Category: MP Market Reviews

MP Market Review – March 31, 2023

Last updated by BM on April 03, 2023

Summary

This is a weekly installment of our MP Market Review series, which provides updates on the financial markets and Canadian dividend growth companies we monitor on ‘The List’.
Last week, ‘The List’ was up sharply with a YTD price return of +5.5% (capital). Dividend growth also increased and is now at +8.1% YTD, highlighting growth in income over the past year.
Last week, one dividend increase from companies on ‘The List’.
Last week, one earnings report from companies on ‘The List’.
No company on ‘The List’ is due to report earnings this week.
If you’re interested in creating your own income portfolio, consider subscribing to our premium service, which grants you access to the MP Wealth-Builder Model Portfolio (CDN) and exclusive subscriber-only content. Learn More

Introduction

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put it 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.”

This ‘magic pants’ analogy was from a Seeking Alpha article on dividend investing I read about a decade ago and was one of the catalysts for me to take a closer look at this type of investing and see if it truly was magical.

After conducting additional research, I have shifted towards utilizing a dividend growth investing (DGI) strategy as my primary investment approach. While I maintain portfolios consisting of high-quality dividend growers from both the United States and Canada, I have opted to concentrate on Canadian (CDN) dividend growth companies in this blog. This is due to several reasons, including a smaller pool of DGI companies to track, a lack of coverage for the DGI strategy by the North American investment media, and a tendency for those who do cover DGI to narrowly focus on only a handful of sectors (Energy and Financials).

While ‘The List’ is not a portfolio in itself, it serves as an excellent initial reference for individuals seeking to diversify their investments and attain higher returns in the Canadian stock market. Through our blog, we provide weekly updates on ‘The List’ and offer valuable perspectives and real-life examples of the dividend growth investing strategy in practice. This helps readers gain a deeper understanding of how to implement and benefit from this investment approach.

DGI Thoughts

“Success in investing has two parts: finding edge and fully taking advantage of it through proper position sizing. Almost all investment firms focus on edge, while position sizing generally gets much less attention.”

– Michael J. Mauboussin (2016). Thirty Years: Reflections on the Ten Attributes of Great Investors.

A question from a subscriber recently highlights the importance of position sizing when building your dividend growth investing portfolio. We go into a bit more detail on this important concept in one of our ‘Top Posts,’ Position Sizing: It Matters!

What should I do if I am overly concentrated in one of my quality dividend growth stocks and the price drops significantly?

When considering whether to sell a stock that has dropped significantly, it’s important to assess the reason for the decline. If it’s due to temporary factors, such as a short-term dip in the market or a company-specific issue that is expected to be resolved, then it may be wise to hold onto the stock. However, if the decline is due to longer-term fundamental issues with the company or industry, then it may be necessary to sell the stock to avoid further losses.

Concerning the stock being overweight in your portfolio, you have a couple of options. However, it’s important to review your portfolio and determine if it’s still aligned with your investment goals and risk tolerance. Sleeping well at night is an important part of our strategy.

One option is to rebalance your portfolio by trimming the holding incrementally on ‘up days’ in the market. Short-term narratives in the financial media have a way of working themselves out, especially if the stock in question is a stock we categorize as a ‘Core’ holding in your dividend growth portfolio.

Secondly, you may want to hold on to the stock and let dividend reinvestment and new contributions to your portfolio dilute your position size to a level that aligns with your goals and risk tolerance.

Remember, it’s important to always focus on the long-term when it comes to dividend growth investing. Short-term market fluctuations can be unpredictable, but over the long term, quality dividend growth stocks tend to perform well and provide a steady stream of growing income.

Diversification and position sizing are important for managing risk in a dividend growth investing portfolio. By using these strategies, investors can help minimize the impact of market fluctuations on their portfolios and build a more stable, sustainable income stream over the long term.

If you have not yet joined as a subscriber of the blog to receive DGI Alerts on the activity in our model portfolio, it’s not too late. Click Here.

Recent News

Dollarama profit jumps nearly 19% as high inflation drives Canadians to discount retailer (Globe & Mail)

https://www.theglobeandmail.com/business/article-dollarama-profit-inflation/

“Over the past year, the retailer has introduced higher price points up to $5 for products on its shelves, both to offset rising costs – such as for shipping and raw materials – and to bring in new items it could not offer at its previous maximum price of $4. Among the products it now sells with a $5 price tag are yoga mats, shoe racks and gardening trellises. Mr. Rossy said on the call that the new price points have been “well accepted” by shoppers.”

It appears that Dollarama has successfully navigated the effects of inflation on its business by introducing higher price points for its products (pricing power). By increasing its maximum price from $4 to $5, Dollarama has been able to offset rising costs and bring in new items that were not previously available at the lower price point. This move has been well-received by shoppers, indicating that they are willing to pay slightly higher prices for certain products.

In addition to increasing its maximum price point, Dollarama’s expansion into new markets and opening new stores have likely contributed to its continued success. By increasing its presence in the discount retail sector, Dollarama has attracted customers seeking affordable options in the face of high inflation.

Overall, it appears that Dollarama’s strategy of introducing higher price points and expanding its store network has helped it maintain its competitive edge in a challenging economic environment.

These dividend stocks beat inflation two ways (Globe & Mail)

https://www.theglobeandmail.com/investing/personal-finance/carrick-on-money/article-rob-carrick-these-dividend-stocks-beat-inflation-two-ways/

“There may not be a better inflation fighter than the double-duty dividend stock.

The double-duty stock offers a dividend yield at or better than the inflation rate, and a history of raising dividends by average annual amounts that meet or exceed inflation. In the S&P/TSX 60 index of big blue chips, there are seven such stocks right now.”

The author has discovered one of our dividend truths:

DGI Truth #3: Dividend growth investors enjoy inflation-protected income.

While seeking out high-yield dividend stocks can be tempting for those seeking inflation-protected income, it is important to prioritize quality first. High-yielding stocks may come with risks, such as poor financial health or unsustainable dividends, which can ultimately result in lower returns or losses.

Instead, investors should look for companies with a history of consistent dividend growth and strong financials. Such companies are more likely to continue raising dividends and outperforming the market over the long term, even in inflationary environments.

By focusing on quality dividend growth stocks, investors can enjoy the inflation-protected income and benefit from long-term capital appreciation and higher total returns.

The List (2023)

Last updated by BM on March 31, 2023

The Magic Pants List contains 27 Canadian dividend growth stocks. ‘The List’ contains Canadian companies that have raised their dividend yearly for at least the last ten years and have a market cap of over a billion dollars. Provided below is each stock’s symbol, name, current yield, current price, price return year-to-date, current dividend, dividend growth year-to-date and current dividend growth streak. Companies on ‘The List’ are added or subtracted once a year, on January 1. After that, ‘The List’ is set for the next twelve months. Prices and dividends are updated weekly.

SYMBOL	COMPANY	YLD	PRICE	YTD %	DIV	YTD %	STREAK
AQN-N	Algonquin Power & Utilities	6.0%	$8.40	24.8%	$0.51	-29.0%	12
ATD-T	Alimentation Couche-Tard Inc.	0.8%	$67.95	13.0%	$0.56	19.1%	13
BCE-T	Bell Canada	6.3%	$60.54	0.5%	$3.82	5.0%	14
BIP-N	Brookfield Infrastructure Partners	4.4%	$33.77	5.2%	$1.44	6.3%	15
CCL-B-T	CCL Industries	1.6%	$67.14	15.7%	$1.06	10.4%	21
CNR-T	Canadian National Railway	2.0%	$159.47	-2.1%	$3.16	7.8%	27
CTC-A-T	Canadian Tire	3.9%	$176.37	20.3%	$6.90	17.9%	12
CU-T	Canadian Utilities Limited	4.8%	$37.66	1.9%	$1.79	1.0%	51
DOL-T	Dollarama Inc.	0.3%	$80.77	1.1%	$0.27	23.8%	12
EMA-T	Emera	5.0%	$55.52	5.5%	$2.76	3.0%	16
ENB-T	Enbridge Inc.	6.9%	$51.53	-3.4%	$3.55	3.2%	27
ENGH-T	Enghouse Systems Limited	2.2%	$38.25	7.1%	$0.85	18.2%	16
FNV-N	Franco Nevada	0.9%	$145.80	5.5%	$1.36	6.3%	15
FTS-T	Fortis	3.9%	$57.45	3.8%	$2.26	4.1%	49
IFC-T	Intact Financial	2.3%	$193.42	-1.2%	$4.40	10.0%	18
L-T	Loblaws	1.3%	$123.17	2.4%	$1.62	5.2%	11
MGA-N	Magna	3.4%	$53.57	-6.9%	$1.84	2.2%	13
MRU-T	Metro	1.6%	$74.34	-1.5%	$1.21	10.0%	28
RY-T	Royal Bank of Canada	4.1%	$129.25	1.0%	$5.28	6.5%	12
SJ-T	Stella-Jones Inc.	1.8%	$51.79	4.5%	$0.92	15.0%	18
STN-T	Stantec Inc.	1.0%	$79.01	20.9%	$0.77	8.5%	11
TD-T	TD Bank	4.7%	$80.95	-7.7%	$3.84	7.9%	12
TFII-N	TFI International	1.2%	$119.29	19.1%	$1.40	29.6%	12
TIH-T	Toromont Industries	1.5%	$110.93	13.5%	$1.68	10.5%	33
TRP-T	TC Energy Corp.	7.0%	$52.57	-1.4%	$3.69	3.4%	22
T-T	Telus	5.2%	$26.83	1.9%	$1.40	5.4%	19
WCN-N	Waste Connections	0.7%	$139.07	5.6%	$1.02	7.9%	13
Averages		3.1%		5.5%		8.1%	19

Six Canadian stocks on ‘The List’ declare earnings and dividends in US dollars and are inter-listed on a US exchange in US dollars. The simplest way to display dividend and price metrics for these stocks is to show their US exchange symbols along with their US dividends and price. The stocks I am referring to have a -N at the end of their symbols. You can still buy their Canadian counterparts (-T), but your dividends will be converted into CDN dollars and will fluctuate based on the exchange rate.

Note: When the dividend and share price currency match, the calculation is straightforward. But it’s not so simple when the dividend is declared in one currency, and the share price is quoted in another. Dividing the former by the latter would produce a meaningless result because it’s a case of apples and oranges. To calculate the yield properly, you must express the dividend and share price in the same currency.

Performance of ‘The List’

Feel free to click on this link, ‘The List’ for a sortable version from our website.

Last week, ‘The List’ was up sharply with a YTD price return of +5.5% (capital). Dividend growth also increased and is now at +8.1% YTD, highlighting growth in income over the past year.

The best performers last week on ‘The List’ were Magna (MGA-N), up +6.76%; TFI International (TFII-N), up +6.27%; and Brookfield Infrastructure Partners (BIP-N), up +2.05%.

Telus (T-T) was the worst performer last week, down -1.72%.

Dividend Increases

“The growth of dividend paying ability is of significance in the determination of a stock’s quality, or general safety…”

– Arnold Bernhard (the founder of Value Line)

“As a dividend increase is a positive sign of a company’s financial strength, the safest purchase, after research, is a stock with a recent dividend increase.”

– Tom Connolly (the founder of dividendgrowth.ca)

Last week, one dividend increase from companies on ‘The List’.

Dollarama Inc. (DOL-T) on Wednesday, March 29, 2023, said it increased its 2023 quarterly dividend from $0.0553 to $0.0708 per share, payable May 05, 2023, to shareholders of record on April 14, 2023.

This represents a dividend increase of +28.0%, marking the 13th straight year of dividend growth for this quality operator of discount retail stores.

Earnings Releases

Benjamin Graham once remarked that earnings are the principal factor driving stock prices.

Each quarter we will provide readers with weekly earnings updates of stocks on ‘The List’ during the calendar earnings season.

The updated earnings calendar can be found here.

Earnings growth and dividend growth tend to go hand in hand, so this information can tell us a lot about the future dividend growth of our quality companies. Monitoring our dividend growers periodically is part of the process, and reading the quarterly earnings releases is a good place to start.

No company on ‘The List’ is due to report earnings this week.

Last week, one earnings report from companies on ‘The List’.

Dollarama Inc. (DOL-T) released its fourth-quarter 2023 results on Wednesday, March 29, 2023, before markets opened.

“Our outstanding performance in Fiscal 2023, including a 12% increase in comparable store sales and EPS growth of 27%, further reinforces the relevance of our value retail concept for consumers, the enduring strength of our unique business model and our disciplined execution.”

– Neil Rossy, President and Chief Executive Officer

Highlights:

Comparable store sales growth of 15.9% for fourth quarter and 12.0% for Fiscal 2023
Diluted net earnings per common share up 23.0% to $0.91 for fourth quarter; up 26.6% to $2.76 for Fiscal 2023
Fiscal 2023 annual guidance met on all key metrics
Quarterly dividend increase of 28% to $0.0708 per common share

Outlook:

In the first half of Fiscal 2024, the Corporation expects to benefit from strong demand for its affordable, everyday items in the context of continued inflationary pressures on consumers. These demand trends are expected to normalize through the second half of the fiscal year. While the Corporation expects higher sales of lower-margin consumable products to carry over into Fiscal 2024, lower freight and logistics costs on imported goods are expected to positively impact gross margins. Wage pressures on SG&A are expected to be more substantial in Fiscal 2024 compared to the prior year, partially offset by the positive impact of scaling as well as ongoing efficiency and labour productivity initiatives.

In Fiscal 2024, the Corporation will maintain its balanced approach to capital allocation, investing in organic growth and returning capital to shareholders. The Corporation intends to maintain its pace of new store openings and investments in maintenance and transformational capital expenditures. Higher capital expenditures primarily reflect remaining investments in the Corporation’s Laval warehouse, namely racking.

In addition to its intent to maintain a dividend subject to quarterly approval, the Corporation intends to continue allocating the majority of its available cash toward the repurchase of shares through its normal course issuer bid. Management believes share repurchases continue to represent an appropriate and efficient use of excess cash to increase shareholder value.

In the current macro-economic and higher interest rate environment, the Corporation also continues to actively manage its capital structure. As such, the Corporation anticipates that its leverage ratio (adjusted net debt to EBITDA will remain below its historical target ratio of 2.75x-3.00x throughout Fiscal 2024. As at January 29, 2023, the Corporation’s adjusted net debt to EBITDA ratio was 2.71x.

Source: (DOL-T) Q4-2023 Earnings Release

MP Market Review – March 24, 2023

Last updated by BM on March 27, 2023

Summary

This is a weekly installment of our MP Market Review series, which provides updates on the financial markets and Canadian dividend growth companies we monitor on ‘The List’.
Last week, ‘The List’ was flat with a YTD price return of +2.4% (capital). Dividend growth also remained the same at +7.3% YTD, highlighting growth in income over the past year.
Last week, there were no dividend increases from companies on ‘The List’.
Last week, there were no earnings reports from companies on ‘The List’.
One company on ‘The List’ is due to report earnings this week.
If you’re interested in creating your own income portfolio, consider subscribing to our premium service, which grants you access to the MP Wealth-Builder Model Portfolio (CDN) and exclusive subscriber-only content. Learn More

Introduction

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

After conducting additional research, I have shifted towards utilizing a dividend growth investing (DGI) strategy as my primary investment approach. While I maintain portfolios consisting of high-quality dividend growers from both the United States and Canada, I have opted to concentrate on Canadian (CDN) dividend growth companies in this blog. This is due to several reasons, including a smaller pool of DGI companies to track, a lack of coverage for the DGI strategy by Canadian investment media, and a tendency for those who do cover DGI to narrowly focus on only a handful of sectors (Energy and Financials).

DGI Thoughts

“Experience is the name we give to our mistakes.”

– Oscar Wilde

Reflecting on the current banking liquidity issues reminded me of a lesson I learned early on in my journey as a dividend growth investor. The company was Home Capital Group (HCG-T).

