Canadian Telecom Oligopoly Provides Sustainable Dividend Growth (BCE) (RCI) (TU)

The Canadian wireless market is dominated by The Big-3: BCE Inc (TSE: BCE, NYSE: BCE), Rogers Communications Inc (TSE: RCI.B, NYSE: RCI) and Telus (TSE: T, NYSE: TU) controlling approximately 91% of the wireless market, with various other regional players filling in the rest. The recent acquisitions by the Big-3 have allowed them them to expand into the media and entertainment business and provides the companies with diversified growth and income sources. These Big-3 are components of the S&P/TSX 60 index and have been providing stockholders with a constant flow of dividends and sustainable dividend growth.To read the full article, click here.


Ottawa Real Estate

Enough has already been written by countless others about the Canadian housing market, so I wont ramble on about how overpriced houses in Canada are. Canadians now hold a household debt-to-income ratio of 163.4% (up from 162.1% in the first quarter of 2013). Following are some charts from The Economist, comparing the historical real estate prices between Canada and US since 1975.
My wife and I are currently renting an apartment in Ottawa, Canada and are considering buying a house for the past few months. We are thinking about buying a house in a year or two (2014-2015), but the state of the market just leaves me in disbelief. The Ottawa real estate board states that the average home prices are $346K (source). The inclusion of suburbia, the remote outskirts and the rougher parts of town bring down the average prices as any good house in the city has a listing price of $500K-$800K.

Canada Real Estate

Canada Real Estate

Canada Real Estate

Canada Real Estate

Canada Real Estate
The 4th chart is really interesting which shows that with the current state, its much cheaper to rent than to buy a house. But having considered all, the big question still remains: Do we wait for a correction or just buy in while the interest rates are down? 
What are your thoughts?

Where’s the bailout, Canada?

What is the rationality by the Canadian government against bailing out the tech sector, while bailouts for the banking and auto sector gets an easy green light? Are tech workers any less Canadian who’s jobs do not matter?
BlackBerry (TSE: BB) recently had one of the worst quarters with almost a $1 billion loss in write-downs. BlackBerry, which was ahead of the curve in the invention of smartphones, are now at the brink of bankruptcy with $2-$3 billion in cash – and that’s running out fast! BlackBerry announced last week that they will be cutting 4,500 jobs (source), about a third of the workforce.
The Canadian government has bailed out the banking sector with $114 billion (source), auto industry with $4 billion (source) during the economic crisis five years ago, but why no such bailouts for the tech sector?
BlackBerry is not the first tech company that is in this situation. In the past, Canada had the opportunity to save jobs with a bailout of Nortel Networks, but it was decided that the company is not worth saving (source). BlackBerry may as well face the same verdict in the coming months. Both Nortel and BlackBerry were leaders in their heyday, and being the giants that they once were, have spawned off a number of other startups across the country. So, why the hatred and ignorance towards the tech sector by the Canadian government? Are the tech workers any less Canadian than bankers and auto-sector workers?
I am not advocating that every company that fails should be bailed out with taxpayer money, but what is the rationality behind saving some industries and letting others fail? This is not made clear by the politicians.
What are your thoughts on this topic? 

Best Places to Retire 2013

The first ranking discussed here is for the best countries to retire and the second ranking discussed here is for the best cities in Canada to retire. Both these rankings came out earlier this year in spring.

According to this ranking from Natixis Global Retirement Index, Canada is ranked 13th (United States is ranked 19th, if you are asking). The western and northern European countries have swept the ranking mostly due to the higher marks achieved in the Health and Quality of Life sections.

Best countries to retire:

  1. Norway
  2. Switzerland
  3. Luxembourg
  4. Sweden
  5. Austria
  6. Finland
  7. Netherlands
  8. Denmark
  9. Germany
  10. France
  11. Australia
  12. Israel
  13. Canada

Best Canadian Cities to retire:

The best cities to retire in Canada, according to this ranking from MoneySense are:
  1. Victoria, BC
  2. Saanich, BC
  3. Kingston, ON
  4. Burlington, ON
  5. Ottawa, ON
  6. Toronto, ON
  7. Joliette, QC
  8. Saskatoon, SK
  9. Stratford, ON
  10. Winnipeg, MB

My Thoughts

Some metric points may have more influence than others in the ranking consideration which may or may not matter to you.

For e.g.: Israel is ranked higher than Canada, but the political turmoil that comes by living in a country like Israel is not my cup of tea. 
Another e.g., Victoria, B.C may as well have more days above 0C per year (312 days) compared to Ottawa, ON (118 days), but according to the same ranking, violent crime rate is also much higher in Victoria, B.C (2178 per 100K) compared to Ottawa, ON (651 per 100K).
My take from these rankings is – look at the performance metrics and check the relative performance between cities only for the metrics that matter to you. I am still quite happy to see that my city Ottawa is ranked 5th 🙂

Stop Lending the Government Free Money

Do you look forward to tax season where you end up getting a big fat cheque from the government after filing your taxes? If so, then you have been paying too much in taxes and lending the government free money.

Withholding tax

The income tax rate is calculated by your employer and is deducted at the source. If you contribute to your RRSP (or similar tax-deferred accounts) during the tax year, you end up getting a refund at the end of the year since the tax is deferred to whatever amount you contributed to your RRSP.

For e.g.: Say, you contribute $100 each month to an RRSP account. When the tax season comes around and you file your taxes, you end up getting a tax refund for whatever amount of taxes were applied on that amount = ($1200 x Your Tax Rate).

You are paying too much in taxes to begin with – leaving you with a smaller take-home paycheque. You are lending the government interest-free money for a year! That extra amount that you have paid could have been growing tax-free in your investments and when you consider how compound interest works, you realize how much of your income you are missing out on.

The Solution

The solution for this is listed below:

  1. Complete the CRA form: T1213 – Request to Reduce Tax Deductions at Source.
  2. Provide proof: You need to provide CRA the proof that you are contributing to an RRSP or RESP or equivalent tax-deferred accounts (TFSA does not count) and request that your tax deductions be reduced. The proof can be an confirmation letter from your financial advisor or printouts from your self-directed investment contribution accounts showing that you make monthly contributions or you can make a lump sum contribution and attach that as proof. Be clear in indicating the amount that you want reduction of taxes for.
  3. Wait for a confirmation: It normally takes 2-6 weeks for CRA to send you a confirmation letter letting you know whether your request is approved or not.
  4. Submit  to payroll supervisor: If approved, submit a copy of the CRA letter to your payroll supervisor and they will take care of the rest. Your next paycheque will be a comparatively bigger paycheque (the amount depends on how much you contribute(d) in the tax-deferred account).

Disclaimer: The information provided here is for educational purposes only. All opinions here are my personal opinions and should not be taken as financial advice. I am not qualified to be a financial advisor. Always consult with your financial advisor before investing in any of the companies mentioned on this blog.