Optimism #71 - February 22, 2024

Dear clients and friends,

I think I have spoken about RRSPs with all of you who need/want it. If not, please excuse me, I've missed you. Please book some time with me.  The contribution deadline is Feb the 29th.

We have more dividend increases from TransCanada Pipeline (+3.2%) (now TC Energy), just this morning Gildan Activewear (+10%) (they make T-shirts), Brookfield (+19%), Canadian Tire, Atco, CIBC, Telus, Enbridge, TD, RY, Sun Life, CN Rail, Metro (groceries), and Franco Nevada for you gold bugs. 

We received dividend pay raises without even asking.  Tamara and I have had rental properties. No tenant ever volunteered a rent increase.
And as my famous friend Tom Connolly always says, dividend growth drives share price increases.  We get both.  That’s how you win at this game.

Insiders are buying again at Tourmaline Oil and CN Rail. There are many more.

Nvidia, a computer chip maker is currently worth more than the top 20 US Energy companies combined.  You know, Exxon, Chevron, ConocoPhillips….  This never ends well.
Remember when Nortel was Canada’s most valuable company?  History doesn’t repeat itself, but it rhymes.  Mark Twain was correct.

Some days X drives me crazy, and other times there are brilliant gems. A colleague Mark McGrath wisely points out that “the goal of tax planning is not to pay the least amount of tax. It’s to ensure the best after-tax outcome.  The former is often accomplished at the expense of the latter.”

On X again, Aaron pointed out something I had never thought of.  If you defer OAS to age 70, you receive an extra .6% per month, 7.2% per year, or 36% more, but for fewer years. 
That part I get.  All income figures are individual.
I learned that the income level at which OAS becomes fully clawed back is 36% higher for those who deferred the pension. 
For 2024, OAS clawback starts when your income hits $90,997 and the pension is fully depleted when income hits $148,179.  But for those who deferred, they actually don’t lose the full amount of the pension until income (line 23400) hits $168,765, almost $21,000 higher.  I have to think about this more. Maybe high net worth / high earners should defer OAS even if it's not necessarily clawed back between ages 65 and 70?

Japan’s stock market peaked in 1989.  Just today, ignoring dividends, it recovered to the value it was 35 years ago. Imagine having little or no return after 35 years.
Japan’s Nikkei stock market index hits all-time high, breaking 1989 record
We have been talking about this for my entire career. 

On the subject of RESP withdrawals, here is a good article from the always excellent Jamie Golombek at CIBC.
New tax year brings new chance to withdraw strategically from this registered plan

I despise those glossy 30-page financial plans because after a few years, the projections are always way off target.
Apparently Winston Churchill said, “Plans are of little importance, but planning is essential.”

Have a super week.
Derek Moran