Category: MP Market Reviews

Intro

Is Now a Good Time to Invest?

That’s the question on everyone’s mind. But for dividend growth investors, it’s the wrong question. Trying to catch the exact top or bottom is a futile exercise. Our focus is on consistency, discipline, and long-term results.

That’s why we prefer to deploy capital gradually—especially when managing a larger sum. In our model portfolio, for instance, we invest our $100,000 of initial capital over a four-year period, adjusting based on valuation and market direction, while always keeping a long-term horizon of 5 to 10 years (or more) in mind.

We Take a Different Approach

While many investors try to time the market, we focus on keeping our cash-generating machine running at full throttle—through every market cycle, in any condition. This ensures a steady stream of income consistently flows into our account, giving us the flexibility to meet our needs and reinvest opportunistically, whether markets are rallying or retreating.

The financial markets have been the most powerful engine of wealth in human history—but only for those who can ignore the noise. While others react emotionally to headlines and volatility, we stay the course, confident that our dividends will continue to roll in—rain or shine.

Why Dividend Growth?

The key is having a strategy built on quality, reliability, and growing income. Dividend growth investing delivers all three. Instead of sitting in cash and waiting for the “perfect” time to enter the market, we prefer to own high-quality companies with long track records of increasing their dividends.

Cash rarely keeps pace with inflation. A dollar in 2000 is worth just 52 cents today. But a carefully selected portfolio of dividend growers doesn’t just preserve purchasing power—it increases it, through rising income and compounding returns.

While many index and ETF investors panic and try to guess the bottom, we remain calm, patient, and disciplined—ready to purchase our quality dividend growers when prices become sensible.

The Power of Compounding Dividends

Our annual CAGR sheets tell the story best. They show ten years of dividend growth across the page—clear, consistent, and compounding. It’s one thing to see the numbers; it’s another to understand the impact. These annual increases don’t just drive wealth creation—they are the wealth. Every dividend raise is a powerful signal: income is growing, purchasing power is compounding, and time is on our side.

Below are the sheets (as of January 1, 2025) we keep close by—because they remind us exactly why we do what we do.

Intro

Q4 earnings season has wrapped up! Curious how The List performed compared to last year’s earnings and analyst expectations? Check out our earnings calendar for a full breakdown.

Last week we talked about ‘doing less badly’ than other strategies during periods of volatility. It might sound strange, but sometimes just losing less than others is what makes a good investor. When the market is booming, everyone looks smart—but the real test is how well you handle the tough times. Historically, dividend growth stocks have outperformed during periods of uncertainty.

When Chuck Carnevale said, “It’s a market of stocks, not a stock market,” he was emphasizing that the stock market is not a single, uniform entity that moves in the same direction for all stocks. Instead, it is made up of individual stocks, each with its own fundamentals, valuations, and performance patterns.

Below are the ten most undervalued dividend growth companies from our Canadian and U.S. watchlists, based on last Friday’s closing prices.

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 shorter term. These are our ‘Timely Ten.’

Intro

The United States has imposed new tariffs on goods from Canada, Mexico, and China, with more expected on the EU. In response, these countries have retaliated with their own tariffs, increasing costs and uncertainty for businesses.

The key takeaway? No one truly wins in a trade war.

Meanwhile, heightened inflation, persistent higher interest rates, and renewed market volatility have created a challenging environment, particularly for long-term investors with lower risk tolerance. In this landscape, dividend growth stocks are gaining prominence as a strategy that not only enhances returns but also dampens volatility, offering both resilience and opportunity.

Intro

We haven’t shared an updated version of The List-USA since early January. Meanwhile, the Canadian edition appears weekly in our DGI Scorecard section.

While our investment strategy remains consistent across both countries, our U.S. holdings tend to deliver higher total returns—despite starting with an average yield that’s a full percentage point lower.

Can you guess why?

Intro

An interesting article in the ‘News’ section below highlights the risks of retiring at market highs while following the 4% Rule. This chart sums it up perfectly.

Intro

The Trump tariff policies have brought significant market volatility, with The Wall Street Journal even calling it “the dumbest trade war in history.” As dividend growth investors, we see short-term negativity as an opportunity—market dips allow us to buy more income at better prices. While tariff threats may impact some of our quality dividend growers, both positively and negatively, our focus remains on long-term fundamentals.

Earnings season also adds to the turbulence, with several stocks on our watchlists taking a hit after they reported. Some have now entered our ‘Timely Ten’, while others have climbed higher on the list. We’ll be watching these opportunities most closely in the weeks ahead.