Home Capital Group is a Canadian company that provides mortgage lending, deposits, and consumer credit services. In July 2015, the company suspended 45 mortgage brokers for submitting fraudulent income information on mortgage applications. The value of mortgages at the time from the suspended brokers on Home Capital’s books was estimated to be between $1.5 billion and $2 billion.

In March 2017, the company’s President and CEO, Martin Reid, was fired. This came two weeks after several current and former officers and directors of the company received enforcement notices from the Ontario Securities Commission (OSC). The OSC’s notices were related to the company’s past disclosure practices and, in some cases, trades in its shares.

The OSC’s enforcement action followed a series of events that had put the company under intense scrutiny. In April 2015, the Globe and Mail newspaper published an investigation that alleged that some Home Capital brokers had falsified borrower incomes on mortgage applications. The company initially denied the allegations but later launched an investigation that confirmed the fraud and led to the suspension of the 45 brokers.

The fallout from the fraud scandal had a significant impact on Home Capital’s business. The company’s stock price fell sharply, and it faced a run on deposits as some customers withdrew their money. The company was forced to seek a $2 billion credit line from the Healthcare of Ontario Pension Plan to support its operations.

As an investor, it is important to thoroughly research and understand the risks associated with any investment, especially in the financial sector. This includes evaluating a bank’s financial strength, management quality, and regulatory compliance. Keeping up with news and developments related to the company and the broader industry can also be helpful in identifying potential risks and opportunities.

Thankfully, my position size at the time was small enough so that the impact on my overall portfolio was minimal. Whenever possible, I now only invest in larger capitalized companies with several quality indicators.

If you have not yet joined as a subscriber of the blog to receive DGI Alerts on the activity in our model portfolio, it’s not too late. Click Here.

Recent News

How to beat the pros, Part 3: Identifying high-quality stocks (Globe & Mail)

https://www.theglobeandmail.com/investing/education/article-how-to-beat-the-pros-part-3-indentifying-high-quality-stocks/

“To reiterate what we said in the last article, stock picking is a subtraction process. We believe that enterprising investors would have a great chance of harvesting long-term alpha by rejecting the temptation of betting on most public companies that are speculative in nature, and, instead, concentrating on only a few high-quality ones on an exceedingly selective basis. We define quality as the predictable ability for a business to generate a superior return on capital over time.”

The author identifies his ‘quality indicators’ as companies with capital-light business models, management with an owner mindset and market leadership.

We have been in agreement with much of what the author has written about in his first two articles, including the quote above. We do, however, have specific ‘quality indicators’ when it comes to our strategy of investing.

U.S. banking crisis plunges TD’s First Horizon deal into uncertainty (Globe & Mail)

https://www.theglobeandmail.com/business/article-td-first-horizon-banking-crisis/

“Shares of First Horizon have been plummeting, sinking more than 20 per cent since Silicon Valley Bank’s demise nearly two weeks ago, sending U.S. regional banks stocks tumbling. Early last year, TD agreed to buy First Horizon for US$25 a share, higher than the US$15.58 that the U.S. bank’s share price closed at on Wednesday. At its widest, the spread between TD’s offer and First Horizon’s beleaguered stock was US$10 on Friday.”

The author seems to feel that Toronto-Dominion Bank can now go back and renegotiate a better deal. We never know what exactly the outcome will be, which is why we stick to our process.

Negative news about our quality dividend growers is usually short-lived. That is why we don’t pay much attention to it unless it gives us an opportunity to add to our positions at a sensible price. This was the case with Toronto-Dominion Bank over the last few weeks.

The List (2023)

Last updated by BM on March 24, 2023

SYMBOL	COMPANY	YLD	PRICE	YTD %	DIV	YTD %	STREAK
AQN-N	Algonquin Power & Utilities	6.3%	$8.02	19.2%	$0.51	-29.0%	12
ATD-T	Alimentation Couche-Tard Inc.	0.9%	$64.66	7.5%	$0.56	19.1%	13
BCE-T	Bell Canada	6.3%	$60.79	0.9%	$3.82	5.0%	14
BIP-N	Brookfield Infrastructure Partners	4.4%	$31.79	5.2%	$1.44	6.3%	15
CCL-B-T	CCL Industries	1.6%	$64.66	11.4%	$1.06	10.4%	21
CNR-T	Canadian National Railway	2.0%	$156.11	-4.2%	$3.16	7.8%	27
CTC-A-T	Canadian Tire	4.1%	$167.53	14.3%	$6.90	17.9%	12
CU-T	Canadian Utilities Limited	5.0%	$35.93	-2.7%	$1.79	1.0%	51
DOL-T	Dollarama Inc.	0.3%	$78.72	-1.4%	$0.22	2.3%	12
EMA-T	Emera	5.0%	$54.70	4.0%	$2.76	3.0%	16
ENB-T	Enbridge Inc.	7.0%	$50.43	-5.4%	$3.55	3.2%	27
ENGH-T	Enghouse Systems Limited	2.3%	$37.38	4.7%	$0.85	18.2%	16
FNV-N	Franco Nevada	0.9%	$144.42	4.5%	$1.36	6.3%	15
FTS-T	Fortis	4.0%	$56.16	1.5%	$2.26	4.1%	49
IFC-T	Intact Financial	2.3%	$193.41	-1.2%	$4.40	10.0%	18
L-T	Loblaws	1.4%	$116.29	-3.4%	$1.62	5.2%	11
MGA-N	Magna	3.7%	$50.18	-12.8%	$1.84	2.2%	13
MRU-T	Metro	1.7%	$70.74	-6.3%	$1.21	10.0%	28
RY-T	Royal Bank of Canada	4.2%	$126.81	-1.0%	$5.28	6.5%	12
SJ-T	Stella-Jones Inc.	1.8%	$50.27	1.4%	$0.92	15.0%	18
STN-T	Stantec Inc.	1.0%	$75.97	16.3%	$0.77	8.5%	11
TD-T	TD Bank	4.9%	$77.62	-11.5%	$3.84	7.9%	12
TFII-N	TFI International	1.2%	$112.25	12.1%	$1.40	29.6%	12
TIH-T	Toromont Industries	1.6%	$106.62	9.1%	$1.68	10.5%	33
TRP-T	TC Energy Corp.	7.1%	$52.00	-2.4%	$3.69	3.4%	22
T-T	Telus	5.1%	$27.30	3.7%	$1.40	5.4%	19
WCN-N	Waste Connections	0.8%	$133.62	1.5%	$1.02	7.9%	13
Averages		3.2%		2.4%		7.3%	19

Note: When the currency of the dividend and share price match, the calculation is straightforward. But it’s not so simple when the dividend is declared in one currency and the share price is quoted in another. Dividing the former by the latter would produce a meaningless result because it’s a case of apples and oranges. To calculate the yield properly, you would need to express the dividend and share price in the same currency.

Performance of ‘The List’

Feel free to click on this link, ‘The List’ for a sortable version from our website.

Last week, ‘The List’ was flat with a YTD price return of +2.4% (capital). Dividend growth also remained the same at +7.3% YTD, highlighting growth in income over the past year.

The best performers last week on ‘The List’ were Alimentation Couche-Tard Inc. (ATD-T), up +4.98%; Intact Financial (IFC-T), up +2.12%; and Canadian Tire (CTC-A-T), up +2.05%.

TFI International (TFII-N) was the worst performer last week, down -3.34%.

Dividend Increases

“The growth of dividend paying ability is of significance in the determination of a stock’s quality, or general safety…”

– Arnold Bernhard (the founder of Value Line)

“As a dividend increase is a positive sign of a company’s financial strength, the safest purchase, after research, is a stock with a recent dividend increase.”

– Tom Connolly (the founder of dividendgrowth.ca)

Last week, there were no dividend increases from companies on ‘The List’.

Earnings Releases

Benjamin Graham once remarked that earnings are the principal factor driving stock prices.

Each quarter we will provide readers with weekly earnings updates of stocks on ‘The List’ during the calendar earnings season.

The updated earnings calendar can be found here.

One company on ‘The List’ is due to report earnings this week.

Dollarama Inc. (DOL-T) follows an off-cycle reporting schedule. It will release its fourth-quarter 2023 results on Wednesday, March 29, 2023, after markets open.

Last week, there were no earnings reports from companies on ‘The List’.

MP Market Review – March 17, 2023

Last updated by BM on March 20, 2023

Summary

This is a weekly installment of our MP Market Review series, which provides updates on the financial markets and Canadian dividend growth companies we monitor on ‘The List’.
Last week, ‘The List’ was up slightly with a YTD price return now of +2.4% (capital). Dividend growth remained the same at +7.3% YTD, highlighting growth in income over the past year.
Last week, there were no dividend increases from companies on ‘The List’.
Last week, there were three earnings reports from companies on ‘The List’.
No companies on ‘The List’ are due to report earnings this week.
If you’re interested in creating your own income portfolio, consider subscribing to our premium service, which grants you access to the MP Wealth-Builder Model Portfolio (CDN) and exclusive subscriber-only content. Learn More

Introduction

After conducting additional research, I have shifted towards utilizing a dividend growth investing (DGI) strategy as my primary investment approach. While I maintain portfolios consisting of high-quality dividend growers from both the United States and Canada, I have opted to concentrate on Canadian (CDN) dividend growth companies in this blog. This is due to several reasons, including a smaller pool of DGI companies to track, a lack of coverage for the DGI strategy by Canadian investment media, and a tendency for those who do cover DGI to narrowly focus on only a handful of sectors (Energy and Financials).

DGI Thoughts

“Earnings are the principal factor driving stock prices.”

– Benjamin Graham

Q4 2022 earnings season is over for companies on ‘The List’.

The earnings results are now available for viewing at the bottom of the page under the ‘The List’ menu item. Here we track analysts estimated earnings and compare them to actual results. One-third of the companies on ‘The List’ missed expectations last quarter, which is the highest since we started the blog in early 2021.

The probability is rising of an earnings recession in 2023 which will put downward pressure on stock markets both here and in the United States. Additional events, like the banking system issues last week in Europe and the US, could make markets unpredictable in the short term. With lots of cash available in our subscriber model portfolio, we are looking to take advantage of short-term mispricing of the quality companies we follow.

If you have not yet joined as a subscriber of the blog to receive DGI Alerts on the activity in our model portfolio, it’s not too late. Click Here.

Recent News

Who’s to blame for this banking and markets mess? The addiction to debt that started with the baby boomers (Globe & Mail)

https://www.theglobeandmail.com/investing/investment-ideas/article-whos-to-blame-for-this-banking-and-markets-mess-debt-loving-baby/

“The aim of the wise is not to secure pleasure but to avoid pain”

– Aristotle

“Silicon Valley Bank (SVB) is a bank that wanted to grow fast and took excessive levels of risk by buying billions of dollars of treasury and other bonds when rates were almost zero, but lost significant value when rates started to move higher over the past 12 months. Rather than minimize risk, the bank tried to maximize profits and this backfired exactly as Aristotle had warned.”

The author is not convinced that things are going to end well.

Canadian Banks have always had the reputation of being better regulated and governed than their US counterparts. We will see how deep this problem goes here in Canada.

Couche-Tard to buy more than 2,000 European service stations from French energy giant TotalEnergies (Globe & Mail)

https://www.theglobeandmail.com/business/article-couche-tard-totalenergies-europe-gas-stations/

“This transaction has all the hallmarks of a Couche-Tard deal,” RBC Capital Markets analyst Irene Nattel said in a research note, adding that it is strategically compelling, geographically complementary and attractive in terms of valuation. Couche-Tard is paying a multiple of eight times operating profits, based on the stores’ 2022 results.

This deal looks like it is in Alimentation Couche-Tard’s wheelhouse. Adding significantly more stores in Europe in four new countries gives Couche-Tard a significant market share with 4900 stores now in Europe.

The List (2023)

Last updated by BM on March 17, 2023

SYMBOL	COMPANY	YLD	PRICE	YTD %	DIV	YTD %	STREAK
AQN-N	Algonquin Power & Utilities	6.4%	$7.96	18.3%	$0.51	-29.0%	12
ATD-T	Alimentation Couche-Tard Inc.	0.9%	$61.59	2.4%	$0.56	19.1%	13
BCE-T	Bell Canada	6.4%	$60.02	-0.3%	$3.82	5.0%	14
BIP-N	Brookfield Infrastructure Partners	4.4%	$32.46	5.2%	$1.44	6.3%	15
CCL-B-T	CCL Industries	1.7%	$63.63	9.6%	$1.06	10.4%	21
CNR-T	Canadian National Railway	2.0%	$158.30	-2.8%	$3.16	7.8%	27
CTC-A-T	Canadian Tire	4.2%	$164.16	12.0%	$6.90	17.9%	12
CU-T	Canadian Utilities Limited	4.9%	$36.80	-0.4%	$1.79	1.0%	51
DOL-T	Dollarama Inc.	0.3%	$77.93	-2.4%	$0.22	2.3%	12
EMA-T	Emera	4.9%	$55.92	6.3%	$2.76	3.0%	16
ENB-T	Enbridge Inc.	7.1%	$50.19	-5.9%	$3.55	3.2%	27
ENGH-T	Enghouse Systems Limited	2.3%	$36.68	2.7%	$0.85	18.2%	16
FNV-N	Franco Nevada	0.9%	$143.50	3.9%	$1.36	6.3%	15
FTS-T	Fortis	3.9%	$57.91	4.6%	$2.26	4.1%	49
IFC-T	Intact Financial	2.3%	$189.40	-3.3%	$4.40	10.0%	18
L-T	Loblaws	1.4%	$116.06	-3.5%	$1.62	5.2%	11
MGA-N	Magna	3.7%	$50.18	-12.8%	$1.84	2.2%	13
MRU-T	Metro	1.7%	$69.95	-7.3%	$1.21	10.0%	28
RY-T	Royal Bank of Canada	4.1%	$127.26	-0.6%	$5.28	6.5%	12
SJ-T	Stella-Jones Inc.	1.8%	$51.27	3.4%	$0.92	15.0%	18
STN-T	Stantec Inc.	1.0%	$78.35	19.9%	$0.77	8.5%	11
TD-T	TD Bank	4.9%	$77.90	-11.1%	$3.84	7.9%	12
TFII-N	TFI International	1.2%	$116.13	16.0%	$1.40	29.6%	12
TIH-T	Toromont Industries	1.6%	$107.77	10.3%	$1.68	10.5%	33
TRP-T	TC Energy Corp.	7.2%	$51.03	-4.3%	$3.69	3.4%	22
T-T	Telus	5.2%	$26.87	2.1%	$1.40	5.4%	19
WCN-N	Waste Connections	0.8%	$134.36	2.0%	$1.02	7.9%	13
Averages		3.2%		2.4%		7.3%	19

Performance of ‘The List’

Feel free to click on this link, ‘The List’ for a sortable version from our website.

Last week, ‘The List’ was up slightly with a YTD price return now of +2.4% (capital), while its dividend growth remained the same at +7.3% YTD, highlighting growth in income over the past year.

The best performers last week on ‘The List’ were Enghouse Systems Limited (ENGH-T), up +11.93%; Franco Nevada (FNV-N), up +10.01%; and Fortis (FTS-T), up +8.71%.

Stella-Jones Inc. (SJ-T) was the worst performer last week, down -8.71%.

Dividend Increases

“The growth of dividend paying ability is of significance in the determination of a stock’s quality, or general safety…”

– Arnold Bernhard (the founder of Value Line)

“As a dividend increase is a positive sign of a company’s financial strength, the safest purchase, after research, is a stock with a recent dividend increase.”

– Tom Connolly (the founder of dividendgrowth.ca)

Last week, there were no dividend increases from companies on ‘The List’.

Earnings Releases

Benjamin Graham once remarked that earnings are the principal factor driving stock prices.

Each quarter we will provide readers with weekly earnings updates of stocks on ‘The List’ during the calendar earnings season. Last week we saw the end of the Q4 2022 earnings season for companies on ‘The List’.

The updated earnings calendar can be found here.

No companies on ‘The List’ are due to report earnings this week.

