WARNING: CERB Payments Are About to Expire for Many Canadians

Canadians should brace themselves for the end of CERB payments in the late summer and early fall, while also scouting out other income opportunities.

Canada’s economy has paid a heavy price due to the COVID-19 pandemic and subsequent lockdowns. Worse yet, the slowdown has put an incredible strain on Canadian workers. The country lost nearly 2 million jobs in the month of April. This slide has pushed Canada’s unemployment rate to its highest point since the 1980s.

Fortunately, the federal government stepped in with radical spending programs to alleviate some of the financial pain. The biggest change was the introduction of the Canada Emergency Response Benefit (CERB). This provides Canadians who are out of work or who have seen their pay severely reduced to claim a $2,000 a month payment. As of early May, the Canada Revenue Agency has received more than 11 million applications for the CERB.

Those who have relied on CERB payments since March need to plan accordingly as we look ahead to the summer.

Canadians: CERB payments will run out for many applicants this summer

The third phase of CERB began on May 10 and will run through June 6, 2020. Eligibility permitting, the CERB provides a taxable $500-per-week payment for a maximum of 16 weeks. It is available from March 15 through to October 3, 2020. The 16-week calculation kicks in immediately after the first CERB payment. This means that Canadians who applied for CERB payments starting in March will see the program expire in July.

Canadians who are considering applying in the May-through-June period may want to exercise patience. The federal government is encouraging citizens who think they may be returning to work to think about waiting a little longer before filling out an application. Another important point to remember is that the CERB is taxable, but no tax is withheld at source.

How you can gobble up monthly income regardless

Jobs lost during this terrible crisis will not return at the snap of a finger. Industries like airlines and hospitality will take years to recover. Moreover, new regulations may severely limit the earning power of restaurants, theatres and other spaces. Canadians who are reeling from the economic upheaval will need to find an alternative to CERB payments as we look ahead to the latter half of 2020.

It is always a good idea to target attractive income-yielding equities. Hydro One is a utility that I still love in late May. Its shares have increased 3.1% in 2020 as of close on May 20. Not only does Hydro One provide solid income, but it is a nice defensive play in this environment. Canadians are spending more time than ever in their homes. Utility services are more essential than ever.

Hydro One stock last had a favourable price-to-earnings ratio of 18 and a price-to-book value of 1.6. The company put out more good news this month. It increased its quarterly dividend payout to $0.2536 per share. This represents a solid 3.9% yield. Hydro One had achieved dividend growth in every year since its 2015 IPO. Canadians on the hunt for income substitutes should look to this massive Ontario-based utility.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan owns shares of HYDRO ONE LIMITED.

More on Coronavirus

A airplane sits on a runway.
Coronavirus

3 Fresh Stocks I’m Likely Buying in 2025

I am likely buying Air Canada (TSX:AC) stock in 2025.

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Coronavirus

Canadian RRSP Stocks to Buy Now for Retirement

Alimentation Couche-Tard Inc (TSX:ATD) is a quality retirement stock.

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Coronavirus

Retirees: What Rising Inflation Means for Your CPP Payments

If you aren't getting enough CPP, you can consider investing in stocks and ETFs. Canadian National Railway (TSX:CNR) is one…

Read more »

Coronavirus

Air Canada Stock Is Starting to Get Ridiculously Oversold

Air Canada (TSX:AC) has been beaten down to absurd lows.

Read more »

Coronavirus

Should You Buy Air Canada Stock While it’s Below $18?

Air Canada (TSX:AC) stock is below $18. Should you invest?

Read more »

Illustration of data, cloud computing and microchips
Stocks for Beginners

3 Canadian Stocks That Could Still Double in 2024

These three Canadians stocks have been huge winners already in 2024, but still have room to double again in the…

Read more »

Aircraft Mechanic checking jet engine of the airplane
Coronavirus

Can Air Canada Stock Recover in 2024?

Air Canada (TSX:AC) stock remains close to its COVID-19 era lows, even though its business has recovered.

Read more »

A airplane sits on a runway.
Coronavirus

3 Things to Know About Air Canada Stock Before You Buy

Air Canada stock continues to hover below $20 despite the sharp rise in travel demand seen across the industry. What's…

Read more »