B8 | RE P O RT O N BUS I N ES S
Financial players fight to
lure clients away from big
banks with savings rates
Outsider firms can
only stand to gain as
mainstream lenders fail
to offer better interest
ROB
CARRICK
OPINION
T
he economy simply will not
co-operate in generating
the sparks needed to move
interest rates higher.
And yet, the biggest personal
finance story of the moment is a
war in which a fascinating collec-
tion of financial players are fight-
ing over who can offer the highest
rates on savings and chequing ac-
counts.
EQ Bank has just increased the
rate on its savings account to 2.45
per cent from 2.3 per cent,
enough to edge out the 2.4-per-
cent rate announced earlier in
the week by the robo-adviser
Wealthsimple for a new no-fee ac-
count called Wealthsimple Cash.
Think of Wealthsimple Cash as a
hybrid saving-spending account
that you will be able to access by
ATM and use for debit purchases
and bill payments.
LBC Digital, the online division
of tiny Laurentian Bank of
Canada, launched a savings ac-
count last fall with a show-stop-
ping rate of 3.3 per cent. Previous-
ly, the best rate in savings might
have been Motive Financial’s Sav-
vy Savings Account at 2.8 per
cent.
Notice anything about this rate
war? All the combatants are out-
siders trying to win business
away from the big banks, which
continue to exploit the compla-
cency of their clients by offering
savings rates in the rough 1-per-
cent range. In a low-rate world,
there’s no better way for a finan-
Dividend stocks that are ahead of the curve on climate-change risks
SCOTT CLAYTON
NUMBER CRUNCHER
MBA, is senior analyst for TSI
Network and associate editor of TSI
Dividend Advisor
WHAT ARE WE LOOKING FOR?
Sustainable dividends from com-
panies already reporting their fi-
nancial risks from climate
change.
THE SCREEN
Climate change took centre stage
at this week’s World Economic
Forum in Davos, Switzerland.
While big investors in attend-
ance put pressure on corpora-
tions to track and report their ex-
posure to climate-change risks,
some corporations are well
ahead of the curve: They’ve vol-
untarily adopted industry-specif-
ic standards on revealing those
financial implications to share-
holders.
Their disclosure tracks risks
such as their susceptibility to
EYE ON EQUITIES DAVID LEEDER
ROGERS (RCI.B-TSX)
CLOSE $66.76, UP 9¢
The performance of Rogers Com-
munications Inc. stock will rely
heavily upon a bounceback in its
wireless segment, according to
Canaccord Genuity analyst Ara-
vinda Galappatthige. “We believe
that investors are now very much
focused on the likelihood and
magnitude of this potential [sec-
ond half] recovery,” he said.
Target: Maintaining a “hold” rat-
ing for Rogers shares, he raised
his target to $66 from $64. The
consensus target on the Street is
$70.94.
cial firm to attract both attention
and customers than offering an
eye-catching interest rate.
If you want to see more com-
petition on rates for savers, start
rewarding these feisty upstarts
for their efforts. Show them that
you can be pried away from your
big bank if the offer is good
enough.
The overall interest rate out-
look right now suggests a bias to-
ward lower rates. Bank of Canada
Governor Stephen Poloz sig-
nalled earlier this week that a rate
cut is possible if the weak eco-
nomic growth of late last year and
early 2020 continues. For that rea-
son, you have to recognize the
possibility that today’s competi-
tive savings account rates could
slip back at some point.
If you want to see more
competition on rates for
savers, start rewarding
these feisty upstarts for
their efforts. Show them
that you can be pried
away from your big
bank if the offer
is good enough.
Some banks have already low-
ered their rate on savings. Tanger-
ine, the online bank owned by
Bank of Nova Scotia, cut the re-
turn on its savings account to 1.05
per cent on Jan. 7 from 1.1 per
cent. A new-ish online player
called motusbank now offers 2.1
per cent on its savings account,
down from the 2.25 per cent of-
fered when it launched last
spring.
Wealthsimple describes its 2.4-
per-cent rate as “non-promotion-
al.” Craig Backman, Laurentian’s
executive vice-president of per-
sonal digital banking, told me in
November that the 3.3 per cent “is
not meant as an introductory
Climate volatility: Select dividend stocks adopting industry-specific standards on financial risks
RANKING * COMPANY
1 Enbridge Inc.
2 Algonquin Power & Utilities Corp.
3 Clorox Co.
4 American Water Works Co.
5 Kellogg Co.
6 Johnson Controls International PLC
*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield
and industry outlook to decide final placements. ** In the native currency. Source: Dividend Advisor
more-prevalent floods and wild-
fires. Many also share liabilities
stemming from new and pro-
posed regulatory changes.