Last week, three companies on ‘The List’, reported their earnings.

Franco Nevada (FNV-N) released its fourth-quarter 2022 results on Wednesday, March 15, 2023, after markets closed.

“Franco-Nevada is reporting strong fourth quarter and annual results for 2022. Our Diversified assets outperformed due to elevated energy prices in the year, stated Paul Brink, CEO. We are pleased that First Quantum and the Government of Panama have agreed on terms for a refreshed concession contract and look forward to Cobre Panama achieving its expanded throughput capacity later this year. Precious metal GEOs and Diversified production in 2023 are expected to be consistent with 2022. We are however guiding to lower total GEOs for the year as current energy prices are below 2022 levels. The organic growth in our 5 year outlook comes from both mine expansions and new mines. Franco-Nevada is debt-free, is growing its cash balances and has an active pipeline of growth opportunities.”

– Chief Executive Officer, Paul Brink

Highlights:

Earned record GEOs, revenue, Adjusted Net Income, Adjusted EBITDA and operating cash flow in 2022
No debt and $2.2 billion in available capital as at December 31, 2022
Generated close to $1 billion in operating cash flow in 2022
Quarterly dividend increased 6.25% to $0.34/share effective Q1 2023

Outlook:

For 2023, we expect GEO sales from our Precious Metal assets to range between 490,000 and 530,000 GEOs, consistent with 2022, but anticipate total GEOs sales to be between 640,000 and 700,000 GEOs, a reduction from 2022 primarily based on lower assumed oil and gas prices. With respect to Cobre Panama, based on First Quantum’s most recent 2023 guidance of between 350,000 and 380,000 tonnes of copper, our attributable GEO production would be between 131,000 and 142,000 GEOs. Following the restriction of concentrate shipments in February, we have made a larger allowance for the impact of shipment timing for the year. We have estimated GEOs delivered and sold from Cobre Panama to be between 115,000 and 135,000 GEOs. We expect higher production from Antapaccay, MWS and Musselwhite, and initial contributions from new mines including Magino, Séguéla and Salares Norte, partly offset by anticipated decreases in GEO sales from Antamina, Hemlo and Candelaria. For our Diversified assets, we are guiding to lower GEOs, reflecting lower assumed oil and gas prices, partly offset by higher GEO contributions from our Iron Ore and Other Mining assets.

We estimate depletion expense to be between $275 and $305 million. Our remaining capital commitment to the Royalty Acquisition Venture with Continental is $79.4 million. In addition, we expect to commence funding of our $250 million stream on the Tocantinzinho project at the end of Q1 2023.

Source: (FNV-N) Q4-2022 Earnings Release

Alimentation Couche-Tard Inc. (ATD-T) released its third-quarter 2023 results on Wednesday, March 15, 2023, after markets closed.

“As our markets across the globe, especially those in Europe, continue to face persistently high inflationary conditions, we have remained focused and committed to delivering a strong and consistent value to our customers and maintaining cost discipline in our operations. In convenience across the network, we had notable sales in our food program as well as with our private brand items, both offering high quality at lower price points. Throughout the quarter, we continued to be pleased with the resilience of our customers, and through our localized pricing efforts and on-going fuel promotions, we are providing them with further benefits. While our mobility results are still impacted by stay-at-home work patterns and higher prices, we continued to generate healthy fuel margins offsetting the decline in volumes,”.

– Brian Hannasch, President and Chief Executive Officer

Highlights:

Net earnings were $737.4 million, or $0.73 per diluted share for the third quarter of fiscal 2023 compared with $746.4 million, or $0.70 per diluted share for the third quarter of fiscal 2022. Adjusted net earnings were approximately $741.0 million compared with $746.0 million for the third quarter of fiscal 2022. Adjusted diluted net earnings per share were $0.74, representing an increase of 5.7% from $0.70 for the corresponding quarter of last year. The translation of foreign currencies into US dollar had a net unfavorable impact of approximately $28.0 million on net earnings and adjusted net earnings.
Total merchandise and service revenues of $5.0 billion, an increase of 3.5%. Same-store merchandise revenues increased by 4.8% in the United States, by 3.5% in Europe and other regions, and by 2.3% in Canada.
Merchandise and service gross margin decreased by 0.4% in the United States to 33.2%, by 0.5% in Europe and other regions to 37.3%, and increased by 0.7% in Canada to 32.3%.
Same-store road transportation fuel volumes decreased by 2.3% in the United States, by 1.2% in Europe and other regions, and increased by 0.5% in Canada.
Road transportation fuel gross margin of 46.85¢ per gallon in the United States, an increase of 7.22¢ per gallon, CA 12.52¢ per liter in Canada, an increase of CA 0.74¢ per liter, and US 8.01¢ per liter in Europe and other regions, a decrease of US 2.82¢ per liter, driven by the impact of currency translation as well as by the volatility of the European fuel market. Fuel margins remained healthy throughout the network due to favorable market conditions and the continued work on the optimization of the supply chain.
Subsequent to the end of the quarter, the Corporation closed the acquisition of 65 express tunnel car wash sites conveniently located in our core markets in the United States. The Corporation also reached an agreement to acquire 45 modern high-quality company-owned and operated convenience retail and fuel sites, in the United States.
During the third quarter and first three quarters of fiscal 2023, the Corporation repurchased shares for amounts of $1.2 billion and $1.9 billion, respectively. Subsequent to the end of the quarter, shares were repurchased for an amount of $373.0 million.

Outlook:

LAVAL, QC, March 16, 2023 /CNW/ – Alimentation Couche-Tard Inc. (“Couche-Tard” or the “Corporation”) (TSX: ATD) announces today that it has agreed to a firm and irrevocable offer to acquire certain assets to be carved out from TotalEnergies and has entered into exclusive negotiations on this basis. The proposed acquisition would comprise 100% of TotalEnergies retail assets in Germany and the Netherlands as well as a 60% controlling interest in the Belgium and Luxembourg entities.

“We are excited to welcome the TotalEnergies employees and stores into the Couche-Tard family. As we learned more about their business, it became clear that we share the same customer-centric approach, values, and focus on an engaged workforce. We have deep respect for its operations, management, and people as well as great confidence that by joining forces together, we will build a winning global retail operation in the region. We see this as a strong geographical fit with our existing European network, which will allow us to grow together in some of Europe’s strongest economies and move forward in our vision to become the world’s preferred destination for convenience and mobility,” said Brian Hannasch, President and Chief Executive Officer of Alimentation Couche-Tard.

Source: (ATD-T) Q3-2023 Earnings Release

Algonquin Power & Utilities (AQN-N) released its fourth-quarter 2022 results on Friday, March 17, 2023, before markets opened.

“Despite various challenges throughout the year, we ended 2022 on stable footing, with our Adjusted Net Earnings per common share having met the Company’s revised guidance estimate,” said Arun Banskota, President and Chief Executive Officer of AQN. “We remain confident that the decisive actions previously announced by the Company to realign capital allocation will strengthen our financial and strategic foundation and position AQN for sustainable, long-term growth. AQN continues to be supported by a high-quality asset base and has the right skills and expertise to capitalize on the energy transition and deliver value for shareholders.”

– Arun Banskota, President and Chief Executive Officer

Highlights:

Fourth quarter Adjusted EBITDA of $358.3 million, an increase of 20%;
Fourth quarter Adjusted Net Earnings of $151.0 million, an increase of 10%;
Fourth quarter Adjusted Net Earnings per common share of $0.22, an increase of 5%;
Annual Adjusted EBITDA of $1,256.8 million, an increase of 17%;
Annual Adjusted Net Earnings of $474.9 million, an increase of 6%;
Annual Adjusted Net Earnings per common share of $0.69, a decrease of 3%, in each case on a year-over-year basis.

Outlook:

Reiterate Estimated 2023 Adjusted Net Earnings Per Common Share – The Company reiterates its previously-disclosed estimate of Adjusted Net Earnings per common share for the 2023 fiscal year within a range of $0.55-$0.61 (see “Non-GAAP Measures”).

Source: (AQN-N) Q4-2022 Earnings Call Presentation

MP Market Review – March 10, 2023

Last updated by BM on March 13, 2023

Summary

This is a weekly installment of our MP Market Review series, which provides updates on the financial markets and Canadian dividend growth companies we monitor on ‘The List’.
Last week, ‘The List’ was down sharply with a YTD price return now of +2.0% (capital), while its dividend growth jumped to +7.3% YTD, highlighting growth in income over the past year.
Last week, there were two dividend increases from companies on ‘The List’.
Last week, there were two earnings reports from companies on ‘The List’.
Three companies on ‘The List’ are due to report earnings this week.
If you’re interested in creating your own income portfolio, consider subscribing to our premium service, which grants you access to the MP Wealth-Builder Model Portfolio (CDN) and exclusive subscriber-only content. Learn More

Introduction

After conducting additional research, I have shifted towards utilizing a dividend growth investing (DGI) strategy as my primary investment approach. While I maintain portfolios consisting of high-quality dividend growers from both the United States and Canada, I have opted to concentrate on Canadian (CDN) dividend growth companies in this blog. This is due to several reasons, including a smaller pool of DGI companies to track, a lack of coverage for the DGI strategy by Canadian investment media, and a tendency for those who do cover DGI to narrowly focus on only a handful of sectors (Energy and Financials).

DGI Thoughts

“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.”

– Warren Buffett

In our blog, we frequently discuss the process of determining a reasonable price for investing in a quality company. One such approach is the utilization of ‘Dividend Yield Theory’.

IQT (Investment Quality Trends) popularized this theory in the 1960s, and it is straightforward and logical. Essentially, it suggests that for high-quality dividend growth stocks, which are characterized by consistent business models that don’t undergo significant changes over time, dividend yields have a tendency to return to their average.

What makes ‘Dividend Yield Theory’ easy to comprehend is that if the current yield surpasses the ‘historical yield’ (i.e., the average yield), then the stock is probably undervalued, whereas if it falls below the average yield, it is likely overvalued.

Here are the top ten firms on ‘The List,’ which are currently within a range of a ‘reasonable price’ using ‘Dividend Yield Theory’ alone for valuation purposes (as of last Friday’s market close).

Source: magicpants.ca

I can’t recall a week in the past few years where I’ve seen so many high-quality companies on this list. If the current market decline continues, we may have to bring out our washtub!

Recent News

Bank of Canada maintains policy rate, continues quantitative tightening (Bank of Canada)

https://www.bankofcanada.ca/2023/03/fad-press-release-2023-03-08/

“Governing Council will continue to assess economic developments and the impact of past interest rate increases, and is prepared to increase the policy rate further if needed to return inflation to the 2% target.”

As expected, the Bank of Canada did not raise interest rates last week. As one of the first Central Banks to take this approach, Canada is betting that previous rate hikes will be enough to bring inflation down. They did, however keep the door open for further rate hikes if necessary.

Failure of Silicon Valley Bank stuns tech sector already reeling from downturn (Globe & Mail)

https://www.theglobeandmail.com/business/article-canada-silicon-valley-bank-impact/

“The shutdown of SVB stemmed from its decision in 2021 to pull back on lending and instead stash tens of billions into long-term, low-interest-rate mortgage-backed securities. But as interest rates rose, bond values fell, saddling SVB with a paper loss, which it crystalized when it was forced to sell some bonds for a US$1.8-billion loss.”

This sounded a bit like 2008 to many people, and we know what happened after that.

As of late Sunday night the U.S. Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. said the government would back Silicon Valley Bank deposits beyond the federally insured ceiling of $250,000.

“Depositors will have access to all of their money starting Monday, March 13,” the agencies said in a joint statement Sunday evening. “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

The List (2023)

Last updated by BM on March 10, 2023

SYMBOL	COMPANY	YLD	PRICE	YTD %	DIV	YTD %	STREAK
AQN-N	Algonquin Power & Utilities	6.8%	$7.40	10.0%	$0.51	-29.0%	12
ATD-T	Alimentation Couche-Tard Inc.	0.9%	$62.90	4.6%	$0.56	19.1%	13
BCE-T	Bell Canada	6.4%	$59.76	-0.8%	$3.82	5.0%	14
BIP-N	Brookfield Infrastructure Partners	4.4%	$32.08	5.2%	$1.44	6.3%	15
CCL-B-T	CCL Industries	1.7%	$63.44	9.3%	$1.06	10.4%	21
CNR-T	Canadian National Railway	2.0%	$159.71	-1.9%	$3.16	7.8%	27
CTC-A-T	Canadian Tire	4.1%	$167.41	14.2%	$6.90	17.9%	12
CU-T	Canadian Utilities Limited	5.1%	$35.22	-4.7%	$1.79	1.0%	51
DOL-T	Dollarama Inc.	0.3%	$77.25	-3.3%	$0.22	2.3%	12
EMA-T	Emera	5.2%	$52.75	0.2%	$2.76	3.0%	16
ENB-T	Enbridge Inc.	6.8%	$52.36	-1.8%	$3.55	3.2%	27
ENGH-T	Enghouse Systems Limited	2.6%	$32.77	-8.2%	$0.85	18.2%	16
FNV-N	Franco Nevada	1.0%	$130.44	-5.6%	$1.36	6.3%	15
FTS-T	Fortis	4.2%	$53.27	-3.7%	$2.26	4.1%	49
IFC-T	Intact Financial	2.3%	$190.11	-2.9%	$4.40	10.0%	18
L-T	Loblaws	1.4%	$115.58	-3.9%	$1.62	5.2%	11
MGA-N	Magna	3.5%	$52.51	-8.7%	$1.84	2.2%	13
MRU-T	Metro	1.8%	$68.65	-9.0%	$1.21	10.0%	28
RY-T	Royal Bank of Canada	4.0%	$133.11	4.0%	$5.28	6.5%	12
SJ-T	Stella-Jones Inc.	1.7%	$55.27	11.5%	$0.92	15.0%	18
STN-T	Stantec Inc.	1.0%	$78.44	20.1%	$0.77	8.5%	11
TD-T	TD Bank	4.6%	$83.77	-4.4%	$3.84	7.9%	12
TFII-N	TFI International	1.2%	$121.27	21.1%	$1.40	29.6%	12
TIH-T	Toromont Industries	1.5%	$108.95	11.5%	$1.68	10.5%	33
TRP-T	TC Energy Corp.	6.9%	$53.77	0.9%	$3.69	3.4%	22
T-T	Telus	5.3%	$26.44	0.5%	$1.40	5.4%	19
WCN-N	Waste Connections	0.8%	$131.04	-0.5%	$1.02	7.9%	13
Averages		3.2%		2.0%		7.3%	19

Performance of ‘The List’

Feel free to click on this link, ‘The List’ for a sortable version from our website.

Last week, ‘The List’ was down sharply with a YTD price return now of +2.0% (capital), while its dividend growth jumped to +7.3% YTD, highlighting growth in income over the past year.

The best performers last week on ‘The List’ were Stella-Jones Inc. (SJ-T), up +8.86%; Dollarama Inc. (DOL-T), up +0.39%; and Canadian Utilities Limited (CU-T), up +0.26%.

Enghouse Systems Limited (ENGH-T) was the worst performer last week, down -24.49%.

Dividend Increases

“The growth of dividend paying ability is of significance in the determination of a stock’s quality, or general safety…”

– Arnold Bernhard (the founder of Value Line)

“As a dividend increase is a positive sign of a company’s financial strength, the safest purchase, after research, is a stock with a recent dividend increase.”

– Tom Connolly (the founder of dividendgrowth.ca)

Last week, there were two dividend increases from companies on ‘The List’.

Stella-Jones Inc. (SJ-T) on Wednesday, March 8, 2023, said it increased its 2023 quarterly dividend from $0.20 to $0.23 per share, payable April 21, 2023, to shareholders of record on April 3, 2023.

This represents a dividend increase of +15.0%, marking the 19th straight year of dividend growth for this quality lumber and wood product manufacturer.

