Just when you thought there was only going to be good news from now on, the Canada Revenue Agency (CRA) throws a curve ball. After announcing that the Canadian Emergency Response Benefit (CERB) would be extended, with some able to receive up to $12,000, another announcement quietly comes on its heels. Those benefits for many could be a lot smaller.
It clearly wasn’t a large announcement, as many people throughout June were shocked to find their cheques come in at far less than the $500 per month. These same people received notices from the government that they would not be eligible for the full $2,000 per month from CRA in CERB payments. Here is what you could see soon:
“Because you previously received an advance payment of $2,000 of the Canada Emergency Response Benefit, you won’t receive a payment for the period of June 15, 2020 to June 28, 2020. This is to cover the equivalent of the first two weeks of this advance. We will communicate any further changes to your future CERB payments in the coming weeks.”
CRA crackdown
It seems that there were people who originally signed up for CERB who may not need it any more, according to the CRA. Even worse, there were those taking advantage of this system designed to help people struggling to make ends meet.
Some received upfront payments that were larger, while some who were receiving employment insurance (EI) even received two payments when the program began. Further, some people even applied twice, through EI and the CRA. Now, those people have already hit the maximum $8,000 for a four-month period.
The government did announce that for those who still really need CERB, such as those who are still out of work, these individuals would be eligible for the further $4,000 recently announced. That would bring the total CRA money to the full $12,000. Now, the government will hopefully use the extension to let people know if they will need to start budgeting.
Other options
There are a few other CRA benefits that you can apply for, but if you have any cash available I would use it to create a passive income stream. Finding stocks that offer quarterly or even monthly dividends means you are creating your own means of income. That income will stick around far beyond a CERB limit of $12,000 or four months.
One great option these days is Pembina Pipeline Corp. (TSX:PPL)(NYSE:PBA). Pembina trades just below fair value at about $32 per share as of writing. However, analysts believe the stock should be much higher.
Once its $5.6 billion worth of growth projects are complete, the stock could shoot up as high as $60 per share. That’s double your investment!
Meanwhile, the stock offers an incredible dividend yield of 7.52% as of writing, each and every month. Right now, if you were able to use half of your Tax Free Savings Account (TFSA) contribution room, that would bring in $228.06 per month in dividend income, and $2,736.72 per year.
And while others in the energy industry have been cutting dividends, Pembina is solid. The company is supported by long-term contracts that will continue bringing in cash for decades.
Bottom line
If you need CERB, it sounds like the CRA won’t be making cuts just yet. But once you reach that maximum of $12,000, it’s going to be time to really budget. Having a dividend stock in your portfolio is an excellent way to prepare for that day.
Pembina is a great long-term hold for any portfolio, but if you need stable dividend income, it’s one of the best choices out there.
