Equity Income ETFs: A New Way to Live Well in Retirement

Learn how Investment Income can help you live well in retirement 

Retirement in Canada is changing. A mixture of demographics, healthcare advances, and the cost of living are remaking what retirement looks like for Canadians.  

At the current rate of aging, as documented by StatsCan, in under 10 years around one quarter of Canadians will be over 65. The average 65-year-old today will live until they’re almost 86, according to StatsCan, and one in five Canadians aged over 65 will live past 95. 

Number of Canadians Aged 65 and older 1980-2018

Average Life Expectancy At 65 years old 1980-2018
These are objectively good things, but they come with new financial challenges for those retirees who have to stretch their savings out for a longer retirement. 

The changing retirement landscape in Canada boils down to three key points. More Canadians are older, older Canadians are living longer, and retirees need a way to stretch their income so they can keep living well in retirement. 

What hasn’t changed are your retirement goals. Everybody wants to live well in retirement, in whatever unique way they define ‘living well.’ That could mean winters spent south of the border, or summers up at the cottage. It could mean more time with your family and friends, or time to travel the world and see the sights you’ve always wanted. Everybody’s goals are unique, but we all want to live well in retirement. 

The tricky part is paying for that.

A source of high investment income for retirees

Harvest Equity Income ETFs are built to deliver high monthly income for Canadian retirees. These ETFs are portfolios of stocks, selected as the leaders of a particular sector or the overall market. They focus on the biggest companies with dominant market shares and growth potential over the long-term. Those stocks are combined with a covered call option writing strategy to deliver monthly cashflow. As of January 13, 2023 they paid annualized yields between 6.49% and 9.65%. 

Harvest ETFs also offers a suite of Enhanced Equity Income ETFs which pay a higher level of income with the addition of modest leverage. Their annualized yields as of January 13, 2023 were between 9.00% and 12.15%. 

In addition to these high yields, much of the income generated by Harvest equity income & enhanced equity income ETFs comes from covered call option writing and is taxed as capital gains not income. The income they pay can help offset mandatory RRIF withdrawals, meaning your retirement nest egg can stay largely intact. 

Harvest ETFs currently offers eight equity income ETFs, as well as four enhanced equity income ETFs. Each ETF holds a different portfolio of big businesses from specific sectors. They can help retirees and pre-retirees get the income they’re seeking, while also investing in a sector with growth potential. 

Different Income ETFs for Different Goals

Canadians in or approaching retirement will have their own unique financial needs and goals. With a wide array of ETFs – the income-generating strategies provided by Harvest ETFs can help most Canadians find what they are seeking. 

Retirees and pre-retirees who want stable sectors may want to consider the Harvest Healthcare Leaders Income ETF (HHL:TSX) or the Harvest Equal Weight Global Utilities Income ETF (HUTL:TSX). Both sectors have very stable demand, people are unlikely to cut what they spend on healthcare or on utilities in any economy. 

Investors who expect the market to grow may want to consider the Harvest Tech Achievers Growth & Income ETF (HTA:TSX). It holds leading companies in the tech sector, which had been leading growth on the markets for much of the last decade. 

Many of these Equity Income ETFs are also offered in a ”U” series – meaning they trade and pay their income in US dollars, which can be helpful for retirees planning to spend long periods of time south of the border. You can learn more about them here.

Those willing to take on some risk, or those seeking a higher income yield, may want to consider the high income yields from Harvest’s Enhanced Equity Income ETFs. These ETFs use a modest amount of leverage to enhance their yields, which typically comes with slightly more risk. 

So even as demographics shift, and the retirement landscape changes in Canada, our shared retirement goal of living well remains. Harvest ETFs is here to help generate investment income and help you live well in your retirement.    

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Disclaimer

For Information Purposes Only. Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds (managed by Harvest Portfolios Group Inc.). Please read the relevant prospectus before investing. The ETF is not guaranteed, its values changes frequently and past performance may not be repeated. This communication should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies. Tax, investment and all other decisions should be made with guidance from a qualified professional.

Certain statements in this communication are forward looking Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS.FLS are not guarantees of future performance and are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Fund can attract and maintain investors and have sufficient capital under management to effect their investment strategies, (ii) the investment strategies will produce the results intended by the portfolio managers, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the FLS contained herein are based upon what the portfolio manager believe to be reasonable assumptions, the portfolio manager cannot assure that actual results will be consistent with these FLS. Unless required by applicable law, Harvest Portfolios Group Inc. does not undertake, and specifically disclaim, any intention or obligation to update or revise any FLS, whether as a result of new information, future events or otherwise.