Enghouse Systems Limited (ENGH-T) on Thursday, March 9, 2023, said it increased its 2023 quarterly dividend from $0.185 to $0.22 per share, payable May 31, 2023, to shareholders of record on May 17, 2023.

This represents a dividend increase of +18.9%, marking the 17th straight year of dividend growth for this quality provider of software and services.

Earnings Releases

Benjamin Graham once remarked that earnings are the principal factor driving stock prices.

Each quarter we will provide readers with weekly earnings updates of stocks on ‘The List’ during the calendar earnings season. Q4 2022 will come to an end this week, and we are now seeing the beginning of the next earnings season with (ATD-T) reporting. Not all companies on ‘The List’ follow the calendar year schedule.

The updated earnings calendar can be found here.

Three companies on ‘The List’ are due to report earnings this week.

Franco Nevada (FNV-N) will release its fourth-quarter 2022 results on Wednesday, March 15, 2023, after markets close.

Alimentation Couche-Tard Inc. (ATD-T) will release its third-quarter 2023 results on Wednesday, March 15, 2023, after markets close.

Algonquin Power & Utilities (AQN-N) will release its fourth-quarter 2022 results on Friday, March 17, 2023, before markets open.

Last week, two companies on ‘The List’, reported their earnings.

Stella-Jones Inc. (SJ-T) released its fourth-quarter 2022 results on Wednesday, March 8, 2023, before markets opened.

“Stella-Jones concluded 2022 on a very strong note, and I am proud of the robust performance we delivered as a Company. Our fourth quarter sales continued their upward trajectory, reflecting more than a 25% organic increase in utility poles sales, sustained growth in railway ties sales and better than anticipated residential lumber sales. Our exceptional results in 2022 can be credited to several contributors, from the efforts of our dedicated team to our expansive North American network. In a year of challenging market and macroeconomic conditions, our proven ability to procure the fibre required to meet customer demand and pass through cost increases were true keystones of our success, and a testament to the resilient character of our business model.”

– President and Chief Executive Officer, Eric Vachon

Highlights:

Sales of $3,065 million, up 11%, driven by infrastructure-related product category sales
EBITDA up 12% to $448 million, from $400 million in 2021
Net income reached $241 million, or $3.93 per share
Acquired wood utility pole manufacturing business of Texas Electric Cooperatives, Inc.
Quarterly cash dividend increased 15% to $0.23 per share

Outlook:

“2022 marks a 22^nd consecutive year of increased sales for Stella-Jones and the completion of the first year of our three-year plan, marked by exceptional utility poles sales growth, which we expect will continue in 2023. From where we stand, we are well on our way to meet or exceed our objectives, and remain favourably positioned for the future, with continued growth in sales, profitability and in turn, shareholder value.”

– President and Chief Executive Officer, Eric Vachon

Source: (SJ-T) Q4-2022 Earnings Release

Enghouse Systems Limited (ENGH-T) released its first-quarter 2023 results on Thursday, March 9, 2023, after markets closed.

“Over the last four quarters, revenue in both the Asset and Interactive Management Groups has stabilized significantly, particularly in comparison to the revenue fluctuations that were driven by changing demands throughout the COVID-19 pandemic. Despite the ongoing shift to the cloud, inflation, rising interest rates, economic uncertainty and some competitors experiencing significant financial distress announcing restructuring and employee layoffs, Enghouse continues to operate consistently with positive income and operating cashflows. Enghouse remains well positioned to complete and fund future acquisitions. Subsequent to quarter end, we announced the acquisitions of Qumu and Navita with integrations progressing according to plan.”

– Stephen J. Sadler, Chairman and Chief Executive Officer

Highlights:

Revenue achieved was $106.4 million compared to revenue of $111.1 million;
Results from operating activities was $29.9 million compared to $35.7 million;
Net income was $17.0 million compared to $21.6 million;
Adjusted EBITDA was $32.3 million compared to $38.6 million;
Cash flows from operating activities excluding changes in working capital were $32.6 million compared to $38.7 million.

Outlook:

Enghouse remains focused on its long-term growth strategy, investing in products while ensuring profitability and maximizing operating cashflows. As a result, Enghouse continues to replenish its acquisition capital while annually increasing its eligible quarterly dividend.

Source: (ENGH-T) Q1-2023 Earnings Release

MP Market Review – March 03, 2023

Last updated by BM on March 06, 2023

Summary

This is a weekly installment of our MP Market Review series, which provides updates on the financial markets and Canadian dividend growth companies we monitor on ‘The List’.
Last week, ‘The List’ was up slightly with a YTD price return of +5.4% (capital), while its dividend growth remained the same at +6.2% YTD, highlighting growth in income over the past year.
Last week, there were no dividend increases from companies on ‘The List’.
Last week, there were three earnings reports from companies on ‘The List’.
Two companies on ‘The List’ are due to report earnings this week.
If you’re interested in creating your own income portfolio, consider subscribing to our premium service, which grants you access to the MP Wealth-Builder Model Portfolio (CDN) and exclusive subscriber-only content. Learn More

Introduction

After conducting additional research, I have shifted towards utilizing a dividend growth investing (DGI) strategy as my primary investment approach. While I maintain portfolios consisting of high-quality dividend growers from both the United States and Canada, I have opted to concentrate on Canadian (CDN) dividend growth companies in this blog. This is due to several reasons, including a smaller pool of DGI companies to track, a lack of coverage for the DGI strategy by Canadian investment media, and a tendency for those who do cover DGI to narrowly focus on only a handful of sectors (Energy and Financials).

DGI Thoughts

“Charlie and I are not stock-pickers; we are business pickers.”

– Warren Buffett, Berkshire Hathaway Inc. Annual Report (2022)

I always enjoy reading the Berkshire Hathaway Inc. Annual Report. Great insight from one of the greatest investors of our era. As it turns out, there are a few tidbits of wisdom for dividend growth investors in this year’s report. More on Berkshire Hathaway Inc. and its Annual Report in the ‘Recent News’ portion of this week’s review.

Like Buffett, we are business- pickers, and we like quality businesses. One of the best ways we have found to ‘pick’ a quality dividend growth business is to look at its historical and estimated ‘Growth Yield’ or ‘Yield on Cost’. Here is a chart for you to see at a glance what it takes to get to a 7% return (on dividends alone) within ten years.

Source: magicpants.ca

The table illustrates the possible outcomes of combining initial yields (shown across the top) and annual growth rates (displayed on the left side) to attain the target. Whenever two values meet, the table indicates the number of years needed to achieve a 7% income return from dividends alone. The shaded cells represent those combinations that take 10 years or less to hit the target.

To illustrate, a 3% initial yield that grows at a rate of 9% per year, as well as a 4% initial yield that increases at 6% annually, both result in a 7% ‘Growth Yield’ within a decade, making them both viable combinations.

The 7×10 table focuses solely on income and disregards the influence of price hikes. It also doesn’t account for the compounding effect of reinvesting dividends, which would have reduced the shown timelines. The table only displays the rise in ‘Growth Yield’ due to the growth in the dividend.

As a part of our selection process, we use ‘Growth Yield’ as a quality indicator. Although not mandatory for all businesses in your portfolio to fulfill the 7×10 criterion, our past experience has demonstrated that a considerable number of businesses that meet this metric are likely to achieve market-beating returns.

For more info on ‘Growth Yield’, see one of our top posts: Using Growth Yield (YOC) To Build Powerful DGI Portfolios

Recent News

Berkshire Hathaway Annual Report (2022) https://www.berkshirehathaway.com/2022ar/2022ar.pdf

In reading this year’s annual report, I noticed a few comments from Buffett that were worth pointing out to dividend growth investors.

In the ‘Secret Sauce’ section of the report, Buffett mentions two of his long-term holdings, Coca-Cola and American Express, and laments on how much their dividends and capital have grown in thirty years compared to a comparable fixed income investment of a 30-year bond with a fixed rate of return.

“The cash dividend we received from Coke in 1994 was $75 million. By 2022, the dividend had increased to $704 million.Growth occurred every year, just as certain as birthdays. All Charlie and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow.

American Express is much the same story. Berkshire’s purchases of Amex were essentially completed in 1995 and, coincidentally, also cost $1.3 billion. Annual dividends received from this investment have grown from $41 million to $302 million. Those checks, too, seem highly likely to increase.

These dividend gains, though pleasing, are far from spectacular. But they bring with them important gains in stock prices.

Assume, for a moment, I had made a similarly-sized investment mistake in the 1990s, one that flat-lined and simply retained its $1.3 billion value in 2022. (An example would be a high-grade 30-year bond.) That disappointing investment would now represent an insignificant 0.3% of Berkshire’s net worth and would be delivering to us an unchanged $80 million or so of annual income.”

Buffett agrees with how dependable dividend growth can be from a quality company and that a rising dividend income stream will eventually lead to rising stock prices.

In the report, we also gained some understanding of Buffett’s investment timeline, in which he expressed, “At Berkshire, there will be no finish line.”

Frequently, we become fixated on our retirement plans and the specific time when we will retire, causing us to make unfavourable investment choices. Patrick Keogh explores this issue in his book, Make Your Family Rich. Keogh views dividend growth investing as a method of succession planning for a company (the Keogh Family Office), and he regards it as more of a process than a destination. Thinking of what we do as dividend growth investors in the same way a company plans for succession allows us to lengthen our investing timeline and let our process play out.

Selecting high-quality companies, recognizing that increasing dividends results in increasing stock prices, and having a long-term perspective that extends indefinitely – these are the shared principles of both dividend growth investors and one of the most exceptional investors of our era.

What if interest rates stay high for a few years? (Globe & Mail)

https://www.theglobeandmail.com/investing/markets/inside-the-market/article-interest-inflation-stay-high/

“What would you do if inflation and interest rates remained high, not just for the rest of this year, but for a few years to come?”

The author provides analysis and logic as to why we still have a long way to go before interest rates begin to decline. Preparing for this probable outcome would be prudent.

The List (2023)

Last updated by BM on March 03, 2023

SYMBOL	COMPANY	YLD	PRICE	YTD %	DIV	YTD %	STREAK
AQN-N	Algonquin Power & Utilities	6.5%	$7.82	16.2%	$0.51	-29.0%	12
ATD-T	Alimentation Couche-Tard Inc.	0.9%	$65.30	8.6%	$0.56	19.1%	13
BCE-T	Bell Canada	6.3%	$60.50	0.4%	$3.82	5.0%	14
BIP-N	Brookfield Infrastructure Partners	4.4%	$32.95	5.2%	$1.44	6.3%	15
CCL-B-T	CCL Industries	1.6%	$65.37	12.6%	$1.06	10.4%	21
CNR-T	Canadian National Railway	1.9%	$162.17	-0.4%	$3.16	7.8%	27
CTC-A-T	Canadian Tire	4.0%	$170.80	16.5%	$6.90	17.9%	12
CU-T	Canadian Utilities Limited	5.1%	$35.13	-4.9%	$1.79	1.0%	51
DOL-T	Dollarama Inc.	0.3%	$76.95	-3.6%	$0.22	2.3%	12
EMA-T	Emera	5.1%	$53.82	2.3%	$2.76	3.0%	16
ENB-T	Enbridge Inc.	6.7%	$52.83	-0.9%	$3.55	3.2%	27
ENGH-T	Enghouse Systems Limited	1.7%	$43.40	21.5%	$0.74	3.5%	16
FNV-N	Franco Nevada	1.0%	$136.78	-1.0%	$1.36	6.3%	15
FTS-T	Fortis	4.1%	$54.50	-1.5%	$2.26	4.1%	49
IFC-T	Intact Financial	2.3%	$195.54	-0.1%	$4.40	10.0%	18
L-T	Loblaws	1.4%	$116.80	-2.9%	$1.62	5.2%	11
MGA-N	Magna	3.2%	$57.09	-0.7%	$1.84	2.2%	13
MRU-T	Metro	1.7%	$70.24	-6.9%	$1.21	10.0%	28
RY-T	Royal Bank of Canada	3.9%	$136.75	6.8%	$5.28	6.5%	12
SJ-T	Stella-Jones Inc.	1.6%	$50.77	2.4%	$0.80	0.0%	18
STN-T	Stantec Inc.	1.0%	$79.82	22.2%	$0.77	8.5%	11
TD-T	TD Bank	4.3%	$89.05	1.6%	$3.84	7.9%	12
TFII-N	TFI International	1.1%	$125.59	25.4%	$1.40	29.6%	12
TIH-T	Toromont Industries	1.5%	$113.21	15.9%	$1.68	10.5%	33
TRP-T	TC Energy Corp.	6.6%	$56.18	5.4%	$3.69	3.4%	22
T-T	Telus	5.1%	$27.31	3.8%	$1.40	5.4%	19
WCN-N	Waste Connections	0.8%	$134.14	1.8%	$1.02	7.9%	13
Averages		3.1%		5.4%		6.2%	19

Performance of ‘The List’

Feel free to click on this link, ‘The List’ for a sortable version from our website.

Last week, ‘The List’ was up slightly with a YTD price return of +5.4% (capital), while its dividend growth remained the same at +6.2% YTD, highlighting growth in income over the past year.

The best performers last week on ‘The List’ were Franco Nevada (FNV-N), up +9.19%; Stella-Jones Inc. (SJ-T), up +6.77%; and Magna (MGA-N), up +6.12%.

Canadian Utilities Limited (CU-T) was the worst performer last week, down -3.25%.

Dividend Increases

“The growth of dividend paying ability is of significance in the determination of a stock’s quality, or general safety…”

– Arnold Bernhard (the founder of Value Line)

“As a dividend increase is a positive sign of a company’s financial strength, the safest purchase, after research, is a stock with a recent dividend increase.”

– Tom Connolly (the founder of dividendgrowth.ca)

Last week, there were no dividend increases from companies on ‘The List’.

Earnings Releases

Benjamin Graham once remarked that earnings are the principal factor driving stock prices.

Each quarter we will provide readers with weekly earnings updates of stocks on ‘The List’ during the calendar earnings season. Q4 2022 is just about over and we are now seeing the beginning of the next earnings season with a couple of banks reporting this week.

The updated earnings calendar can be found here.

Two companies on ‘The List’ is due to report earnings this week.

Stella-Jones Inc. (SJ-T) will release its fourth-quarter 2022 results on Wednesday, March 8, 2023, before markets open.

Enghouse Systems Limited (ENGH-T) will release its first-quarter 2023 results on Thursday, March 9, 2023, after markets close.

Last week, three companies on ‘The List’, reported their earnings.

Royal Bank of Canada (RY-T) released its first-quarter 2023 results on Wednesday, March 1, 2023, before markets opened.

“In a complex and uncertain world, RBC is relentlessly focused on bringing leadership, stability and advice to our clients and communities. As our first quarter results demonstrate, we are prudently managing risk while delivering strong revenue growth driven by our diversified business model. Looking ahead, RBC’s premium businesses, robust balance sheet and strategic advantages will allow us to continue transforming our bank for the future and creating value for our clients, communities and shareholders.”

– President and Chief Executive Officer, Dave McKay

Highlights:

Q1 2023 vs. Q1 2022

Net income of $3,214 million was down $881 million or 22% from a year ago.
Diluted EPS of $2.29 was down $0.55 or 19% and ROE of 12.6% was down from 17.3% last year.
Our CET1 ratio of 12.7% was down 80 bps from a year ago.
Excluding the specified item for the impact of the CRD and other tax related adjustments as described below, net income of $4,264 million was up $169 million or 4% from a year ago.
Excluding the specified item, diluted EPS of $3.05 was up $0.21 or 7% and ROE of 16.8% was down from 17.3% last year.
Our earnings were down from last year, primarily driven by the specified item, which is reported in Corporate Support.
Excluding the impact of the specified item, net income increased from last year driven by higher earnings in Personal & Commercial Banking, Capital Markets and Wealth Management, partially offset by lower results in Insurance.

