The Globe and Mail - 03.04.2020

FRIDAY, APRIL 3, 2020 | THE GLOBE AND MAILO B×

EYE ON E.UITIESDA9ID LEEDER

SLATE OFFICE REIT ¹SOT.UNTS;º
CLOSE $3.42, DOWN 6¢

DOLLARAMA ¹DOLTS;º

CLOSE $38.60, DOWN 32¢

CORUS ¹CJR.BTS;º

CLOSE $2.30, DOWN 21¢

GOODFOOD MARET ¹FOODTS;º

CLOSE $3.37, DOWN 7¢

TEC RESOURCES ¹TEC.BTS;º

CLOSE $10.32, UP 23¢

Although he thinks potential av-
erage occupancy improvements
could face further delays and
2020 hotel revenues are likely to
experience large declines be-
cause of the spread of COVID-19,
Industrial Alliance Securities ana-
lyst Brad Sturges raised his rating
forSlate Office Real Estate In-
vestment Trust to“strong buy”
from “buy” based on its current
valuation.
Target:He trimmed his target for
Slate units to $6.25 from $6.50.
The consensus is $5.82.

Even though the impact of CO-

VID-19 on its sales and margins

appears to be worse than the

Street anticipated, Desjardins Se-

curities analyst Chris Li thinks

Dollarama Inc.’sbusiness model

“remains strong.” “DOL’s essen-

tial business status, strong man-

agement team and solid financial

position make it a good defensive

investment,” he said.

Target:Keeping a “hold” rating,

Mr. Li reduced his target to $44

from $45. Consensus is $44.75.

Corus Entertainment Inc.’sout-

look is “significantly blurred by

the virus,” Desjardins Securities

analyst Maher Yaghi said after

“decent” second-quarter results.

Though he said the company will

benefit from a rise in television

viewers owing to the impact of

COVID-19, a decline in advertising

revenue continues to be an area

of significant concern.

Target:Keeping a “hold” rating,

Mr. Yaghi dropped his target to

$4.50 from $7.25. Consensus is

$5.53.

Calling it “a benefactor of the

stay-at-home trade,” Raymond

James analyst Michael Glen initi-

ated coverage ofGoodfood Mar-

ket Corp.with an “outperform”

rating. “While we recognize the

‘stay-at-home’ dynamic spurring

the recent rally in meal-kit stocks

is a less than favourable situation

overall, we believe that we stand

to see at least 2-3 quarters of mo-

mentum in results,” he said.

Target:Mr. Glen set a $4.70 tar-

get, exceeding the $4.13 consen-

sus.

Teck Resources Ltd.presents

“deep value,” said Citigroup

analyst Alexander Hacking, who

warned that met coal exposure

remains a significant risk. “To re-

rate & outperform peers, Teck

needs to first rebuild investor

confidence by delivering operat-

ing results; and then deliver QB2

on budget to re-balance portfolio

away from met coal,” he said.

Target:Maintaining a “buy” rat-

ing, Mr. Hacking trimmed his tar-

get to $21 from $27. Consensus is

$22.64.

:HAT ARE :E LOOING FORÅ

Canadian real estate investment
trusts with sustainable distribu-
tions despite the economic wal-
lop of COVID-19.

THE SCREEN

The market plunge in the wake of
the coronavirus crisis has cut pric-
es for most stocks and REITs. But
REITs, in particular, must directly
grapple with its impact on ten-
ants’ ability to pay rent.
Still, government transfers to
individuals and businesses
should partially offset that. Re-
cent interest rate cuts are another
big plus for mortgage-heavy RE-
ITs.
It’s also worth highlighting that
some REITs focused on high-

value core markets have greater

resilience in these tough times.

They’re most likely to weather the

COVID-19 storm while protecting

strong distributions for income

seekers.

Our search started with Cana-

dian REITs. From there, we ap-

plied our TSI Dividend Sustaina-

bility Rating System, awarding

points to a stock based on key fac-

tors:

One point for five years of con-

tinuous dividend payments – two

points for more than five;

Two points if it has raised the

payment in the past five years;

One point for management’s

commitment to 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 rates and

freedom from political interfe-

rence;

Two points for a strong bal-

ance sheet, including managea-

ble debt and adequate cash;

Two points for a long-term re-

cord of positive earnings and cash

flow sufficient to cover dividend

payments;

One point if it’s an industry

leader.

Companies with 10 to 12 points

have the most secure dividends,

or the highest sustainability.

Those with seven to nine points

have above-average sustainabili-

ty; average sustainability, four to

six points; and below average sus-

tainability, one to three points.

