Category: MP Market Reviews

Intro

In a blog post last November titled When a Stock Fails to Raise Its Dividend, we discussed the steps investors should consider when a company pauses or reduces its dividend, highlighting Bell Canada’s decision at the time to freeze its dividend. Last week, the situation escalated, as Bell Canada announced a substantial 56% dividend cut.

Here’s the statement from BCE’s Q1 2025 earnings report:

“There are a number of significant changes in our economic and operating environments that have occurred since the Fall of 2024 that we need to address. We have made the appropriate decision to adjust our annualized dividend to $1.75 per common share to strengthen our balance sheet while maintaining flexibility in the context of economic uncertainty.

Today we also announced a major strategic partnership with Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investors, to accelerate the development of fibre infrastructure through Ziply Fiber in underserved markets in the United States. PSP Investments will potentially commit in excess of US$ 1.5 billion, enabling us to support our U.S. fibre growth strategy in a cost-efficient manner, while optimizing our balance sheet and improving our free cash flow profile.

As we look ahead to the rest of 2025, we will be focused on disciplined execution and continuing to strengthen the balance sheet. We will remain resilient in a challenging environment to deliver for our customers and shareholders.”

The announcement has sparked an important question in our model portfolio: What should we do with our existing position in BCE-T—sell, hold, or buy more?

In my early years of dividend growth investing, I faced similar situations. Each time, I chose to hold the shares. They eventually recovered—but in one case it took five years, and in the other, two. In both cases I could have made more by selling and investing in a quality company that was growing its dividend.

As noted in the blog post above, we ask ourselves two key questions whenever a company freezes or cuts its dividend:

1. Has the company’s long-term earnings power been impaired?
2. Are there more attractive opportunities elsewhere?

Last fall, we gave Bell Canada the benefit of the doubt and held our shares, hoping for a potential turnaround. However, after reviewing the latest earnings report—marked by confusing signals and a noticeably cautious tone from management—we now have a clear answer to both of our guiding questions: it’s a resounding yes.

Intro

I’m currently preparing the quarterly review of our model portfolios as of April 30, 2025, with the full report set to be released to paid subscribers in the coming weeks. Our fiscal year runs from May 1 to April 30. Just completing its third year, the Canadian model portfolio is beginning to show the compounding effects of wealth building. While the U.S. portfolio is only two years old, it benefited from a well-timed launch during a market upswing, resulting in stronger capital appreciation. More details on overall performance will be shared soon.

One of the most meaningful highlights in each review is the list of companies that raised their dividends during the quarter—a testament to the steady and dependable income growth that anchors our investment strategy. Here’s a sneak peek at the latest dividend growth activity in our Canadian portfolio:

Thirteen companies in the portfolio announced dividend increases this quarter:

Thomson Reuters (TRI-N) .54 to .595 up 10.2% payable March 10, 2025

Magna (MGA-N) .475 to .485 up 2.1% payable March 14, 2025

Manulife Financial (MFC-T) .40 to .44 up 10% payable March 19, 2025

Intact Financial (IFC-T) 1.21 to 1.33 up 9.9% payable March 31, 2025

CCL Industries Inc. (CCL-B-T) .29 to .32 up 10.3% payable March 31, 2025

Toromont Industries (TIH-T) .48 to .52 up 8.3% payable April 4, 2025

goeasy Ltd. (GSY-T) 1.17 to 1.46 up 24.8% payable April 11, 2025

Stantec Inc. (STN-T) .21 to .225 up 7.1% payable April 15, 2025

Stella-Jones Inc. (SJ-T) .28 to .31 up 10.7% payable April 18, 2025

TC Energy (TRP-T) .8225 to .85 up 3.3% payable April 30, 2025

Dollarama Inc. (DOL-T) .092 to .1058 up 15.0% payable May 9, 2025

Enghouse Systems (ENGH-T) .26 to .30 up 15.4% payable May 30, 2025

Loblaw Companies Limited (L-T) .513 to .5643 up 10.0% payable July 1, 2025

Dividend growth itself is a magical thing—it puts more money directly into your pocket, letting you spend more on the things you love. But the true magic happens when dividend growth drives the stock price higher. As dividends rise consistently, stock prices tend to follow suit over time.

Intro

New retirees and novice investors often seek straightforward guidance when making investment choices. To meet this need, we provide a clear and accessible DGI model portfolio featuring precise buy/sell alerts and detailed valuation analyses for every transaction. Our structured approach allows investors to comfortably familiarize themselves with our Dividend Growth Investing (DGI) strategy, gradually building their portfolios alongside ours.

For investors who prefer to invest a lump sum immediately, we offer the ‘No-Look’ DGI Portfolio. Inspired by the sports concept of a ‘no-look’ pass—where an athlete instinctively passes to a teammate without needing to look—this strategy simplifies the investing process. Instead of waiting for individual stocks to become sensibly priced according to our valuation metrics, investors select a single date to equally invest in the highest-rated companies from our curated list, based on reputable third-party quality ratings from Value Line and S&P.

The Value Line ratings are based on the rating services’ proprietary ranking system, which evaluates stocks on various factors, including financial strength, earnings potential, and risk. S&P ratings assess the creditworthiness of entities such as corporations, governments, and other issuers of debt. The better the ratings, the higher the quality of the company.

This approach eliminates guesswork, detailed analysis, and timing concerns, focusing instead on the inherent quality of established dividend-growing companies. Here’s a look at how our ‘No-Look’ DGI Portfolio of the top 20 DGI stocks in Canada has performed year-to-date relative to our broader list of dividend growers and tracked indexes.

Intro

It’s the dividend growth mindset that helps you successfully navigate challenging markets like today’s. A simple shift in how you approach investing can truly make all the difference. Imagine your retirement portfolio as a business—a business designed to generate steady profits, consistent revenue, and regular payments to you, the owner, every single quarter and year.

Although our model portfolios are still relatively young, our yield-on-cost (dividend return) is already beginning to take shape. Regularly reviewing this data provides reassuring confirmation that our retirement strategy remains on the right track.

One of my investing mentors, Tom Connolly, offers valuable advice: “If market gyrations bother you, study the yield on the original price of stocks you purchased years ago. Such data is relaxing.”

Below you’ll find ‘timestamps’ marking the first year of investing in both our Canadian and American model portfolios. The columns ‘YLD THEN’ (Starting Yield) and ‘YOC NOW’ (Yield on Cost) clearly illustrate the growth in our yields. After just a few short years, our dividend returns alone (currently 3.87% and 4.08%) already surpass those of most fixed-income investments, and these yields will likely continue to increase.

Our capital appreciation has also been solid, with eleven of the thirteen companies now valued higher than our original purchase price, even following recent market sell-offs!

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.