Below are the ten most undervalued dividend growth companies from our Canadian and U.S. watchlists, based on last Friday’s closing prices.

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.

• Dividend growth streak: 10 years or more.
• Market cap: Minimum one billion dollars.
• Diversification: Limit of five companies per sector, preferably two per industry.
• 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 shorter term. These are our ‘Timely Ten.’

Intro

Below is our decade-long CAGR dividend data spreadsheet, with dividends year-by-year from January 1, 2015, to January 1, 2025 and their corresponding returns.

This year brings an added layer of insight with the inclusion of our list of American dividend growth companies, now featured on the blog.

As successful dividend growth investors, we understand that rising dividends lay the foundation for higher share prices. To illustrate this, we highlight in blue the ten-year columns showing the compound annual growth rate (CAGR 10Y) of total return (TR), dividend growth (DG), and price growth (PG) for stocks on our lists. The data speaks for itself—when dividends grow, so does the price.

Intro

Before discovering dividend growth investing (DGI), I constantly worried about outliving my capital in retirement.

What if I lived well into my 90s? How would I cover unpredictable healthcare costs? How can I help my kids buy their first home? What will inflation do to my retirement savings? Questions like these kept me up at night—and they’re the same fears that force many people to work into their 60s and 70s, cutting short the years when they could truly enjoy an active retirement.

Thankfully, everything changed when I found DGI. It gave me the confidence and financial security to retire years earlier than I ever imagined.

Our dividend growth investing strategy is highly adaptable, designed to meet the unique needs of investors regardless of age or starting capital. Whether you’re starting with modest savings or managing a significant portfolio, we can tailor the approach to align with your financial goals.

For example, instead of the $100,000 model portfolio we used for illustrative purposes last week, let’s consider a more ambitious scenario for our older subscribers: a $1,000,000 initial investment with 10+ years until retirement.

Take a look at the last two highlighted columns on the spreadsheet—Annual Dividends Collected and End of Year Portfolio Value—to see how powerful DGI can be in both generating income and growing capital over time.

Intro

In just a couple of weeks, we’ll be sharing another quarterly review of our model portfolio, highlighting the consistent power of dividend growth investing across all market conditions.

What makes this journey even more compelling is that we started our model portfolio back in 2022, a year when the market posted negative returns. Despite those challenging conditions, our strategy has continued to deliver steady progress—proving that dividend growth investing thrives even in uncertain times.

Stay tuned as we dive into the numbers and showcase the long-term potential of this disciplined approach!

The quote above perfectly reflects Charlie Munger’s practical wisdom on the challenges of building wealth and the importance of reaching that crucial first financial milestone. His focus on the first $100,000 highlights the need for disciplined saving, consistent investing habits, and, most importantly, patience.

Why is this milestone so significant? Once your financial “snowball” hits a certain size, the magic of compounding begins to take over. At that point, wealth-building shifts from being a grind to a process where exponential growth does much of the heavy lifting. It’s the hardest part of the journey—but also the most rewarding.

On the blog, we walk you through our step-by-step process (The MP Wealth-Builder Model Portfolio (CDN) – Business Plan) for conservatively growing your initial “snowball” into a sustainable source of wealth. Our approach includes buy/sell alerts whenever we make trades in the model portfolio, so you can follow along with confidence. With consistent monthly contributions of $1,000, you’ll keep the snowball rolling and growing over time.

If you’ve got some runway before retirement, this business plan is designed to help most DIY investors achieve a comfortable and secure retirement. The key is simple: start now.

Our last two columns highlight the incredible power of compounding, showing how your dividend income and capital can grow exponentially over time. This tried-and-true strategy rewards patience and discipline. Ready to build your snowball?

Intro

Each month, we spotlight the top ten most undervalued companies on ‘The List’, identified using dividend yield theory, to assist subscribers in their research. While we issue DGI Alerts whenever we add a company to our model portfolio, we understand that new subscribers may need guidance on leveraging our process effectively—especially when they receive our current ‘Timely Ten’ list. To illustrate, we will feature a company that found its way into the ‘Timely Ten’ not so long ago.

TC Energy Corp. (TRP-T) faced significant challenges throughout 2022 and 2023, which pushed its dividend yield to a ten-year high. Since price and yield move inversely, a lower share price results in a higher yield, and vice versa. During this period, TRP-T was trading in the mid-$40 range, offering an attractive yield of approximately 7.5%—a key factor in our decision to take it to our maximum position size at that time as part of our model portfolio.