MORE ABOUT TSI NET:OR

TSI Network is the online home of

the Successful Investor Inc. – the

group of widely followed Cana-

dian investment newsletters by

editor and publisher Pat McKe-

ough. They include our award-

winning flagship newsletter, The

Successful Investor. The TSI Best

ETFs for Canadian Investors is the

latest. TSI Network is also affiliat-

ed with Successful Investor

Wealth Management

:HAT :E FOUND

Our TSI Dividend Sustainability

Rating System generated five

names.Choice Properties REIT’s

principal tenant is leading Cana-

dian grocer Loblaw Cos. Ltd.CT

REITis backstopped by long-term

leases with Canadian Tire Corp.

Ltd., its main lessee.NorthWest

Healthcare Properties REIThas

mostly high-quality tenants such

as doctors, dentists, pharmacies,

laboratories and diagnostic imag-

ing clinics. Although some of

those tenants, notably dentists,

may face difficulty during the CO-

VID-19 crisis, most tenants should

remain operating.Dream Indus-

trial REITandWPT Industrial

REITboth tap into e-commerce

and online retailing with packag-

ing and logistics centres that have

kicked into high gear as bricks-

and-mortar locations shutter op-

erations.

We advise investors to do addi-

tional research on any invest-

ments we identify here.

0earchingfor/I2sîithresilienceintoughties

Select Canadianlisted real estate investment trusts

RANKING* COMPANY TICKER

DIV.

SUSTAIN.

RATING POINTS

MKT.CAP.

($MIL.)

1YTTL.

RTN.(%)

DIV.

YLD.(%)

RECENT

PRICE($)

1 ChoicePropertiesREIT CHP-UN-T AboveAverage 7 4,009.2 -12.4 6.0 12.39

2 NorthWestHealthcareProp.REIT NWH-UN-T Average 6 1,549,4 -24.8 9.2 8.7 1

3 DreamIndustrialREIT DIR-UN-T Average 6 1,429.3 -27.6 8.0 8.73

4 CTREIT CRT-UN-T Average 6 2,670.0 -21.0 7.0 11.30

5 WPTIndustrialREIT WIR-UN-T Average 6 795.3 -35.1 6.2 12.35

*RankingisdeterminedbyTSIDividendSustainabilityScore.Whereoverallpointsarethesame,analystsconsideredP/E,dividendyield

andindustryoutlooktodecidefinalplacements.Source:DividendAdvisor

SCOTT CLAYTON

NUMBER CRUNCHER

MBA, senior analyst for TSI Network
and associate editor of TSI Dividend
Advisor

A

common question I’ve
been asked during this
pandemic is simply this:
Can I claim home-office expenses
now that I have to work from
home? You’d think the answer
would be clear – but it’s not. Still,
I’m all for common sense and
good arguments to rule the day. A
few days ago, I wrote online
about the requirements you have
to meet to claim home-office ex-
penses (tgam.ca/cestnick-WFH),
and suggested that you should be
able to deduct these costs if your
employer requires you to work
from home, at least half the time,
during this pandemic.
Let’s finish off the conversa-
tion today.

THE BASICS

There are really three categories
of people who may be able to
claim a deduction for home office
expenses: employees, commis-
sioned salespeople and the self-
employed. To complicate things,
each of these groups is entitled to
deduct different expenses.
To be allowed a deduction for
home-office expenses, your
home must either be your princi-
pal place of work (more than half
your working time must be spent
there), or it must be a space des-

ignated solely for your work and

used on a regular and continuous

basis for meeting customers or

clients.

The question, which I dealt

with last time, is whether em-

ployees who are required to work

from home for just part of the

year – during the COVID-19 pan-

demic – will meet the test to

claim home-office expenses. I

concluded that you should be al-

lowed these deductions.

THE DEDUCTIONS

So, what exactly can you claim?

As I mentioned earlier, the type

of deductions you can claim will

differ depending on your status.

The pickings are slimmer if

you’re an employee, in which

case you can claim a portion of

any rent, heat, hydro, repairs,

maintenance (including annual

landscaping costs) and supplies

(including mobile phone air-

time, long-distance charges,

pens, pencils, paper, ink, etc.).

If you’re a commissioned

salesperson, you can add to this

list a portion of property taxes

and insurance as well. If you’re

self-employed, the news gets

even better because you can also

add a portion of mortgage inter-

est and capital cost allowance

(CCA), which is depreciation on

your home (more about CCA in a

minute).

Keep in mind, the deductible

portion of these costs is based on

the portion of your home used

for work, and the time it was used

for work. The taxman has only

asked that you prorate your ex-

penses using a reasonable ap-

proach. For example, you could

figure out what percentage of

your home is used for work by di-

viding the square footage of your

work space by the total finished

area of your home (the CRA sug-

gests you should include hall-

ways and bathrooms in the calcu-

lations).

