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Roundup: RIP Wilford Brimley; T.J. Warrens Big Night; Matthew Stafford on COVID List Indulgent brunch recipes for your weekend feast TFSA: How Retirees Can Earn an Extra $520/Month in Tax-Income Income With $69,500

Retirees, your Tax-Free Savings Account (TFSA) is an invaluable tool that’s not just for growing wealth through the power of long-term tax-free compounding.

It can also be used to generate a passive — and tax-free — income stream.

© Provided by The Motley Fool Senior couple at the lake having a picnic

With the CERB, you’ll need to set aside a portion to account for taxes, but with income generated from your TFSA, what you see is what you’ll get, with no strings attached, assuming you don’t break any TFSA rules!

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Putting your TFSA to work as a tax-free income stream

If you’re a retiree who’s been contributing the maximum amount every single year while using the proceeds to sit around in cash or cash equivalents, you’ll have close to $69,500, the cumulative TFSA room assuming zero growth on your contributed wealth since the account’s inception over a decade ago.

To generate $520 per month, you’ll need a 9% yield on the $69,500 in principal.

While most financial advisors would agree that 9% is stretching one’s yield too far, I’d argue that given the environment in which we find ourselves, it’s not reckless if you’re willing to put in the due diligence to ensure you won’t be on the receiving end of a dividend (or distribution) cut.

There are many wonderful cash-flow-generative firms out there with decent enough balance sheets and cash flow streams that are more resilient than you’d think in the face of the COVID-19 pandemic. Despite demonstrating resilience, plenty of firms have still yet to meaningfully recover from the February-March sell-off, mostly because of the nature of their industries.

If you’ve got what it takes to go against the grain, with some of the battered REITs out there, then yes, it is possible to stretch your yield to 9% without getting hurt. Of course, a higher yield comes with more risks, so make sure you understand the risk/reward and put in the required homework.

A smart REIT to boost your TFSA income

One REIT with a 9% yield that I believe is severely oversold is SmartCentres REIT (TSX:SRU.UN). It’s just one of many hard-hit retail REITs that are directly within the crosshairs of the COVID-19 crisis. The “death of the shopping mall” thesis was widely subscribed for years now.

The pandemic has only served to worsen the worries of investors in retail REITs and reinforce the pessimistic narrative of the bears.

SmartCentres REIT kept its distribution intact despite the pressures brought on by the COVID-19 crisis. A significant reason why Smart is holding its own better than many of its peers is because of its wonderful tenant base, which is composed in large part (around 60%) by providers of “essential goods and services.”

Such essential retailers kept their doors open amid the pandemic and will likely do so if we’re in for another round of COVID-19 shutdowns.

Wal-Mart, which thrived amid the pandemic, is a main anchor at nearly two-thirds of SmartCentre locations. The resilient brick-and-mortar retailer continues to keep SmartCentres and well as nearby tenants afloat during this crisis.

Foolish takeaway

SmartCentres is just one of many smart high-yielders to consider as a part of a diversified TFSA income portfolio.

Fellow Fool contributor Kay Ng believes that SmartCentres REIT could be in for 50% worth of gains once the economy normalizes. Given SmartCentre’s demonstrated resilience, the high cash distribution will survive the crisis and that contrarians have a lot to gain from the battered REIT as we inch closer to normalcy.

Speaking of contrarian and value investing, check out these terrific picks curated by the team here at the Motley Fool!

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More reading

  • Risky REITs: 1 to Buy for +50% Upside and 1 to Avoid
  • TSX REITs: 2 Income Machines to Watch
  • Opportunity of a Lifetime: 2 High-Yield REITs With Yields up to 10.5%
  • Students Please Note: Your 2020 CRA Tax Bill Could Go Up to $2,500
  • CERB: The CRA Could Take Away Your $2,000 Payment

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Smart REIT.

The post TFSA: How Retirees Can Earn an Extra $520/Month in Tax-Income Income With $69,500 appeared first on The Motley Fool Canada.