Our search started with Cana-
dian and U.S. dividend-payers
aiming for transparency. We then
applied our TSI Dividend Sus-
tainability Rating System, award-
ing points to a stock based on
key factors:
One point for a long-term (at
least five years) record of divi-
dends – two points for more than
five years of continuous pay-
ments;
Two points for raising the
payment in the past five years;
One point for management’s
public commitment to
HUDBAY MINERALS (HBM-TSX)
CLOSE $4.48, DOWN 1¢
CIBC World Markets analyst Oscar
Cabrera upgraded Hudbay Min-
erals Inc. to “outperformer” from
“neutral.” “In our view, a resolu-
tion for the Pampacancha land
rights negotiation (first produc-
tion for H2/20) and further explo-
ration success in Manitoba re-
main the main short-term posi-
tive catalysts for the stock,” Mr.
Cabrera said.
Target: His target rose to $8 from
$5. Consensus is $7.18.
rate.” But let’s be realistic – these
rates are high by today’s stan-
dards.
A five-year bond issued by the
federal government has a yield
these days of about 1.5 per cent,
and the best rate on a widely
available five-year guaranteed in-
vestment certificate seems to be
2.9 per cent. Getting 2.4 per cent,
never mind 3.3 per cent, is a pret-
ty great deal when you consider
that you can access the money at
any time with no penalties.
The unique thing about
Wealthsimple Cash is that it gives
you a high rate of interest on an
account you can use for everyday
transactions (no chequing,
though). Features to be intro-
duced soon include reimburse-
ment of fees from using ATMs
and no foreign transaction fees
worldwide. Also coming is a cli-
ent card made of the metal tung-
sten. With several high-profile
credit card issuers now offering
the heavier metal cards, this
alone will win customers.
EQ’s savings account doesn’t
offer debits or ATM withdrawals,
but you can use it to pay bills and
send e-transfers at no cost. Lau-
rentian’s savings account can be
partnered with a no-fee online
chequing account that includes
unlimited debits and e-transfers.
Worried that money is not as
safe with these alternative bank-
ing options as it is with a big
bank? Deposits at EQ, Laurentian,
Motive and motusbank are cov-
ered by Canada Deposit Insur-
ance Corp. for up to $100,000 for
every eligible account. Wealth-
simple Cash is not covered by
CDIC.
There’s a business case in
banking right now for cutting in-
terest rates on savings, or at least
holding the line. We are fortunate
to see some financial firms doing
the opposite. Don’t let the oppor-
tunity to boost the return on your
savings slip away.
DIVIDEND
SUSTAINABILITY
TICKER RATING
ENB-T Highest
AQN-T Above Average
CLX-N Above Average
AWK-N Above Average
K-N Above Average
JCI-N Above Average
dividends;
One point for operating in
non-cyclical industries, which
are less sensitive to the ups and
downs of the economy;
One point for limited expo-
sure to foreign currency move-
ments and freedom from politi-
cal interference;
Two points for a strong bal-
ance sheet;
Two points for a long-term
record of positive earnings and
cash flow sufficient to cover divi-
dend payments;
One point if it’s an industry
leader.
Companies with 10 to 12
points have the most-secure divi-
dends or the highest sustainabil-
K92 MINING (KNT-TSX VENTURE)
CLOSE $3.48, UP 12¢
K92 Mining Inc. is a “compelling”
investment, according to Canac-
cord Genuity analyst Tom Gallo,
pointing to the scalability of the
main Kora operation at its Kai-
nantu Gold project in Papua New
Guinea highlands and its
“breadth of mineral potential.”
He initiated coverage of the Van-
couver-based company with a
“buy” rating.
Target: Mr. Gallo set a target price
of $5 a share, which exceeds the
consensus of $4.50.
G TH E GLOBE AND M AIL | FR IDAY , JAN UARY 24, 2020
Markets summary
CANADIAN STOCKS
Canada’s main stock index rose slightly, despite energy
stocks tracking a fall in oil prices on fears of the coronavirus
outbreak in China hitting fuel demand.
The Toronto Stock Exchange’s S&P/TSX Composite Index
was up 0.12 per cent.
Leading the index were Alamos Gold Inc., up 5.1 per cent,
NovaGold Resources, up 4.4 per cent, and Maple Leaf Foods
Inc., higher by 3.9 per cent.
U.S. STOCKS
The S&P 500 ended slightly higher and the Nasdaq Compos-
ite eked out a record closing high, helped by a jump in Net-
flix Inc., while news about the coronavirus outbreak spread-
ing from China and mixed earnings results kept a lid on the
market.