Q1 2023 vs. Q4 2022

Net income of $3,214 million was down $668 million or 17% from last quarter.
Diluted EPS of $2.29 was down $0.45 or 16% and ROE of 12.6% down from 15.6% in the prior quarter.
Our CET1 ratio of 12.7% was up 10 bps from last quarter.
Excluding the specified item, net income of $4,264 million was up $382 million or 10% from last quarter.
Excluding the specified item, diluted EPS of $3.05 was up $0.31 or 11% and ROE of 16.8% was up from 15.6% last quarter.
Our earnings were down from last quarter, primarily driven by the specified item, which is reported in Corporate Support.
Excluding the impact of the specified item, net income increased from last quarter driven by higher earnings in Capital Markets and Wealth Management, partially offset by lower results in Insurance and Personal & Commercial Banking.

Outlook:

Unemployment remains very low across most advanced economies with labour shortages limiting further increases in production and pushing wages higher. However, we expect unemployment rates will rise as higher interest rates and elevated inflation add to growth headwinds. Global inflation pressures have eased with the price of key commodities and shipping costs declining from peak levels in calendar 2022 and the breadth of inflation pressures across goods and services has shown signs of narrowing. Most advanced economy central banks are likely at or close to the end of interest rate increases. However, the lagged impact of aggressive increases in interest rates in calendar 2022 will continue to increase household and business borrowing costs in calendar 2023. The U.S., Canadian, and U.K. economies are expected to undergo moderate recessions in calendar 2023. GDP in the Euro area is expected to grow but at a slow pace in calendar 2023 with higher interest rates adding to inflation and disruptions from the war in Ukraine.

Source: (RY-T) Q1-2023 Earnings Release

TD Bank (TD-T) released its first-quarter 2023 results on Thursday, March 2, 2023, before markets opened.

“TD had a strong start to 2023 with Canadian and U.S. retail businesses delivering robust revenue growth and record earnings, demonstrating the benefits of our diversified business mix,” said Bharat Masrani, Group President and Chief Executive Officer, TD Bank Group. “We continued to invest to strengthen our businesses and deliver the legendary customer experiences our customers and clients have come to expect from TD.” “Yesterday, we announced the close of the Cowen Inc. acquisition, an important step forward in the expansion of our global dealer. TD Securities now has 6,500 colleagues in 40 cities around the world and is able to serve clients with an even broader product and services offering,” added Masrani.

– Bharat Masrani, Group President and Chief Executive Officer

Highlights:

Q1 2023 vs. Q1 2022

Reported diluted earnings per share were $0.82, compared with $2.02.
Adjusted diluted earnings per share were $2.23, compared with $2.08.
Reported net income was $1,582 million, compared with $3,733 million.
Adjusted net income was $4,155 million, compared with $3,833 million.

Acquisition of Cowen Inc.

On March 1, 2023, the Bank completed the acquisition of Cowen Inc. (“Cowen”). The results of the acquired business will be consolidated by the Bank from the closing date and primarily reported in the Wholesale Banking segment.

Outlook:

Pending Acquisition of First Horizon Corporation

On February 9, 2023, the parties announced they had mutually agreed to extend the outside date to May 27, 2023, in accordance with the terms of the merger agreement. The closing of the transaction is subject to customary closing conditions, including approvals from U.S. and Canadian regulatory authorities, which now are not expected to be obtained prior to May 27, 2023. Regulatory approvals are not within the Bank’s control. If the merger does not close by May 27, 2023, then an amendment to the merger agreement would be required to further extend the outside date. TD and First Horizon are discussing a potential further extension.

Source: (TD-T) Q1-2023 Earnings Release

Canadian Utilities Limited (CU-T) released its fourth-quarter 2022 results on Thursday, March 2, 2023, before markets opened.

“First of all, 2022 saw us deliver on significant year-over-year earnings growth. Our Alberta distribution utilities unlocked significant efficiencies that will in turn create meaningful savings for customers going forward. It was also another successful year of operations for our LUMA Energy business, with numerous achievements in the support of the Company’s commitment of rebuilding and modernizing the electricity transmission and distribution system in Puerto Rico.

These successes ultimately cumulated into the extension of LUMA’s supplemental operating agreement, allowing critical work the team is doing for the people of Puerto Rico to continue. We’ve also made significant strides in the execution of our energy transition strategy with the completed acquisition of a major renewable generation portfolio and related development pipeline. While continuing to advance a number of our other ongoing energy transition investments, including our Alberta based solar initiatives and our ongoing hydrogen initiatives in the Alberta heartland.”

– Brian Shkrobot, Executive Vice President and Chief Financial Officer

Highlights:

Adjusted earnings in 2022 of $655 million ($2.43 per share), which were $69 million ($0.26 per share) higher compared to $586 million ($2.17 per share) in 2021.
Fourth quarter adjusted earnings in 2022 of $180 million ($0.66 per share) were $12 million ($0.05 per share) lower compared to $192 million ($0.71 per share) in the fourth quarter of 2021.
Invested $452 million in capital expenditures in the fourth quarter of 2022, of which 85 per cent was invested in regulated utilities and 15 per cent mainly in Energy Infrastructure.
Subsequent to year-end, on January 3, 2023, Canadian Utilities closed the previously announced acquisition of a portfolio of wind and solar assets and development projects located in Alberta and Ontario from Suncor Energy Inc. Concurrent with the close of this acquisition, Canadian Utilities entered into a new 15-year renewable energy purchase agreement with Microsoft Corporation. Under the terms of the agreement, Microsoft will purchase 150-MW per year of renewable energy generated by the Forty Mile Wind Phase 1 Project in Alberta, acquired as part of the acquisition from Suncor.
In December 2022, The Yukon Electrical Company Limited, a subsidiary of Canadian Utilities, and Copper Niisüü Limited Partnership (CNLP), finalized a landmark Electricity Purchase Agreement to underpin the Saa Sè Energy Project in Beaver Creek and enhance energy autonomy for White River First Nation. Under the terms of the agreement, CNLP will build, own and operate the Beaver Creek solar facility. Upon completion, Canadian Utilities will purchase the solar electricity generated, connect it to the grid and redistribute it back to the community. The facility is expected to be fully operational by 2024.
In December 2022, Canadian Utilities announced the commissioning of two hydrogen projects at the Clean Energy Innovation Hub in Australia. These include the blending of hydrogen into the Western Australian (WA) natural gas network and the first hydrogen fuelling station in partnership with Fortescue Future Industries. This will enable Fortescue, Canadian Utilities and third parties such as the WA Police to support their fleets of hydrogen fuel cell vehicles.
Subsequent to year-end, on February 3, 2023, Canadian Utilities executed an extension to the current Power Purchase Agreement with Origin Energy Electricity Limited (Origin) for the Osborne electricity cogeneration facility in South Australia. The extension is for a period of three years, commencing on January 1, 2024, with an option for Origin to extend the term until December 31, 2027.
On January 12, 2023, Canadian Utilities declared a first quarter dividend of 44.86 cents per share or $1.79 per Class A non-voting and Class B common share on an annualized basis, a 1 per cent increase over the 44.42 cents per share paid in each of the four previous quarters. Canadian Utilities has increased its dividend per share for 51 consecutive years, the longest track record of annual dividend increases of any publicly traded Canadian company.

Outlook:

“We expect to invest $3.3 billion in our regulated utilities over the next three years. While utility operations are the largest contributor to our earnings and will remain so for many years to come, we will also be actively investing in our energy transition growth initiatives in the coming years. Our ongoing hydrogen initiatives with Suncor, our continued pursuit of a potential energy storage investment in Australia, and are successful execution of the acquired 1.5 gigawatts of renewable generation pipeline will all necessitate significant capital investment and drive growth for our business.”

– Brian Shkrobot, Executive Vice President and Chief Financial Officer

Source: (CU-T) Q4-2022 Earnings Release

MP Market Review – February 24, 2023

Last updated by BM on February 27, 2023

Summary

This is a weekly installment of our MP Market Review series, which provides updates on the financial markets and Canadian dividend growth companies we monitor on ‘The List’.
Last week, ‘The List’ exhibited a YTD price return of +4.6% (capital), while its dividend growth increased to +6.2% YTD, highlighting growth in income over the past year.
Last week, there were two dividend increases from companies on ‘The List’.
Last week, there were four earnings reports from companies on ‘The List’.
Three companies on ‘The List’ are due to report earnings this week.
If you’re interested in creating your own income portfolio, consider subscribing to our premium service, which grants you access to the MP Wealth-Builder Model Portfolio (CDN) and exclusive subscriber-only content. Learn More

Introduction

After conducting additional research, I have shifted towards utilizing a dividend growth investing (DGI) strategy as my primary investment approach. While I maintain portfolios consisting of high-quality dividend growers from both the United States and Canada, I have opted to concentrate on Canadian (CDN) dividend growth companies in this blog. This is due to several reasons, including a smaller pool of DGI companies to track, a lack of coverage for the DGI strategy by Canadian investment media, and a tendency for those who do cover DGI to narrowly focus on only a handful of sectors (Energy and Financials).

DGI Thoughts

Plenty of predictions in the financial media on the probability of the markets going up, down or sideways last week. Did you know that as dividend growth investors we still get paid regardless of the outcome?

“Persistent high inflation rates will change everything. Dividend growth stocks are the best inflation hedge I know of.”

– Financial Sense, Seeking Alpha Contributor

This quote was from an article in Seeking Alpha that I read on the weekend. The author demonstrates why persistent inflation could disrupt the retirement planning communities’ rules.

“The first rule is the ‘age rule’ which defines how much of a person’s portfolio should be allocated between stocks and bonds. You take the number 100 minus your current age and that defines what you should allocate to stocks. For example, if you are age 65 when you retire, subtracting 65 from 100 equals 35%, the number you should invest in equities with the remaining 65% is invested in bonds and cash. At age 80, your equity portfolio would decline to 20%.

The second rule is on the withdrawal or spend down of your assets, which is 4% per year according to retirement planning advocates. Assuming a $1,000,000 portfolio, you would withdraw $40,000 a year which would last 25 years of your retirement.”

The author notes that both rules have major flaws with their reasoning, especially in a persistently high inflation environment. Purchasing power will be eaten away by inflation and prolonged bear markets can devastate retirement portfolios.

The two charts below show the historical inflation rates for Canada and the annual dividend growth rates of ‘The List’ we follow. Inflation hasn’t been much of a problem for investors in other strategies until recently, but it certainly will wreak havoc on purchasing power if it becomes persistent. The same holds true for a prolonged bear market for those who withdraw capital to live off in their retirement. Their portfolios will get smaller and smaller.

Alternatively, a dividend growth strategy means we don’t need to sell stocks in a bear market to pay our bills. We have dividends. On top of that, our dividends grow so we don’t lose purchasing power either.

Source: rateinflation.com

Compare this inflation rate data to the dividend growth rates of the stocks on ‘The List’ over the same period:

Source: Magic Pants Dividend Growth Investing

When compared to historical inflation rates, an average annual 10% growth rate of our dividends means our purchasing power is increasing not decreasing. If there is a better inflation hedge than dividend growth, we haven’t found it yet.

Recent News

How to beat the pros, Part 2: Simplify by focusing on stocks of high quality

https://www.theglobeandmail.com/investing/education/article-how-to-beat-the-pros-part-2-simplify-by-focusing-on-stocks-of-high/

Recall the first rule in our process. We define quality much the same as this author except we throw in “…a lengthy record of consistent dividend growth” for good measure.

The author defines winners as quality companies that have the “durability of the company’s competitive advantage, predictability/understandability of the business model, and longevity/stability of the industry/market.” Sound familiar?

We like the author’s message here, only deal with high-quality companies. They have the highest probability of delivering higher returns over the long term.

Even as markets tumble, the dividend hikes keep coming (Globe & Mail)

https://www.theglobeandmail.com/investing/education/article-even-as-markets-tumble-the-dividend-hikes-keep-coming/

Not sure what to do with all the uncertainty in the markets?

“Stocks have been stumbling through February, as worries about the economy, interest rates and corporate earnings weigh on equity markets. But for dividend investors, it’s been a banner month.”

This is one of the great things about dividend growth stocks, no matter which direction the market moves, your income continues to grow. Don’t forget about inflation protection too. The income generated from ‘The List’ has already surpassed the inflation rate with more dividend raises last week.

The List (2023)

Last updated by BM on February 24, 2023

SYMBOL	COMPANY	YLD	PRICE	YTD %	DIV	YTD %	STREAK
AQN-N	Algonquin Power & Utilities	6.5%	$7.83	16.3%	$0.51	-29.0%	12
ATD-T	Alimentation Couche-Tard Inc.	0.9%	$64.29	6.9%	$0.56	19.1%	13
BCE-T	Bell Canada	6.3%	$60.46	0.4%	$3.82	5.0%	14
BIP-N	Brookfield Infrastructure Partners	4.4%	$32.95	5.2%	$1.44	6.3%	15
CCL-B-T	CCL Industries	1.6%	$65.04	12.0%	$1.06	10.4%	21
CNR-T	Canadian National Railway	2.0%	$156.76	-3.8%	$3.16	7.8%	27
CTC-A-T	Canadian Tire	4.1%	$169.49	15.6%	$6.90	17.9%	12
CU-T	Canadian Utilities Limited	4.9%	$36.31	-1.7%	$1.78	0.0%	51
DOL-T	Dollarama Inc.	0.3%	$79.36	-0.6%	$0.22	2.3%	12
EMA-T	Emera	5.1%	$54.64	3.8%	$2.76	3.0%	16
ENB-T	Enbridge Inc.	6.9%	$51.46	-3.5%	$3.55	3.2%	27
ENGH-T	Enghouse Systems Limited	1.8%	$42.03	17.7%	$0.74	3.5%	16
FNV-N	Franco Nevada	1.1%	$125.27	-9.3%	$1.36	6.3%	15
FTS-T	Fortis	4.1%	$54.80	-1.0%	$2.26	4.1%	49
IFC-T	Intact Financial	2.2%	$198.06	1.2%	$4.40	10.0%	18
L-T	Loblaws	1.4%	$119.63	-0.6%	$1.62	5.2%	11
MGA-N	Magna	3.4%	$53.80	-6.5%	$1.84	2.2%	13
MRU-T	Metro	1.7%	$71.42	-5.4%	$1.21	10.0%	28
RY-T	Royal Bank of Canada	3.8%	$137.22	7.2%	$5.28	6.5%	12
SJ-T	Stella-Jones Inc.	1.7%	$47.55	-4.1%	$0.80	0.0%	18
STN-T	Stantec Inc.	1.0%	$79.25	21.3%	$0.77	8.5%	11
TD-T	TD Bank	4.2%	$91.11	3.9%	$3.84	7.9%	12
TFII-N	TFI International	1.1%	$122.35	22.2%	$1.40	29.6%	12
TIH-T	Toromont Industries	1.5%	$113.38	16.0%	$1.68	10.5%	33
TRP-T	TC Energy Corp.	6.6%	$56.22	5.5%	$3.69	3.4%	22
T-T	Telus	5.2%	$27.17	3.2%	$1.40	5.4%	19
WCN-N	Waste Connections	0.8%	$134.13	1.8%	$1.02	7.9%	13
Averages		3.1%		4.6%		6.2%	19

Performance of ‘The List’

Feel free to click on this link, ‘The List’ for a sortable version from our website.

Last week, ‘The List’ exhibited a YTD price return of +4.6% (capital), while its dividend growth increased to +6.2% YTD, highlighting growth in income over the past year.

The best performers last week on ‘The List’ were Stantec Inc. (STN-T), up +10.22%; CCL Industries (CCL-B-T), up +5.53%; and Toromont Industries (TIH-T), up +0.78%.

Franco Nevada (FNV-N) was the worst performer last week, down -5.42%.

Dividend Increases

“The growth of dividend paying ability is of significance in the determination of a stock’s quality, or general safety…”

– Arnold Bernhard (the founder of Value Line)

“As a dividend increase is a positive sign of a company’s financial strength, the safest purchase, after research, is a stock with a recent dividend increase.”

– Tom Connolly (the founder of dividendgrowth.ca)

Last week, there were two dividend increases from companies on ‘The List’.

