buy Canadian
The patriotic investor’s guide to the top stocks, funds and bets
Gordon Pape gives his top investment bets
Best stock: Enbridge Inc. We have many great companies in Canada including the big banks, utilities like Fortis, the railroads and our energy companies. Choosing one was not easy. I picked Enbridge on the basis of historical performance, low downside risk and the prospects for the future.
Based in Calgary, Enbridge operates the world’s longest crude oil and liquids transportation system and is Canada’s largest natural gas distribution firm. Also, Enbridge is stepping up its activity in the renewable power sector including wind farms, solar, and geothermal energy. Recently, it completed a merger with Spectra Energy of Houston that created North America’s largest energy infrastructure company.
The share price has moved steadily higher over the past 20 years. In 1997, it was less than $10 a share; at the time of writing, the price was more than $55. The company also has a long history of annual dividend increases, raising its payout each year since 2005. In recent years Enbridge has increased the rate by 33 per cent to $1.86 per share annually in 2015. It followed that up with a 14 per cent boost at the start of 2016 and a 10 per cent hike at the beginning of 2017. Because much of Enbridge’s business is regulated, the risk level is low although like any stock it will come under pressure when the overall market drops. But the shares have quickly rebounded from past dips and the stock is as steady an income generator as you’ll find. I own shares myself and don’t ever intend to sell. Best ETF: The Vanguard FTSE Canada All Cap Index ETF A top exchange-traded fund should offer three advantages: low cost, easy to understand, and a good track record. The Vanguard FTSE Canada All Cap Index ETF, which trades under the symbol VCN, meets all these criteria. It gives you exposure to the total Canadian stock market (large, medium, and small cap stocks), is dirt cheap with a management expense ratio of only 0.06 per cent, and has produced an average annual compound rate of return of 8.8 per cent since inception (to March 31). You won’t find better! Best GIC rates: Street Capital Bank of Canada Conservative investors are fed up with low interest rates that have kept yield on Guaranteed Investment Certificates at their lowest level in decades. Who wants to tie up their money for five years at 1.6 per cent? You can do better but only if you are willing to deal with smaller financial institutions. Many of these offer yields that are almost a full percentage point more than the major banks, but you have to hunt around for them. One of the best online sources for this information is rate supermarket.ca. Enter the parameters you require – length of term, minimum investment, etc. – and the site will create a list that will beat the big banks hands-down. At the time of writing, the best five-year rate was with Street Capital Bank of Canada at 2.55 per cent. You may have never heard of Street Capital but your investment is covered by Federal deposit insurance up to $100,000. That’s all you really need to know. Best savings account: EQ Bank Last year, the prize went to a newcomer, EQ Bank, an online institution that was trying to build business by offering to pay 2.25 per cent on your money. Twelve months later, EQ is still the leader, but the rate has dropped to 2 per cent. Alterna Bank is a close second at 1.95 per cent. You can also use rate supermarket.ca to check out the best rates offered on bank savings accounts. Best free money: Registered Education Savings Plan When you open an RESP, the federal government will add 20 per cent (more in certain circumstances) to your contribution, up to a maximum of $500 a year. The lifetime limit per child is $7,200. That’s free money – take advantage of it.