Canadian companies hiking dividends, big bank stock pick and tax deduction checklist: What you need to know in investing this week

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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.

Why I’m reinvesting dividends in this Big Five bank

Reinvesting dividends is one of the keys to building wealth, John Heinzl writes. The beauty of compound growth is that it accelerates over time, like the proverbial snowball that gets bigger as it rolls downhill. With that in mind, I’ll be reinvesting most of the more than $1,000 in virtual cash that’s accumulated in my model Yield Hog Dividend Growth Portfolio.

Canadian banks are carrying record amounts of capital, thanks to their resilient earnings and the year-long ban on dividend increases and share buybacks. As discussed in last week’s column, I’m expecting the banks to resume dividend increases later this year. They are also benefiting from several other tailwinds including falling loan losses, rising interest rates and strong results from their capital markets and wealth management divisions. Read more here, including why I’m buying additional shares of CIBC.

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Read more: How bank stocks will be affected by OSFI efforts to cool housing market

Dividends on the rise: Canadian companies restore payouts to pre-pandemic levels

Canadian companies have accelerated their payouts to shareholders, restoring dividends overall back to levels seen before the pandemic ushered in a wave of reductions and suspensions, David Milstead and Darcy Keith write.

According to an analysis of S&P Global Market Intelligence data, 62 companies with their primary listing on the TSX announced dividend increases in the just-completed first quarter ended March 31 Of the 62 companies announcing dividend increases in 2021′s first quarter, 40 are large enough to be on the S&P/TSX Composite Index Read more here and see the full list of Canadian companies that announced dividend hikes during in first quarter below (It doesn’t include companies that have their primary stock listing on an exchange in the U.S. or elsewhere outside Canada).

Dividend hikes

Company Ticker Dividend Announcement
Urbana Corporation URB-T Jan. 4
Algoma Central Corporation ALC-T Jan. 14
ATCO Ltd. ACO.X-T Jan. 14
Canadian Utilities Limited CU-T Jan. 14
Cogeco Inc. CGO-T Jan. 14
Melcor Real Estate Investment Trust MR.UN-T Jan. 14
Mackenzie Master Limited Partnership MKZ.UN-T Jan. 15
Income Financial Trust INC.UN-T Jan. 20, Feb. 18 and Mar. 18
Richelieu Hardware Ltd. RCH-T Jan. 21
Mullen Group Ltd. MTL-T Jan. 22
Canadian National Railway Company CNR-T Jan. 26
Metro Inc. MRU-T Jan. 26
Exco Technologies Limited XTC-T Feb. 2
BCE Inc. BCE-T Feb. 4 and Mar. 11
PFB Corporation PFB-T Feb. 4
FirstService Corporation FSV-T Feb. 8
PrairieSky Royalty Ltd. PSK-T Feb. 8 and Mar. 9
TFI International Inc. TFII-T Feb. 8
Andrew Peller Limited ADW.A-T Feb. 10
Brookfield Asset Management Inc. BAM.A-T Feb. 11
A&W Revenue Royalties Income Fund AW.UN-T Feb. 17 and Mar. 3
goeasy Ltd. GSY-T Feb. 17
Nutrien Ltd. NTR-T Feb. 17
TC Energy Corporation TRP-T Feb. 18
Lundin Mining Corporation LUN-T Feb. 19
Magna International Inc. MG-T Feb. 19
Nexus Real Estate Investment Trust NXR.UN-T Feb. 19
Western Forest Products Inc. WEF-T Feb. 19
Gibson Energy Inc. GEI-T Feb. 22
Goodfellow Inc. GDL-T Feb. 22
Dream Unlimited Corp. DRM-T Feb. 23 and Feb. 26
Leon’s Furniture Limited LNF-T Feb. 23
Thomson Reuters Corporation TRI-T Feb. 23
Alamos Gold Inc. AGI-T Feb. 24
Guardian Capital Group Limited GCG.A-T Feb. 24
Stantec Inc. STN-T Feb. 24
Aecon Group Inc. ARE-T Feb. 25
CCL Industries Inc. CCL.B-T Feb. 25
ECN Capital Corp. ECN-T Feb. 25
Maple Leaf Foods Inc. MFI-T Feb. 25
Quebecor Inc. QBR.A-T Feb. 25
Top 10 Canadian Financial Trust TCT.UN-T Mar. 3
Canadian Natural Resources Limited CNQ-T Mar. 4
Cargojet Inc. CJT-T Mar. 4
Freehold Royalties Ltd. FRU-T Mar. 4
Parkland Corporation PKI-T Mar. 4 and Mar. 11
Tree Island Steel Ltd. TSL-T Mar. 4
Franco-Nevada Corporation FNV-T Mar. 10
Linamar Corporation LNR-T Mar. 10
Stella-Jones Inc. SJ-T Mar. 10
Tourmaline Oil Corp. TOU-T Mar. 10
Cervus Equipment Corporation CERV-T Mar. 11
Enghouse Systems Limited ENGH-T Mar. 11
Premium Brands Holdings Corporation PBH-T Mar. 11
Wheaton Precious Metals Corp. WPM-T Mar. 11
Badger Daylighting Ltd. BAD-T Mar. 12 and Mar. 15
European Residential Real Estate Investment Trust ERE.UN-T Mar. 15
Whitecap Resources Inc. WCP-T Mar. 15
Melcor Developments Ltd. MRD-T Mar. 17
Westshore Terminals Investment Corporation WTE-T Mar. 17
BRP Inc. DOO-T Mar. 25
Dollarama Inc. DOL-T Mar. 31