The S&P and the Nasdaq had both been trading down
before news late in the session that Gilead Sciences Inc., up
0.8 per cent, was assessing its experimental Ebola drug as a
possible treatment for the virus.
The Dow Jones Industrial Average fell 0.09 per cent, the
S&P 500 gained 0.11 per cent, and the Nasdaq added 0.2 per
cent.
Among winners, Union Pacific Corp, gained 3.5 per cent
after the rail operator said the Phase 1 U.S.-China trade pact
should reverse slumping volumes.
Netflix jumped 7.2 per cent, rebounding from losses
sparked by a disappointing forecast earlier in the week.
COMMODITIES
Oil prices fell 2 per cent on concerns that the spread of
coronavirus from China could lower fuel demand if it stunts
economic growth, but losses were limited by a draw-down
in U.S. crude inventories.
FOREX AND BONDS
The Canadian dollar was little changed against the green-
back, steadying after a dovish shift in tone by the Bank of
Canada helped drive it to an earlier one-month low, al-
though a drop in oil prices could hurt prospects for the
currency.
The U.S. dollar rose against the euro after the European
Central Bank held interest rates steady and launched a
broad review of its policy that was likely to see new presi-
dent Christine Lagarde redefine the ECB’s main goal and
how to achieve it.
Canadian government bond prices were higher across the
yield curve in sympathy with U.S. Treasuries on haven de-
mand. The two-year rose 5.5 cents to yield 1.519 per cent and
the 10-year was up 30 cents to yield 1.418 per cent. The 10-
year yield hit its lowest intraday level since Nov. 20 at 1.402
per cent.
U.S. Treasury prices rallied, pushing yields to multiweek
lows, boosted by safer demand on persistent concerns about
the impact of the latest coronavirus.
REUTERS
vestor Wealth Management.
DIV. MKT. CAP. RECENT 1Y TTL. WHAT WE FOUND
POINTS YLD. % ($ BIL.) ** PRICE ($) ** RTN. (%)
11 6.1 107.9 53.67 12.7 Our TSI Dividend Sustainability
9 3.8 10.3 19.69 38.6 Rating System generated six
9 2.7 20.0 159.63 5.6 stocks. Algonquin Power & Util-
9 1.5 24.1 134.05 44.5 ities Corp. tracks risks to its
8 3.2 24.1 70.26 19.7 hydroelectric plants from rising
7 2.5 31.7 41.37 27.1 climate volatility. Water utility
American Water Works Co. pins
down the risks to its water re-
sources. Johnson Controls Inter-
ity rating. Those with seven to national PLC supplies energy-ef-
nine points have above-average ficient heating and air-condition-
sustainability; average sustaina- ing for buildings and is transpar-
bility, four to six points; and be- ent about meeting changing
customer demands in a warming
low average sustainability, one to
three points. world. Cereal-giant Kellogg Co.
faces serious climate conse-
quences centred on grain inputs.
MORE ABOUT TSI NETWORK Clorox Co.’s challenges include
TSI Network is the online home calculating costs of ever-scarcer
of the Successful Investor Inc. – water. Energy-generator, distrib-
the group of widely followed utor and pipeline giant Enbridge
Canadian investment newslet- Inc. continues to test and report
ters by editor and publisher Pat on the profitability of its existing
McKeough. They include our assets and operations as climate-
award-winning flagship newslet- change concerns weaken de-
ter, The Successful Investor. The mand for fossil fuels.
TSI Best ETFs for Canadian Inves- We advise investors to do ad-
tors is the latest. TSI Network is ditional research on any invest-
also affiliated with Successful In- ments we identify here.
BIRCHCLIFF ENERGY (BIR-TSX) AURION (AU-TSX VENUTRE)
CLOSE $1.79, DOWN 26¢ CLOSE $1.92, UP 2¢
Although he thinks Birchcliff En- Possessing a geological model
ergy Ltd.’s five-year plan for pro- that is “coming together” in a top
duction and free cash flow investment jurisdiction, Aurion
growth is “intriguing,” AltaCorp Resources Ltd. is likely to draw
Capital analyst Patrick O’Rourke “significant” interest from larger
expects near-term equity head- producers, according to Haywood
winds stemming from its in- Securities analyst Michael Carew,
creased capital expenditure bud- who initiated coverage a “buy”
get. “Overall, we believe that the rating. “We see plenty of upside to
market may view the event nega- come in 2020 and beyond,” he
tively in the near-term,” he said. said.
Target: With Wednesday’s an- Target: Mr. Carew set a target of
nouncement, Mr. Rourke main- $3.50. Consensus is $3.25.
tained an “outperform” rating
and $4 target. Consensus is $4.26.