Category: MP Market Reviews

Intro

Last week was a clear reminder of the importance of staying the course. Those who panicked and sold are likely regretting it now—patience and discipline once again proved to be the investor’s greatest advantage.

When the broader market sells off, the share prices of even high-quality dividend growth stocks can fall. But as their prices drop, their dividend yields rise (since yield = dividend ÷ price). At a certain point, the higher yield becomes too attractive for investors to ignore, especially for income-focused or value-conscious buyers.

This rising yield acts like a magnet, drawing in new buyers who want that growing income stream. As demand increases, the stock price stabilizes and often rebounds, creating a natural price floor.

This dynamic is especially strong with dividend growth stocks because:

• Their dividends are reliable (often backed by decades of increases).
• Investors trust the payout will keep rising, even during downturns.
• Retirees, institutions, and income-seekers step in when yields get juicy.

So, while growth stocks might keep falling in a panic, dividend growth stocks often find support sooner—because the rising yield makes them increasingly attractive the lower they go.

Timely Ten

Below are the ten most undervalued dividend growth companies from our Canadian and American 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

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

I came across this magic pants analogy in an article on dividend investing about twenty years ago, and it stuck with me. It was one of the early sparks that led me to seriously explore dividend growth investing and question whether there really was something “magical” about it.

The past week in the stock market served as a great reminder of why I made the switch. I was looking for an approach that could deliver reliable, growing income even when markets were falling. The year-to-date income for ‘The List’ is now up 7.5%, thanks to another dividend increase last week from Dollarama Inc. And the best part? We didn’t have to sell a single share to achieve that. While the broader market declined, our capital held up far better. That’s the power of dividend growth investing, steady income and downside protection, no matter what the market’s doing.

Why Dividend Growth Investing Offers a More Sustainable Path

Relying on total return investing—especially when it means selling shares for income—introduces unnecessary complexity and risk. Selling shares to generate cash flow forces investors to constantly monitor the market, time their sales, and make judgment calls that can be clouded by emotion or volatility. It turns investing into a kind of ongoing speculation rather than a disciplined wealth-building strategy.

Dividend growth investing, by contrast, shifts the focus from selling to holding. It replaces the need to create your own income with a reliable, growing income stream that comes to you—quarter after quarter, year after year. There’s comfort and confidence in knowing your portfolio is paying you to hold it.

And unlike broad-market ETFs, which often dilute quality by holding “too many losers,” a curated portfolio of quality dividend growers focuses only on high-conviction, proven businesses with long-term track records of shareholder returns. It allows investors to concentrate on excellence, not just participate in averages.

While diversification is often sold as protection, real downside protection comes from owning resilient, cash-generating businesses bought at sensible prices, that raise dividends even in tough times. Dividend growth investing isn’t about chasing the highest returns, it’s about building a dependable, inflation-beating income that grows over time, with the added bonus of long-term capital appreciation.

Intro

In The past few months have tested the resolve of many investors. With stocks retreating from recent all-time highs, it’s in moments like these that the difference between true long-term investors and short-term speculators becomes crystal clear.

As dividend growth investors, we understand that wealth is built not by timing the market, but by time in the market. Staying the course during volatility gives us the best opportunity to harness the power of compounding, leading to growing streams of dividend income and the potential for substantial capital appreciation over time.

This is when discipline matters most. When sentiment is low and prices are falling, buying high-quality dividend growers may feel uncomfortable in the short term, but history has shown it can be a brilliant move over the next 10 to 20 years.

It’s natural to feel the urge to protect your portfolio from further price declines. But for those focused on growing reliable income, market pullbacks are not threats, they’re opportunities. Opportunities to accumulate shares of great businesses at more attractive yields, setting the stage for future income and long-term gains.

One of the ways we deal with volatile times is to focus on our income (dividends). Knowing that our income is unaffected by markets is another magical thing about what we do. The chart below (10YR DIV PAID) helps us sit tight during market volatility waiting patiently for an opportunity to purchase our quality dividend growers at better prices.

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.