- The Bank of Canada increased interest rates by another 25 basis points and the banks are increasing the prime rate by a similar amount to 6.00%. The Bank has increased interest rates seven times since last fall but suggested that the tightening phase might be over.
- We have heard that it is better to buy the bank (shares) than put money in it. It turns out the same is true of mutual fund companies. This article in The Globe and Mail points out that investors in Investors Group enjoyed annual compounded returns of 22.4% whereas investors in its Dividend Fund made a measly 10.3%, trailing even the average return of its peer group. The fund charges a MER of 2.76%. In contrast, IGM Financial (TSX: IGM) yields 3%.
- Speaking of banks and dividends, Bank of Montreal (TSX: BMO) increased its quarterly dividend by an impressive 17%. Analysts also expect Bank of Nova Scotia (TSX: BNS) and beleaguered CIBC (TSX: CM) to increase their dividends when they announce their earnings.
- Forbes magazine’s semi-annual investment guide is disappointing, at least for Canadian readers. The issue had lots of articles on U.S. tax matters and real estate and even one on brewing your own beer. I think I’d rather buy a bottle of Sleeman’s Honey Brown Lager (TSX: ALE).