CCL Industries (CCL-B-T) on Thursday, February 23, 2023, said it increased its 2023 quarterly dividend from $0.24 to $0.265 per share, payable March 31, 2023, to shareholders of record on March 17, 2023.

This represents a dividend increase of +10.4%, marking the 22nd straight year of dividend growth for this quality manufacturer of packaging and packaging-related products.

Stantec Inc. (STN-T) on Thursday, February 23, 2023, said it increased its 2023 quarterly dividend from $0.18 to $0.195 per share, payable April 17, 2023, to shareholders of record on March 31, 2023.

This represents a dividend increase of +8.3%, marking the 12th straight year of dividend growth for this quality global engineering, architecture, and environmental consulting company.

Earnings Releases

Benjamin Graham once remarked that earnings are the principal factor driving stock prices.

The updated earnings calendar can be found here.

Three companies on ‘The List’ are due to report earnings this week.

Royal Bank of Canada (RY-T) will release its first-quarter 2023 results on Wednesday, March 1, 2023, before markets open.

TD Bank (TD-T) will release its first-quarter 2023 results on Thursday, March 2, 2023, before markets open.

Canadian Utilities Limited (CU-T) will release its fourth-quarter 2022 results on Thursday, March 2, 2023, before markets open.

Last week, four companies on ‘The List’, reported their earnings.

Stantec (STN-T) released its fourth-quarter 2022 results on Wednesday, February 22, 2023, after markets closed.

“For the second consecutive year, we achieved record financial results, and I am extremely pleased that we outperformed our revenue and earnings guidance for 2022 on the strength of our outstanding fourth quarter performance.” said Gord Johnston, President and CEO. “I am also very proud that Stantec has again been ranked as one of the most sustainable companies in the world. These remarkable achievements are attributed to the dedication and passion of our employees. With the Cardno integration behind us, we expect our strong financial momentum to continue throughout 2023 and the years ahead.”

– President and Chief Executive Officer, Gord Johnston

Highlights:

Net revenue of $4.5 billion in 2022, an increase of 22.6% over 2021
Adjusted diluted EPS1 of $3.13, an increase of 29.3% over 2021
Backlog of $5.9 billion, up 14.9% since December 31, 2021
Ranked #7 of the most sustainable corporations in the world by Corporate Knights, first among peers

Outlook:

“Stantec is well positioned for another year of solid growth,” said Mr. Johnston. “Significant backlog and strong tailwinds of public and private investment, along with Stantec’s focus on project execution and operational efficiencies, support Stantec’s confidence for delivering on our strategic plan and 2023 targets.”

For 2023, Stantec has established the following targets and expectations.

Source: (STN-T) Q4-2022 Earnings Presentation

CCL Industries (CCL-B-T) released its fourth-quarter 2022 results on Wednesday, February 22, 2023, after markets closed.

“2022 was our third consecutive year of delivering record results despite difficult economic conditions including historic inflationary pressures, global supply chain disruptions, pandemic-related restrictions and geopolitical events disrupting commodity and energy markets. Our teams worked with resolve, dedication and passion delivering for customers and shareholders. 2022 was another year of strong free cash flow, largely reinvested in our businesses, positioning the Company for continued long term success.”

– Geoffrey T. Martin, President and Chief Executive Officer

Highlights:

Fourth Quarter Highlights

Per Class B share: $0.83 adjusted basic earnings up 2.5%; $0.82 basic earnings up 2.5%; currency translation positive $0.03
Sales increased 6.6% on 4.9% acquisition growth and 2.3% positive currency translation partially offset by 0.6% organic decline
Operating income increased 1.1%, with a 13.3% operating margin down 70 bps

2022 Highlights

Per Class B share: $3.57 adjusted basic earnings up 5.9%; $3.50 basic earnings up 5.1%; currency translation negative $0.02
Sales increased 11.3% on 7.3% organic growth and 4.8% acquisition growth partially offset by 0.8% negative currency translation
Operating income increased 4.8%, with a 14.6% operating margin down 90 bps
Annual dividend increased 10.4% effective March 17, 2023

Outlook:

Core CCL business units’ orders picture still solid
CCL Design: outlook similar to Q4
CCL Secure volume expected to improve
Avery direct to consumer strength remains, augmented by recent acquisitions, horticultural peak season in Q1
Checkpoint: apparel destocking expected to continue for some months, MAS outlook stable with easier comps
Innovia volume subject to label materials industry demand recovery, inflationary pressures and inventory cost squeeze both stabilizing
Modest FX tailwind

Source: (CCL-B-T) Q4-2022 Earnings Release

Loblaws (L-T) released its fourth-quarter 2022 results on Thursday, February 23, 2023, before markets opened.

“Loblaw used its assets to provide value to customers in a period of continued inflation,” said Galen G. Weston, Chairman and President, Loblaw Companies Limited. “Consumers responded favourably to those efforts and continued to benefit from our extensive private label offering, leading loyalty program and targeted promotions.”

– Galen G. Weston, Chairman and President

Highlights:

2022 FOURTH QUARTER HIGHLIGHTS

Revenue was $14,007 million, an increase of $1,250 million, or 9.8%.
Retail segment sales were $13,694 million, an increase of $1,208 million, or 9.7%.
- Food Retail (Loblaw) same-stores sales increased by 8.4%.
- Drug Retail (Shoppers Drug Mart) same-store sales increased by 8.7%, with front store same-store sales growth of 11.5% and pharmacy same-store sales growth of 5.4%.
E-commerce sales increased by 8.3%.
Operating income was $871 million, an increase of $166 million, or 23.5%.
Adjusted EBITDA was $1,493 million, an increase of $169 million, or 12.8%.
Retail segment adjusted gross profit percentage was 30.6%, a decrease of 30 basis points.
Retail segment selling, general and administrative expenses (“SG&A”) as a percentage of sales was 20.2%, a favourable decrease of 70 basis points.
Net earnings available to common shareholders of the Company were $529 million, a decrease of $215 million or 28.9%. Diluted net earnings per common share were $1.62, a decrease of $0.58, or 26.4%. The decrease was primarily driven by a prior year gain related to a favourable Court ruling.
Adjusted net earnings available to common shareholders of the Company were $575 million, an increase of $60 million, or 11.7%.
Adjusted diluted net earnings per common share were $1.76, an increase of $0.24 or 15.8%.
Repurchased for cancellation 0.8 million common shares at a cost of $100 million and invested $599 million in capital expenditures, net of proceeds from property disposals. Retail segment free cash flow was $408 million.

2022 SELECT ANNUAL HIGHLIGHTS

Revenue was $56,504 million, an increase of $3,334 million, or 6.3%.
Food Retail same-store sales increased by 4.7% and Drug Retail same-store sales increased by 6.9%.
E-commerce sales were approximately $3 billion, a decrease of 3.8%, lapping elevated online sales due to lockdowns last year.
Net earnings available to common shareholders of the Company were $1,909 million, an increase of $46 million or 2.5%. Diluted net earnings per common share were $5.75, an increase of $0.30, or 5.5%.
Adjusted net earnings available to common shareholders of the Company were $2,263 million, an increase of $352 million, or 18.4%.
Adjusted diluted net earnings per common share were $6.82, an increase of $1.23, or 22.0%.
Repurchased for cancellation, 10.9 million common shares at a cost of $1,258 million and invested $1,407 million in capital expenditures, net of proceeds from property disposals. Retail segment free cash flow was $2,005 million.

Outlook:

Loblaw will continue to execute on retail excellence while advancing its growth initiatives in 2023. The Company’s businesses remain well placed to service the everyday needs of Canadians. However, the Company cannot predict the precise impacts of global economic uncertainties, including the inflationary environment, on its 2023 financial results.

For the full-year 2023, Loblaw expects:

its Retail business to grow earnings faster than sales;
Adjusted net EPS growth in the low double digits;
to increase investments in our store network and distribution centres by investing a net amount of $1.6 billion in capital expenditures; and
to return capital to shareholders by allocating a significant portion of free cash flow to share repurchases.

Source: (L-T) Q4-2022 Earnings Release

Emera Inc. (EMA-T) released its fourth-quarter 2022 results on Thursday, February 23, 2023, before markets opened.

“In 2022, we continued our track record of delivering for both our customers and shareholders. We successfully executed a $2.6 billion capital plan focused on delivering cleaner and more reliable energy for our customers, leading to strong earnings growth and supporting continued dividend increases for our shareholders” said Scott Balfour, President and CEO of Emera Inc. “In 2023, we will remain focused on leading a balanced energy transition at a pace that is as cost effective as possible for customers and supports system reliability.”

– Scott Balfour, President and Chief Executive Officer

Highlights:

Q4 2022 Financial Results

Q4 2022 reported net income was $483 million, or $1.80 per common share, compared with net income of $324 million, or $1.24 per common share, in Q4 2021. Reported net income included a $307 million after-tax MTM gain, primarily at EES, compared to a $156 million gain in Q4 2021 and a $73 million non-cash impairment charge related to Grand Bahama Power Company (“GBPC”).
Q4 2022 adjusted net income was $249 million, or $0.93 per common share, compared with $168 million, or $0.64 per common share, in Q4 2021. The increase was primarily due to the litigation award in Q4 2022; higher earnings contribution from Tampa Electric, EES and NMGC; and the impact of a weaker Canadian dollar (“CAD”). These were partially offset by lower earnings contribution from NSPI and increased corporate operating, maintenance and general expenses (“OM&G”) due to the timing of long-term compensation and related hedges and higher corporate interest expense.

Annual Financial Results

2022 reported net income was $945 million or $3.56 per common share, compared with a net income of $510 million or $1.98 per common share in 2021. 2022 reported net income included a $175 million after-tax MTM gain primarily at EES, compared to $213 million loss in 2021, a $73 million non-cash impairment charge related to GBPC and $7 million of NSP Maritime Link Inc. (“NSPML”) unrecoverable costs.
2022 adjusted net income was $850 million or $3.20 per common share, compared with $723 million or $2.81 per common share in 2021.
Growth in 2022 adjusted net income was primarily due to higher earnings contributions from Tampa Electric, EES, and PGS; the litigation award in Q4 2022; and the impact of a weaker CAD. These were partially offset by increased corporate OM&G due to the timing of long-term compensation and related hedges, higher corporate interest expense, realized gains on corporate FX hedges in 2021, increased preferred stock dividends and lower earnings contribution from NSPI.
The impact of the weakening CAD, partially offset by the unrealized losses on FX hedges increased reported net income by $42 million in Q4 2022 and $30 million for the year ended December 31, 2022, compared to the same periods in 2021. Weakening of the CAD increased adjusted net income by $14 million in Q4 2022 and $28 million for the year ended December 31, 2022, compared to the same periods in 2021. The impacts of the weakening CAD include the realized impacts of corporate FX hedges in the Other segment.

Outlook:

“In 2023, we will remain focused on leading a balanced energy transition at a pace that is as cost effective as possible for customers and supports system reliability,” said Scott Balfour, president and CEO of Emera.

Source: (EMA-T) Q4-2022 Earnings Presentation

MP Market Review – February 17, 2023

Last updated by BM on February 20, 2023

Summary

This is a weekly installment of our MP Market Review series, which provides updates on the financial markets and Canadian dividend growth companies we monitor on ‘The List’.
Last week, ‘The List’ exhibited a YTD price return of +5.4% (capital), while its dividend growth increased to +5.6% YTD, highlighting a growth in income over the past year.
Last week, there were two dividend increases from companies on ‘The List’.
Last week, there were four earnings reports from companies on ‘The List’.
Four companies on ‘The List’ are due to report earnings this week.
If you’re interested in creating your own income portfolio, consider subscribing to our premium service, which grants you access to the MP Wealth-Builder Model Portfolio (CDN) and exclusive subscriber-only content. Learn More

Introduction

This ‘magic pants’ analogy was from a Seeking Alpha article on dividend investing I read in 2012 and was the catalyst for me to take a closer look at this type of investing and see if it truly was magical.

After conducting additional research, I have shifted towards utilizing a dividend growth investing (DGI) strategy as my primary investment approach. While I maintain portfolios consisting of high-quality dividend growers from both the United States and Canada, I have opted to concentrate on Canadian (CDN) dividend growth companies in this blog. This is due to several reasons, including a smaller pool of DGI companies to track, a lack of coverage for the DGI strategy by Canadian investment media, and a tendency for those who do cover DGI to narrowly focus on only a handful of sectors (Energy and Financials).

Recent News

Job growth is surging, but the picture is more complicated (Globe & Mail)

https://www.theglobeandmail.com/investing/markets/inside-the-market/article-job-growth-is-surging-but-the-picture-is-more-complicated/

Just a few months ago, negative news appeared to have a positive impact on the stock market. Every time the central banks announced interest rate increases, stocks would surge higher. This was because it was believed that the interest rate hikes were coming to a close, and as a result, a bull market was on the horizon. However, the situation has now reversed, and positive news is having a negative impact on the stock market.

Although core inflation figures have ceased to accelerate and have even declined slightly, job creation is continuing to increase, indicating that wage growth is not subsiding. Given that overall inflation is not decreasing rapidly enough, central bankers may be compelled to resume raising interest rates to further cool down the economy. However, this could exacerbate the situation as it may negatively impact company earnings, which are already declining.

I appreciate the author’s probability scale, which outlines his assessment of the market forecast with the greatest likelihood.

Inflation will be harder to bring down than markets think (The Economist)

https://rb.gy/twrqsn

This article backs up the previous one but goes a step further. The author predicts a “nasty correction”!

“America’s “core” prices, which exclude volatile food and energy, grew at an annualized pace of 4.6% over the past three months, and have started gently accelerating. The main source of inflation is now the services sector, which is more exposed to labour costs. In America, Britain, Canada and New Zealand wage growth is still much higher than is consistent with the 2% inflation targets of their respective central banks; pay growth is lower in the euro area, but rising in important economies such as Spain.”

The author concludes that central bankers in wealthy nations have not indicated any intention to change their stance. However, even if inflation declines or they abandon their efforts to combat it, policymakers are unlikely to execute a seamless shift. Investors have positioned themselves for frustration, whether it’s due to persistently high rates, a recession, or a turbulent period of policy transition.

The List (2023)

Last updated by BM on February 17, 2023

SYMBOL	COMPANY	YLD	PRICE	YTD %	DIV	YTD %	STREAK
AQN-N	Algonquin Power & Utilities	6.5%	$7.83	16.3%	$0.51	-29.0%	12
ATD-T	Alimentation Couche-Tard Inc.	0.9%	$65.59	9.1%	$0.56	19.1%	13
BCE-T	Bell Canada	6.2%	$61.78	2.6%	$3.82	5.0%	14
BIP-N	Brookfield Infrastructure Partners	4.4%	$32.95	5.2%	$1.44	6.3%	15
CCL-B-T	CCL Industries	1.6%	$61.63	6.2%	$0.96	0.0%	21
CNR-T	Canadian National Railway	2.0%	$157.22	-3.5%	$3.16	7.8%	27
CTC-A-T	Canadian Tire	4.0%	$174.64	19.1%	$6.90	17.9%	12
CU-T	Canadian Utilities Limited	4.9%	$36.49	-1.2%	$1.78	0.0%	51
DOL-T	Dollarama Inc.	0.3%	$79.92	0.1%	$0.22	2.3%	12
EMA-T	Emera	5.0%	$54.77	4.1%	$2.76	3.0%	16
ENB-T	Enbridge Inc.	6.8%	$52.38	-1.8%	$3.55	3.2%	27
ENGH-T	Enghouse Systems Limited	1.7%	$42.46	18.9%	$0.74	3.5%	16
FNV-N	Franco Nevada	1.0%	$132.45	-4.1%	$1.36	6.3%	15
FTS-T	Fortis	4.1%	$55.74	0.7%	$2.26	4.1%	49
IFC-T	Intact Financial	2.2%	$202.70	3.5%	$4.40	10.0%	18
L-T	Loblaws	1.4%	$118.89	-1.2%	$1.62	5.2%	11
MGA-N	Magna	3.3%	$56.60	-1.6%	$1.84	2.2%	13
MRU-T	Metro	1.7%	$71.90	-4.7%	$1.21	10.0%	28
RY-T	Royal Bank of Canada	3.8%	$138.79	8.4%	$5.28	6.5%	12
SJ-T	Stella-Jones Inc.	1.7%	$47.95	-3.3%	$0.80	0.0%	18
STN-T	Stantec Inc.	1.0%	$71.90	10.1%	$0.72	2.1%	11
TD-T	TD Bank	4.1%	$92.87	5.9%	$3.84	7.9%	12
TFII-N	TFI International	1.1%	$125.93	25.8%	$1.40	29.6%	12
TIH-T	Toromont Industries	1.5%	$112.50	15.1%	$1.68	10.5%	33
TRP-T	TC Energy Corp.	6.5%	$56.84	6.6%	$3.69	3.4%	22
T-T	Telus	5.1%	$27.79	5.6%	$1.40	5.4%	19
WCN-N	Waste Connections	0.7%	$136.11	3.3%	$1.02	7.9%	13
Averages		3.1%		5.4%		5.6%	19

Performance of ‘The List’

Feel free to click on this link, ‘The List’ for a sortable version.

