Month: December 2025

Intro

When I decided to start this blog, I didn’t want to build another investing site full of hype or “perfect” results. I wanted to build something real.

If I’m asking people to trust a strategy, especially something as long-term as dividend growth investing, then they deserve to see it actually being used. That’s why we use model portfolios. They show every decision in real time. Every buy. Every mistake. Every win. Nothing is hidden.

That matters because in investing, trust isn’t given, it’s earned. Anyone can talk about results after the fact. What really builds confidence is seeing the process play out day by day, even when things don’t go perfectly. That’s how you learn. And that’s how real investors are made.

The good news is that the model portfolio building is working exactly the way we expected. The portfolios are doing what dividend growth investing is designed to do: create a reliable growing stream of income, which over time pushes portfolio values higher.

Now here’s the “good problem” we’re running into. More people are discovering dividend growth investing, and some new subscribers are worried they’re showing up too late. They look at the portfolios and think, “Did I miss my chance?”

Short answer: no.

Earlier this year, I introduced something called The All-Canadian DGI Portfolio. Think of it as a simplified starting point. It focuses only on some of the highest-quality Canadian companies from The List, many of which have been raising their dividends for 20 years or more. These are the kinds of businesses you can grow with for decades.

Introducing the All-Canadian DGI Portfolio:

Intro

Our Timely Ten lists remain the fastest way to spot potential value opportunities, which explains why they continue to be the most-read articles every month.

Timely Ten (Canadian version)

There was little change month over month in our Timely Ten (CDN), as the broader market traded largely sideways and limited the number of attractive buying opportunities.

Waste Connections and Enbridge Inc. swapped places this month, with Enbridge now back in the tenth spot. It is one we will continue to watch closely, particularly following the announcement of another dividend increase earlier this month. Rising dividends, paired with an improving valuation, are precisely what put a stock back on our radar.

Further down the list sits TD Bank. After another strong quarter and an impressive full-year performance, the shares have continued to climb, pushing TD to number eighteen. It is worth remembering that as recently as January this year, TD ranked seventh on our Timely Ten. This is dividend yield theory at work.

As always, patience remains a core part of our process. We are disciplined about deploying hard-earned capital and will act decisively when valuation meets our criteria. That said, the Canadian market appears increasingly frothy heading into year-end, which makes selectivity and restraint more important than ever.

Timely Ten (United States version)

There was modest movement in our Timely Ten (USA) this month, as money flows continue to rotate away from richly valued AI stocks and back toward companies with durable fundamentals and cash-flow strength.

UnitedHealth Group and Domino’s Pizza are both showing early signs of turning the corner after ranking near the top of the list last month. While each has only slipped a few positions, even small moves matter.

The most intriguing name this month is Zoetis, which now sits at number one. After nearly two years of steady declines, the stock appears to be attempting to form a bottom. Two years is a long time for any quality business to slide, which raises an important question: is this simply valuation normalization, or is there a deeper structural issue at play? We are revisiting the thesis carefully before year-end to determine whether our conviction remains intact, as it did when we first initiated a position in early 2024.

Another stock moving back onto our radar is Amgen. The yield has just crossed above its ten-year average, lifting the shares to number ten this month from fifteen last month.

As always, the list is not a call to action on its own, but a disciplined starting point for deeper research and patient capital deployment.

Here’s a recap on how we select our Timely Ten:

Step three in our process involves monitoring our quality dividend growers regularly, which can become quite challenging depending on the number of companies we track. Fortunately, we rely on ‘The List’ instead of the vast array of stocks in the index, which streamlines our task. Nevertheless, we continually seek methods to enhance our efficiency. Through dividend yield theory, we’ve discovered an approach that has proven remarkably effective in aiding us with our efforts over the years.

Dividend yield theory is a simple and intuitive approach to valuing dividend growth stocks. It suggests that the dividend yield of quality dividend growth stocks tends to revert to the mean over time, assuming that the underlying business model remains stable. In practical terms, if a stock pays a dividend yield above its ten-year average annual yield, its price will likely increase to return the yield to its historical average. Knowing that price and yield go in opposite directions, this theory helps us find stocks poised for a favourable price correction.

We have pre-screened our candidates using the criteria we initially laid out in building our watchlists. This helps us considerably narrow the universe of investable stocks.

1. Dividend growth streak: 10 years or more.
2. Market cap: Minimum one billion dollars.
3. Diversification: Limit of five companies per sector, preferably two per industry.
4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Next, we rank our Canadian and American watchlists based on how far each stock’s price is below its fair value (Low Price), as determined by dividend yield theory. To find fair value, divide the current dividend (Dividend) by the stock’s historical high yield (High Yield).

Since price and yield move in opposite directions, a lower price results in a higher yield, and vice versa. The ten companies above the thick black line have a current price (Price) below fair value (Low Price). Put simply, these stocks have a current dividend yield higher than their historically high yield. According to dividend yield theory, these companies are sensibly priced and have the highest probability of a price increase in the short term. These are our Timely Ten.

Intro

Each year around this time, I set a reminder to revisit one of the most overlooked advantages of dividend growth investing: taxes. We spend most of the year talking about quality companies, rising income, valuation, and long-term compounding. But the tax treatment of eligible Canadian dividends is a major part of why this strategy works so well, and it deserves attention.

In Canada, eligible dividends are among the most tax-efficient forms of income. Federal and provincial dividend tax credits offset the corporate taxes already paid, preventing double taxation and putting more money back into your pocket.

How much more?

For example, based on the 2025 tax tables from TaxTips.ca, earning $70,000 in eligible Canadian dividends can save more than $12,000 in taxes compared to earning the same amount from salary, interest, or GIC income ($12,762 vs. $750). That extra money can be reinvested, spent, or allowed to compound year after year, which significantly accelerates long-term wealth building.

The two tables below show provincial tax rates at four different before-tax income levels, with Ontario (my home province) highlighted. The difference is remarkable. Investors who focus on high-quality Canadian dividend-paying companies keep far more of their income than those who earn the same amount from employment or fixed-income sources.

Intro

I recently published the quarterly performance summaries for both of our model portfolios. Each one continues to do exactly what it was built to do: produce a steadily rising stream of dividends from high-quality businesses.