You should also prorate your

costs for the time that the space is

used for work. If, for example,

you work from home for a limit-

ed time, say from March 15 to

June 15, then you would only in-

clude costs that pertain to that

time period (i.e., three out of 12

months for property taxes etc.).

Also, if the space is used 75 per

cent of the time for work, and 25

per cent by your kids for their

homework, then you would de-

duct 75 per cent of your expenses

otherwise calculated.

Some costs may relate solely to

your work space (such as paint or

cleaning materials for that area of

your home), in which case you

could claim those costs fully.

THE PLAN

Here are some tips for you: First,

you can still claim your principal

residence exemption if you use

your home for work provided

your work space is ancillary to

the main use of your home as a

residence, you make no structur-

al changes to your home to create

the space to work from home and

you claim no CCA on your home.

So, for those who are self-employ-

ed, you generally want to avoid

claiming CCA for this reason.

If you’re an employee, your

employer will have to sign Form

T2200 (in Quebec, Form TP-64.3-

V), to prove that you were re-

quired to have an office at home

and worked there more than half

the time during at least part of

the year. It might be a good idea

to speak to your employer about

this now so there’s time for your

employer to research the issue

and make the decision to help

employees in this way.

Also, the amount you can de-

duct is limited to the amount of

your employment or self-em-

ployment income earned during

that period of the year you’re

working from home. Any excess

deduction can be carried forward

to be claimed in future years pro-

vided you’re still working from

home and qualify for deductions

in those years.

ereÌshoîtoclai

hoeofficeeïpenses

Asmoreofusare

requiredtotelework,

therearealsomore

questionsabouthow

thataffectsdeductions

TIM
CESTNIC

OPINION

TAX MATTERS

FCPA, FCA, CPA(IL), CFP, TEP, is an
author, and co-founder and CEO of
Our Family Office Inc.

CANADIAN STOCS

Canada’s main stock index moved higher as energy stocks

surged on a record move in crude oil prices on a promised

ceasefire between Russia and Saudi Arabia. The S&P/TSX

Composite Index closed up 221.36 points at 13,097.76.

Canadian National Railway hit an all-time record for

March grain movement. The stocks jumped 2.1 per cent.

Canadian mining companies with assets in Mexico moved

to suspend operations in the country as the Mexicangovern-

ment ordered non-essential businesses to close in an effort

to slow the spread of COVID-19. Agnico Eagle Mines Ltd.,

which rose 5 per cent. says its Pinos Altos, Creston Mascota

and La India operations were ramping down and would be

placed on care and maintenance until April 30. Equinox Gold

Corp. says it will temporarily suspend mining at its Los Filos

Mine in Mexico.

U.S. STOCS

U.S. stocks rallied as hopes for a truce in the price war be-

tween Saudi Arabia and Russia and a cut in oil output drove

gains, taking some sting out of a shocking jump in Amer-

icans filing jobless claims because of coronavirus-led lock-

downs.

The S&P energy index, down by more than 50 per cent this

year because of the Russia-Saudi price war and coronavirus-

driven demand worries that has caused oil prices to plunge,

climbed 9.08 per cent.

The Dow Jones Industrial Average rose 2.24 per cent, the

S&P 500 gained 2.28 per cent and the Nasdaq Composite add-

ed 1.72 per cent.

The list of top gainers on the benchmark S&P 500 was

littered with oil companies. Occidental Petroleum Corp.

surged 18.90 per cent, with names such as Apache Corp. and

Halliburton Co. also seeing double-digit percentage gains.

COMMODITIES

Crude prices posted their biggest-one day gains on record

after U.S. President Donald Trump said he expects Russia

and Saudi Arabia to announce a major oil production cut,

and Saudi state media said the kingdom was calling an emer-

gency meeting of producers to deal with the market turmoil.

FORE; AND BONDS

The Canadian dollar strengthened slightly in choppy trading

against its U.S. counterpart, as oil prices rallied but a spike in

U.S. jobless claims weighed on investor sentiment.

The American dollar rose against a basket of currencies

for a second straight day as investors, worried about the

prospect of a global recession, continued to take shelter in

the greenback.

Canadiangovernment bond yields rose across a steeper

curve. The 10-year was up 3.6 basis points at 0.650 per cent.

U.S. Treasuries shrugged off a record rise in jobless claims

shown in data, leaving yields steady as investors tried to

gauge when the pandemic’s economic impact might peak.

REUTERS AND THE CANADIAN PRESS

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