Source: S&P Global Market Intelligence

A complete list of tax deductions and credits for investors

The deadline for individuals to file their taxes for 2020 is at the end of April. Investors should check their returns against this list by tax expert Tim Cestnick first:

Deductions: interest expenses for investment, carrying charges (investment management, custody, accounting and bookkeeping, and tax preparation costs), net capital losses of other years, an allowable business investment loss, exploration or development expenses, limited partnership losses and the lifetime capital gains deduction.

Non-refundable credits: the dividend tax credit, foreign tax credits and labour-sponsored funds credit.

Refundable credit: the investment tax credit.

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Here is his full list of deductions and credits for any scenario.

Read more: When filing your tax return, the devil is in the details

Rob Carrick: Are you overpaying for help in filing your tax return?

Gordon Pape: Investors should pay close attention to these takeaways from the first quarter

There was no meltdown. That’s the primary take-away from the first quarter of 2021, Gordon Pape writes. Still. there were many unusual developments in the quarter that will almost certainly have ripple effects as the year progresses. Here are some key takeaways. They include:

Central banks can only do so much. Both the Federal Reserve Board and the Bank of Canada are making cooing noises about keeping interest rates low. But the bond markets are paying little attention. T he yields on 10-year U.S. Treasury bonds spiked sharply higher in the quarter, with Canadian bonds following along. The result was a steep decline in bond prices.

It appears the first-quarter trend will continue. That will mean more pressure on bond funds and gold, and for higher mortgage rates, which will negatively affect the housing market.

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Read more: ‘Where is the bubble?’: Money manager, pension expert square off over highflying stock market

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Rob Carrick’s 2021 ETF Buyer’s Guide: Best Canadian dividend funds

Curb your enthusiasm if you’re looking at the amazing returns of Canadian dividend ETFs in the past 12 months, Rob Carrick writes. As good as dividend ETFs were, most still trailed the S&P/TSX Composite Index in total returns (share price changes plus dividends) over the past one-, three- and five-year periods. Here, we arrive at a sobering truth about these funds. While they’re great for producing tax-efficient dividend income, they can be second-best for growing your money behind holding plain old Canadian equity funds. Read more here and check out the full rankings.

More from Rob Carrick: ‘Where does one find a 4% conservative rate of return?’

What investors need to know for the week ahead

Earnings season kicks off in the week ahead, as companies reporting their latest financial results include Bank of America, Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley, BlackRock, Charles Schwab, Wells Fargo, PepsiCo, Delta Air Lines, Cogeco, Shaw Communications, Aphria, General Electric and Kansas City Southern.

The Bank of Canada releases its business outlook survey and survey of consumer expectations for the first quarter on Monday. U.S. Federal Reserve chairman Jerome Powell speaks in Washington and the U.S. Beige Book is released on Wednesday. Economic data on tap include: U.S. budget deficit for March (Monday); U.S. inflation figures for March (Tuesday); Canadian manufacturing sales, new orders and new motor vehicle sales for February, plus existing home sales, average prices and MLS Home Price Index for March as well as U.S. retail sales for March (Thursday); Canadian and U.S. housing starts plus U.S. building permits for March, and Canadian wholesale trade and international securities transactions for February (Friday).

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Read more: With U.S. stocks at record highs, investors look to upcoming earnings

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