Last week, ‘The List’ was up with a +5.4% YTD price return (capital). Dividend growth of ‘The List’ increased to +5.6% YTD, demonstrating the rise in income over the last year.

The best performers last week on ‘The List’ were Canadian Tire (CTC-A-T), up +9.02%; Algonquin Power & Utilities (AQN-N), up +5.38%; and Alimentation Couche-Tard Inc. (ATD-T), up +4.84%.

Enbridge Inc. (ENB-T) was the worst performer last week, down -3.27%.

Dividend Increases

“The growth of dividend paying ability is of significance in the determination of a stock’s quality, or general safety…”

– Arnold Bernhard (the founder of Value Line)

“As a dividend increase is a positive sign of a company’s financial strength, the safest purchase, after research, is a stock with a recent dividend increase.”

– Tom Connolly

Last week, there were two dividend increases from companies on ‘The List’.

TC Energy (TRP-T) on Tuesday, February 14, 2023, said it increased its 2023 quarterly dividend from $0.90 to $0.93 per share, payable April 28, 2023, to shareholders of record on March 31, 2023.

This represents a dividend increase of +3.3%, marking the 23rd straight year of dividend growth for this quality pipeline and operator of power generation assets.

Toromont Industries (TIH-T) on Tuesday, February 14, 2023, said it increased its 2023 quarterly dividend from $0.39 to $0.43 per share, payable April 04, 2023, to shareholders of record on March 9, 2023.

This represents a dividend increase of +10.3%, marking the 34th straight year of dividend growth for this quality industrial equipment company.

Earnings Releases

Benjamin Graham once remarked that earnings are the principal factor driving stock prices.

Each quarter we will provide readers with weekly earnings updates of stocks on ‘The List’ during the calendar earnings season. Q4 2022 has now ended, and companies are now beginning to report.

The updated earnings calendar can be found here.

Four companies on ‘The List’ are due to report earnings this week.

Stantec (STN-T) will release its fourth-quarter 2022 results on Wednesday, February 22, 2023, after markets close.

CCL Industries (CCL-B-T) will release its fourth-quarter 2022 results on Wednesday, February 22, 2023, after markets close.

Loblaws (L-T) will release its fourth-quarter 2022 results on Thursday, February 23, 2023, before markets open.

Emera Inc. (EMA-T) will release its fourth-quarter 2022 results on Thursday, February 23, 2023, before markets open.

Last week, four companies on ‘The List’, reported their earnings.

We are now seventy percent of the way through earnings season, with four more companies on ‘The List’ reporting last week. For the most part, earnings have been good compared to estimates. All four companies that reported beat estimates, with (TIH-T) and (CTC-A-T) doing so quite handily.

TC Energy (TRP-T) released its fourth-quarter 2022 results on Tuesday, February 14, 2023, before markets opened.

“2022 has been a record setting year with continued demand and strong utilization across our systems, which is highlighted by TC Energy’s comparable earnings per common share of $4.30 and comparable EBITDA1 of $9.9 billion.” Poirier continued, “Our business remains resilient and is expected to deliver strong comparable EBITDA growth in 2023. We have a defined funding plan in place that will allow us to continue to progress our industry leading capital program and accelerate our deleveraging target.”

– President and Chief Executive Officer, François Poirier

Highlights:

Reaffirmed 2023 financial outlook with comparable EBITDA expected to be five to seven per cent higher than 2022, while comparable earnings per common share is expected to be modestly higher than 2022
Capital spending in 2023 is expected to be approximately $11.5 to $12.0 billion which we anticipate will be funded through a combination of internally generated cash flow, incremental long-term debt and hybrid capacity and through our asset divestiture program
Majority of the 2023 capital program is focused on NGTL System expansions, advancement of the Southeast Gateway Pipeline and the Coastal GasLink pipeline project, U.S. Natural Gas Pipelines projects, the Bruce Power life extension program and normal course maintenance capital expenditures
Fourth quarter 2022 results were underpinned by strong utilization across our assets, reflecting the continued high demand for our services
On December 19, 2022, NGTL System set a new record for delivery of 16.4 Bcf
On December 23, 2022, U.S. Natural Gas Pipelines experienced an all-time peak delivery record of 36.6 Bcf
Bruce Power achieved 87 per cent availability and the Unit 4 planned outage was completed approximately 22 days ahead of schedule
Power and Energy Solutions had high power plant availability during the coldest days in December when the average of Alberta power prices reached approximately $312/MWh

Financial results: Fourth quarter 2022

Net losses attributable to common shares of $1.4 billion or $1.42 per common share, compared to net income of $1.1 billion or $1.14 per common share in 2021
Segmented losses of $1.0 billion compared to segmented earnings of $1.9 billion in 2021 and comparable EBITDA of $2.7 billion compared to $2.4 billion in 2021

Financial results: year ended December 31, 2022

Net income attributable to common shares of $0.6 billion or $0.64 per common share, compared to net income of $1.8 billion or $1.87 per common share in 2021
Segmented earnings of $3.6 billion compared to $4.1 billion in 2021 and comparable EBITDA of $9.9 billion compared to $9.4 billion in 2021
TC Energy’s Board of Directors approved a 3.3 per cent increase in the quarterly common share dividend to $0.93 per common share for the quarter ending March 31, 2023
Dividend Reinvestment and Share Repurchase Plan (DRP) participation rate amongst common shareholders was approximately 33 per cent, resulting in $607 million reinvested in common equity from the dividends declared in 2022
Sanctioned $8.8 billion of projects and placed $5.8 billion of projects in service in 2022, and expect to place approximately $6 billion of new projects in service in 2023
Continued to advance industry leading $34 billion secured capital program, with various projects helping advance GHG emissions reduction goals
Placed the Alberta XPress project in service in January 2023 and approved a 63 km (39 mile), 1.4 Bcf/d extension of the Gillis Access project in February 2023 to further connect supplies from the Haynesville basin at Gillis
Executed main land acquisition agreements required for land falls and compressor stations in Veracruz and Tabasco for the Southeast Gateway Pipeline project, supporting our commitment and execution of the first critical path milestones
Announced updated cost estimates to the Coastal GasLink pipeline project on February 1, 2023. TC Energy’s project cost estimate has increased to $14.5 billion.

Outlook:

We expect our 2023 comparable EBITDA to be higher than 2022 and our 2023 comparable earnings per common share are expected to be modestly higher than 2022 due to the net impact of the following:

growth in the NGTL System from advancement of expansion programs
higher contributions from our Mexico Natural Gas Pipelines segment primarily related to the new Transportadora de Gas Natural de la Huasteca (TGNH) Transport Service Agreement (TSA) with the CFE
full-year impact from assets placed in service in 2022 and new projects anticipated to be placed in service in 2023, net of incremental depreciation expense
lower contributions from the Keystone Pipeline System including liquids marketing, primarily as a result of the de-rate associated with the Milepost 14 incident and continuing lower margins
higher Interest expense as a result of long-term debt issuances, net of maturities and higher floating interest rates
higher AFUDC related to the Southeast Gateway Pipeline.

We continue to monitor developments in energy markets, our construction projects, regulatory proceedings and our asset divestiture program for any potential impacts on the above outlook.

See the full Earnings Release here

Toromont Industries (TIH-T) released its fourth-quarter 2022 results on Tuesday, February 14, 2023, after markets closed.

“Our team delivered solid operating and financial performance in the fourth quarter and throughout the year, ending in a strong position. We continue to monitor supply and other uncertain market and economic variables. The Equipment Group continued to execute well delivering strong rental and product support results while optimizing equipment and parts sales. Supply chain challenges persisted, albeit some product lines have shown recent improvement. CIMCO revenue improved in the quarter on project construction and higher product support activity. Across the organization, we remain committed to our operating disciplines, driving our after-market strategies and delivering customer solutions.”

– Scott J. Medhurst, President and Chief Executive Officer

Highlights:

Revenue increased $194.1 million or 20% in the fourth quarter compared to the similar period last year. Equipment Group revenue was up 22% and CIMCO revenue was up 7% compared to prior year, however both groups continue to experience delays in equipment deliveries and project construction due to supply chain constraints in the quarter. Product support revenue was 19% higher on increased demand in both Groups, while rental revenue grew 10% on a larger fleet and higher activity levels.
Revenue increased $344.2 million (9%) to $4.2 billion for the year. Equipment Group revenue increased 10% while CIMCO revenue was down 3% on a tough comparable last year. Rental revenue was up 17% and exceeded levels in 2019 (pre-pandemic). Product support revenues were up 16%, with growth in both groups, reflecting continuing activity in end markets and the company’s growth strategies in this important market.
In the fourth quarter of 2022, a property was sold resulting in a pre-tax gain of $17.7 million ($15.4 million after-tax). This facility was previously a Battlefield branch, acquired in the 2017 QM acquisition. The disposition was part of the rental integration and operation excellence footprint strategy.
Operating income increased 43% in the quarter reflecting the higher revenue, the gain on property disposal, and lower expenses. Operating income as a percentage of sales increased to 18.5% (16.9% excluding the property gain) from 15.6% in the prior year.
Operating income increased 31% in the year, and was 14.8% of revenue compared to 12.2% in the similar period last year, reflecting the continued favourable sales mix, improved gross margin and lower expense ratio (including the property dispositions).
Net earnings increased $54.3 million or 51% in the quarter versus a year ago to $159.9 million or $1.94 EPS (basic) and $1.93 EPS (fully diluted).
For the year, net earnings increased $121.5 million or 37% to $454.2 million, or $5.52 EPS (basic) and $5.47 EPS (fully diluted).
Bookings decreased 33% in the quarter compared to the similar period and were down 27% on a full year basis. Equipment Group bookings were lower in both periods against a tough comparable last year with significant construction and mining orders received based on market conditions at that time. CIMCO had good booking activity in the year, up 10%.
Backlog remained relatively unchanged from this time last year at $1.3 billion, reflecting strong order activity over the past year coupled with selective equipment inflow, however ongoing supply constraints still persist.

Outlook:

Expecting the business environment to gradually improve with persistent challenges, key factors monitored:
- Dynamics of the supply chain
- Inflationary & macro-economic developments
- Customer credit risk in light of elevated interest rates
- Status of the pandemic
Our focus areas:
- Continue to protect our employees
- Serve and support our customer requirements
- Protect and build our business for the future (leveraging the learnings & managing risks)
Backlogs remain well positioned, but deliveries subject to availability of certain models & economic conditions
Technician hiring is a key priority, we’ve made progress in 2022 and it remains essential to support the growing demand for our product support and evolving customer requirements
Financially, we are well positioned with ample liquidity and our disciplined culture and track record of investing in organic growth initiatives and complementary opportunities

See the full Earnings Release here

Waste Connections (WCN-N) released its fourth-quarter 2022 results on Wednesday, February 15, 2023, after markets closed.

“Q4 topped off an extraordinary year for Waste Connections, highlighted by continuing outperformance during the period and providing a higher entry point and enhanced visibility for 2023. Strong operational execution and over 10% solid waste pricing, along with acquisitions closed during the period, once again provided for better than expected results,” chief executive Worthing Jackman said in a release.

– Worthing Jackman, Chief Executive Officer

Highlights:

Fourth Quarter Highlights

Price-led organic growth and acquisition activity drive Q4 results above expectations and provide higher entry point into 2023
Revenue of $1.869 billion, net income(a) of $194.4 million, and adjusted EBITDA(b) of $563.6 million, or 30.2% of revenue, above expectations
Net income and adjusted net income(b) of $0.75 and $0.89 per share, respectively

Full Year 2022 Highlights

Revenue of $7.212 billion, up 17.2%
Net income of $835.7 million, or $3.24 per share, and adjusted net income(b) of $985.3 million, or $3.82 per share, up 18.3%
Adjusted EBITDA(b) of $2.221 billion, up 15.7%, and 30.8% of revenue, up 10 basis points year over year, excluding acquisitions
Net cash provided by operating activities of $2.022 billion, up 19.1%, and adjusted free cash flow(b) of $1.165 billion, up 15.4%
Completes acquisitions with approximately $640 million of total annualized revenue in 2022

Outlook:

Strong pricing and acquisition growth to drive both double-digit percentage increase in revenue, and adjusted EBITDA* margin expansion
Revenue of approximately $8.05 billion, up 11.6%
Net income of approximately $961 million and adjusted EBITDA(b) of approximately $2.50 billion, or about 31.1% of revenue
Additional acquisitions, increases in recycled commodities and renewable fuels values, or reduction of inflationary pressures to provide upside to 2023 outlook

See the full Earnings Release here

Canadian Tire (CTC-A-T) released its fourth-quarter 2022 results on Thursday, February 16, 2023, before markets opened.

“Our record fourth-quarter EPS performance was a great finish to a remarkable centennial year. These results, combined with a strong retail topline over the year, demonstrate we managed well through a dynamic economic environment,” said Greg Hicks, President and CEO, Canadian Tire Corporation. “Our Triangle Membership delivered outsized growth over the year and continues to provide us with the rich first party data needed to offer personalized experiences and ultimately drive spend.”

– Greg Hicks, President and Chief Executive Officer

Highlights:

Fourth Quarter highlights

Consolidated retail sales were up 1.2% compared to the fourth quarter of 2021, and up 17.6% on a three-year stacked basis; consolidated comparable sales were in line with 2021’s exceptional performance, and up 21.1% on a three-year stacked basis
- Canadian Tire Retail comparable sales were in line with 2021, when comparable sales were up 9.8%; Automotive continued to deliver the strongest growth in the fourth quarter
- Mark’s had its tenth consecutive quarter of comparable sales growth, up 4.3%, driven by strength in footwear categories
- Licensed apparel sales partly offset declines in categories such as outerwear at SportChek, which ended the quarter down 1.7%
- Helly Hansen was a strong contributor to retail revenue growth in the quarter, up 20.6%, led by increased sales of sportswear through its North American channels
Q4 Diluted Earnings Per Share was a record $9.09, up 9% compared to Q4 2021; normalized diluted EPS was up 11% to $9.34, driven mainly by higher revenue in both Retail and Financial Services, and a higher Retail gross margin rate
- Retail segment income before income taxes (IBT) was $642.4 million, up from $638.1 million in Q4 2021, driven by an increase in retail revenue of 3.3%, or 2.3% excluding Petroleum, and retail gross margin dollars up 3.5%; retail gross margin rate (excluding Petroleum) was up 40 basis points
- Financial Services delivered strong quarterly IBT, up 37.5% to $86.8 million, with higher revenue, up 14.3%, and lower operating expense

Outlook:

“In 2023, we will continue to focus on delivering value to our customers through the unique capabilities of our Owned Brands, multi-category assortment, and Triangle Rewards,” said Hicks. “With these assets and the resilience of our brand, people and Better Connected strategy, we are better positioned than ever to compete and win.”