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Arizonans Who Lost Job Due to Virus Won't Get Full Extra Pay

By BOB CHRISTIE, Associated Press

PHOENIX (AP) — Unemployed Arizonans who were expecting to receive an additional $400 a week under an executive order President Donald Trump signed last weekend will only receive $300 extra, Gov. Doug Ducey’s office announced Friday.

The $400 payment Trump announced to boost payments because of the coronavirus included a 25% state match. Arizona is among a large number of states that have opted out of that cash match because of budget concerns. The government issued rules earlier this week after pressure from states to allow them to count regular state unemployment payments toward the match.

That means the $100 Arizona match will come out of the state’s $240 per week unemployment benefit, so benefits paid to recipients will hit a maximum $540 per week, Ducey spokesman Patrick Ptak said. If FEMA approves Arizona’s plan, benefit checks could flow as soon as Sunday, and include two weeks of retroactive payments to the first week in August.

Ptak said it is important to keep the state’s unemployment trust fund solvent, so using that fund to boost benefits isn’t wise.

“We know we have to be responsible and prudent with these dollars,” he said. “We want to make sure that Arizonans can continue to receive unemployment later this year."

The trust held about $1.1 billion at the end of February, and it now has about $590 million.

“This plan provides immediate help for hundreds of thousands of Arizonans, but we also want to look ahead and make sure Arizonans have help over the long term – that’s important,” he said.

The president acted after Congress failed to agree on an extension of a temporary $600-per-week payment that expired at the end of July, so Trump acted on his own.

Under that program that began in early April, people in Arizona who lost jobs got a total of $840 a week. Arizona’s regular unemployment benefit is the 2nd lowest in the nation and well below that of neighboring states, but Ducey has declined to push for higher rates.

More than 370,000 Arizonans are currently receiving unemployment benefits, up from about 17,500 before the pandemic hit in March and Ducey began ordering businesses to close to contain the spread of the virus. The $600 supplemental payments have helped many stay afloat, along with the businesses they patronize and the governments collecting taxes.

The moves come as the state is seeing major improvements in virus numbers. Arizona health officials on Friday reported 928 additional confirmed COVID-19 cases and 40 additional deaths, increasing the state’s totals to 191,721 confirmed cases with 4,423 deaths.

COVID-19-related hospitalizations in Arizona peaked about a month ago. The latest COVID-19-related hospitalization metrics posted by the Department of Health Services continued to trend down and were at mid- June levels.’

According to Johns Hopkins University data analyzed by The Associated Press, seven-day rolling averages of daily new cases in Arizona and of daily deaths in the state both sharply declined over the past two weeks.

The number of infections is thought to be far higher because many people have not been tested. Studies suggest people can be infected with the virus without feeling sick.

In other developments, a health club chain in metro Phoenix that challenged Ducey’s gym-closure orders aimed at reducing the spread of the coronavirus has asked a judge to hold the governor in contempt of court for enacting what it said was an excessively complicated system for reopening fitness centers.

Mountainside Fitness said in a court filing on Wednesday that Ducey’s reopening plan for reopening fitness clubs lacks firm deadlines and clear standards and argued gyms that assure the state they are operating safely should be allowed to open once they turn in key paperwork.

Last week, a judge ordered Ducey to create an application process for reopening gyms. The judge had ruled that the governor’s shutdown order violated the due process rights of health clubs and said delaying the creation of application procedures to reopen their businesses could further harm their rights as they suffer staggering financial losses.

The Ducey administration on Monday unveiled its reopening plan for gyms, bars and water parks that will let them reopen at a limited capacity and with health precautions once the spread of the virus within their county is downgraded to moderate or minimal.

Maricopa County, where Mountainside Fitness operates, is weeks away from reaching that point.

Ducey spokesman Ptak said businesses that are denied the ability to reopen can seek an appeal with the state. “We will continue to make responsible decisions in the best interest of public health,” he said.

Health clubs in Arizona have been closed for more than six weeks.

For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, and death.


Associated Press writers Paul Davenport and Jacques Billeaud contributed

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Tags: Arizona

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