See the full Earnings Release here

MP Market Review – February 10, 2023

Last updated by BM on February 13, 2023

Summary

This article is part of our weekly series (MP Market Review) highlighting the performance and activity from the previous week related to the financial markets and Canadian dividend growth companies we follow on ‘The List’.
Last week, ‘The List’ was down a bit with a +3.9% YTD price return (capital). Dividend growth of ‘The List’ increased to +5.2% YTD, demonstrating the rise in income over the last year.
Last week, there were three dividend increases from companies on ‘The List’.
Last week, there were six earnings reports from companies on ‘The List’.
Four companies on ‘The List’ are due to report earnings this week.
Are you looking to build an income portfolio of your own? When you become a premium subscriber, you get exclusive access to the MP Wealth-Builder Model Portfolio (CDN) and subscriber-only content. Learn More

“This above all: To thine own self be true”

– William Shakespeare, Hamlet

The line “To thine own self be true” is from Act 1, Scene 3 of Shakespeare’s play, Hamlet. It was spoken by a father giving advice to his son before the latter left for university. We thought this counsel was applicable to those who are new to dividend growth investing (DGI) since they may have to ignore much of the investment guidance they have received to succeed with DGI.

Our belief has always been that to outperform the market, investors must think differently. Our strategy differs greatly from what is commonly found in today’s financial media. DGI hearkens back to a time when an individual’s wealth was determined by the income their assets produced, not the size of their portfolio at a given moment. This mindset is shared by Pat Keogh in his book, Make Your Family Rich, where he urges readers to adopt a similar approach.

According to Keogh, the first step in DGI is to stop viewing it as investing in a stock portfolio and instead, as buying businesses. By doing so, you become the manager of your own part-time asset management business and can shift the focus to making these businesses work for you, rather than the other way around.

The second step, as per Keogh, is to embrace a long-term investing mindset and give dividend growth investing sufficient time to yield results. To achieve this, one must stop thinking about retirement planning and start thinking about succession planning, with the aim of creating a business that will last for generations. By doing so, the pressure to achieve quick success is reduced, and investors are more inclined to adhere to the DGI process. Passing on the knowledge of DGI to family members and continuing to build wealth for future generations is always an option.

Lastly, Keogh recommends that investors shift their focus from constantly monitoring their portfolio value to instead examining the income it generates. By keeping track of the increase in income generated from investments, investors can measure their progress and ask themselves one simple question, “How much did my income increase from the previous year?” as a means of keeping score.

Discovering an investment strategy that aligns with your values and principles can be a challenging endeavour. The best way to determine if DGI is a suitable fit for you is to try it out.

Our asset management business, the Magic Pants Wealth-Builder Model Portfolio (CDN), has recently completed its third quarter, and in a year where most investment strategies produced negative returns, we continued to outperform the markets. More importantly, our income has already started to grow.

Here is a snapshot of our portfolio transactions and their performance as of January 31, 2023:

Statistically, we don’t always have a 100% success rate on our trades in the short term but we have been able to consistently deliver about 95% over the longer term (3-5 years).

We encourage you to join us, in our journey, as we offer guidance and expand the portfolio according to our business plan. We will send out alerts every time we make a purchase and provide detailed explanations behind our decisions. Starting your own DGI portfolio has never been easier!

For those of you who are readers of the blog but not yet subscribers, go to the link at the bottom of the ‘Subscribe’ page and sign up.

Be true to ‘thine self’ and start building real wealth today!

Performance of ‘The List’

At the end of the post is a snapshot of ‘The List’ from last Friday’s close. Feel free to click on the ‘The List’ menu item above for a sortable version.

Last week, ‘The List’ was down with a +3.9% YTD price return (capital). Dividend growth of ‘The List’ increased to +5.2% YTD, demonstrating the rise in income over the last year.

The best performers last week on ‘The List’ were TFI International (TFII-T), up +5.06%; Alimentation Couche-Tard Inc. (ATD-T), up +3.70%; and Waste Connections (WCN-N), up +2.34%.

Magna (MGA-N) was the worst performer last week, down -18.96%.

SYMBOL	COMPANY	YLD	PRICE	YTD %	DIV	YTD %	STREAK
AQN-N	Algonquin Power & Utilities	6.8%	$7.43	10.4%	$0.51	-29.0%	12
ATD-T	Alimentation Couche-Tard Inc.	0.9%	$62.56	4.0%	$0.56	19.1%	13
BCE-T	Bell Canada	6.3%	$60.82	1.0%	$3.82	5.0%	14
BIP-N	Brookfield Infrastructure Partners	4.4%	$32.95	5.2%	$1.44	6.3%	15
CCL-B-T	CCL Industries	1.5%	$62.67	8.0%	$0.96	0.0%	21
CNR-T	Canadian National Railway	2.0%	$159.90	-1.8%	$3.16	7.8%	27
CTC-A-T	Canadian Tire	4.3%	$160.19	9.3%	$6.90	17.9%	12
CU-T	Canadian Utilities Limited	4.9%	$36.43	-1.4%	$1.78	0.0%	51
DOL-T	Dollarama Inc.	0.3%	$78.91	-1.2%	$0.22	2.3%	12
EMA-T	Emera	5.1%	$54.02	2.7%	$2.76	3.0%	16
ENB-T	Enbridge Inc.	6.6%	$54.15	1.5%	$3.55	3.2%	27
ENGH-T	Enghouse Systems Limited	1.8%	$41.76	16.9%	$0.74	3.5%	16
FNV-N	Franco Nevada	1.0%	$136.00	-1.6%	$1.36	6.3%	15
FTS-T	Fortis	4.1%	$55.39	0.1%	$2.26	4.1%	49
IFC-T	Intact Financial	2.2%	$197.04	0.6%	$4.40	10.0%	18
L-T	Loblaws	1.4%	$117.11	-2.7%	$1.62	5.2%	11
MGA-N	Magna	3.4%	$54.14	-5.9%	$1.84	2.2%	13
MRU-T	Metro	1.7%	$70.84	-6.1%	$1.21	10.0%	28
RY-T	Royal Bank of Canada	3.8%	$138.76	8.4%	$5.28	6.5%	12
SJ-T	Stella-Jones Inc.	1.6%	$48.62	-1.9%	$0.80	0.0%	18
STN-T	Stantec Inc.	1.0%	$70.81	8.4%	$0.72	2.1%	11
TD-T	TD Bank	4.1%	$93.01	6.1%	$3.84	7.9%	12
TFII-N	TFI International	1.1%	$124.90	24.7%	$1.40	29.6%	12
TIH-T	Toromont Industries	1.4%	$107.71	10.2%	$1.56	2.6%	33
TRP-T	TC Energy Corp.	6.5%	$55.47	4.1%	$3.60	0.8%	22
T-T	Telus	5.2%	$27.25	3.5%	$1.40	5.4%	19
WCN-N	Waste Connections	0.8%	$135.32	2.7%	$1.02	7.9%	13
Averages		3.1%		3.9%		5.2%	19

MP Market Review – February 03, 2023

Last updated by BM on February 06, 2023

Summary

This article is part of our weekly series (MP Market Review) highlighting the performance and activity from the previous week related to the financial markets and Canadian dividend growth companies we follow on ‘The List’.
Last week, ‘The List’ was up slightly with a +4.6% YTD price return (capital). Dividend growth of ‘The List’ increased to +4.7% YTD, demonstrating the rise in income over the last year.
Last week, there were two dividend increases from companies on ‘The List’.
Last week, there were two earnings reports from companies on ‘The List’.
Six companies on ‘The List’ are due to report earnings this week.
Are you looking to build an income portfolio of your own? When you become a premium subscriber, you get exclusive access to the MP Wealth-Builder Model Portfolio (CDN) and subscriber-only content. Learn More

“Wide diversification is only required when investors do not understand what they are doing …. Diversification may preserve wealth, but concentration builds wealth.”

– Warren Buffett

Q4 2022 earnings reporting is now underway. Be sure to check out our earnings calendar at the bottom of ‘The List’ page to see which companies beat or missed estimates.

“Diworsification” is a word coined by legendary investor Peter Lynch. It refers to owning an excessive number of stock positions for the sake of diversification.

When we were looking at comparables for our Magic Pants Wealth-Builder Portfolios we not only had a difficult time finding 100% Canadian products but also ones that were properly diversified. The Canadian market is heavily weighted with dividend-paying companies in only two sectors, Energy and Financials. Most indexes and mutual funds consisting of only Canadian stocks have between 40-50% of their portfolios invested in these two sectors alone. Because your options for quality dividend growth companies (< 50) are limited in Canada, we are careful not to overweight in any one sector when we build “The List’ and our portfolios.

We also found that almost all dividend ETFs and mutual funds contained well over one hundred companies in their portfolio. With each security added, their portfolios do become more diversified. However, each additional security diversifies its portfolios to a lesser degree than the last one. Eventually, the benefit of each new security added is more and more muted to the point of being immaterial.

While some diversification is prudent, investors should remember to focus on owning the best businesses with the largest potential returns within their risk tolerance and investment style. Be careful not to diversify just for the sake of it. Many studies show that risk is not mitigated by owning more companies.

Safety is in quality not in numbers.

Performance of ‘The List’

At the end of the post is a snapshot of ‘The List’ from last Friday’s close. Feel free to click on the ‘The List’ menu item above for a sortable version.

Last week, ‘The List’ was up slightly with a +4.6% YTD price return (capital). Dividend growth of ‘The List’ increased to +4.7% YTD, demonstrating the rise in income over the last year.

The best performers last week on ‘The List’ were TFI International (TFII-T), up +8.93%; Stella-Jones Inc. (SJ-T), up +4.57%; and Magna (MGA-N), up +4.57%.

Loblaws (L-T) was the worst performer last week, down -4.75%.

SYMBOL	COMPANY	YLD	PRICE	YTD %	DIV	YTD %	STREAK
AQN-N	Algonquin Power & Utilities	6.9%	$7.36	9.4%	$0.51	-29.0%	12
ATD-T	Alimentation Couche-Tard Inc.	0.9%	$60.33	0.3%	$0.56	19.1%	13
BCE-T	Bell Canada	6.2%	$61.77	2.6%	$3.82	5.0%	14
BIP-N	Brookfield Infrastructure Partners	4.4%	$32.95	5.2%	$1.44	6.3%	15
CCL-B-T	CCL Industries	1.5%	$62.85	8.3%	$0.96	0.0%	21
CNR-T	Canadian National Railway	2.0%	$160.66	-1.4%	$3.16	7.8%	27
CTC-A-T	Canadian Tire	4.2%	$165.21	12.7%	$6.90	17.9%	12
CU-T	Canadian Utilities Limited	4.9%	$36.21	-2.0%	$1.78	0.0%	51
DOL-T	Dollarama Inc.	0.3%	$79.25	-0.8%	$0.22	2.3%	12
EMA-T	Emera	5.1%	$54.10	2.8%	$2.76	3.0%	16
ENB-T	Enbridge Inc.	6.5%	$54.38	2.0%	$3.55	3.2%	27
ENGH-T	Enghouse Systems Limited	1.8%	$40.89	14.5%	$0.74	3.5%	16
FNV-N	Franco Nevada	1.0%	$142.14	2.9%	$1.36	6.3%	15
FTS-T	Fortis	4.1%	$55.07	-0.5%	$2.26	4.1%	49
IFC-T	Intact Financial	2.1%	$195.08	-0.4%	$4.00	0.0%	18
L-T	Loblaws	1.4%	$115.24	-4.2%	$1.62	5.2%	11
MGA-N	Magna	2.7%	$66.81	16.2%	$1.80	0.0%	13
MRU-T	Metro	1.7%	$70.00	-7.3%	$1.21	10.0%	28
RY-T	Royal Bank of Canada	3.8%	$138.15	7.9%	$5.28	6.5%	12
SJ-T	Stella-Jones Inc.	1.6%	$49.64	0.1%	$0.80	0.0%	18
STN-T	Stantec Inc.	1.0%	$71.20	9.0%	$0.72	2.1%	11
TD-T	TD Bank	4.2%	$92.42	5.4%	$3.84	7.9%	12
TFII-N	TFI International	1.2%	$118.89	18.7%	$1.40	29.6%	12
TIH-T	Toromont Industries	1.5%	$106.21	8.7%	$1.56	2.6%	33
TRP-T	TC Energy Corp.	6.4%	$56.05	5.2%	$3.60	0.8%	22
T-T	Telus	4.9%	$28.62	8.7%	$1.40	5.4%	19
WCN-N	Waste Connections	0.8%	$132.23	0.4%	$1.02	7.9%	13
Averages		3.1%		4.6%		4.7%	19

MP Market Review – January 27, 2023

Last updated by BM on January 30, 2023

Summary

This article is part of our weekly series (MP Market Review) highlighting the performance and activity from the previous week related to the financial markets and Canadian dividend growth companies we follow on ‘The List’.
Last week, ‘The List’ was down slightly with a +3.8% YTD price return (capital). Dividend growth of ‘The List’ increased to +4.4% YTD, demonstrating the rise in income over the last year.
Last week, there were two dividend increases from companies on ‘The List’.
Last week, there were two earnings reports from companies on ‘The List’.
Two companies on ‘The List’ are due to report earnings this week.
Are you looking to build an income portfolio of your own? When you become a premium subscriber, you get exclusive access to the MP Wealth-Builder Model Portfolio (CDN) and subscriber-only content. Start building real wealth today! Learn More

“Investing is where you find a few great companies and then sit on your ass.”

– Charlie Munger

Noticing that two great companies (MRU-T) and (CNR-T) increased their dividends last week, we couldn’t help but wonder what our list of quality dividend growers would look like if one of our criteria were twenty years of dividend growth instead of ten. The list would be smaller, but we wondered what their dividend growth metrics would look like. Here is what we found:

10YR_CAGR-The List-01-01-2023 – 20+ YR of DG

Remember that the data in this chart displays returns derived from purchases made on January 1, 2013, regardless of valuation. By being a bit more active and following our process of only buying when companies are sensibly priced, we strive to do even better than this passive approach.

In summary, many metrics are similar, which tells you a few of things:

First, from a total return perspective, owning twenty-seven dividend growth stocks isn’t much different from owning eight non-cyclical, quality dividend growers, across a few sectors. In fact, you would probably be just as well off owning a basket of ten to fifteen quality companies from ‘The List’ as opposed to the entire list of dividend growth stocks we follow. It certainly would be a lot easier to monitor a smaller portfolio.

Secondly, these companies once had dividend growth streaks of ten years and comprised a very small list of dividend growth stocks in Canada. Seeing them extend their streaks for an additional ten years and beyond tells you how safe investing in companies with an established dividend growth policy can become.

Finally, the returns from companies with dividend streaks longer than twenty years appear to be even more predictable using our Growth Yield metric. Both the Historical Growth Yield and Estimated Growth Yield are almost identical. Historically, building a dividend growth portfolio with a >7% Estimated Growth Yield has been among the best predictors of market-beating returns.

For more info on Growth Yield, see one of our Top Posts; Using Growth Yield (YOC) To Build Powerful DGI Portfolios.

Performance of ‘The List’

At the end of the post is a snapshot of ‘The List’ from last Friday’s close. Feel free to click on the ‘The List’ menu item above for a sortable version.

Last week, ‘The List’ was down slightly with a +3.8% YTD price return (capital). Dividend growth of ‘The List’ increased to +4.4% YTD, demonstrating the rise in income over the last year.

The best performers last week on ‘The List’ were Canadian Tire (CTC-A-T), up +4.02%; Toromont Industries (TIH-T), up +3.73%; and TD Bank (TD-T), up +2.51%.

Canadian National Railway (CNR-T) was the worst performer last week, down -4.55%.

Category: MP Market Reviews

MP Market Review – March 31, 2023

MP Market Review – March 24, 2023

MP Market Review – March 17, 2023

MP Market Review – March 10, 2023

MP Market Review – March 03, 2023

MP Market Review – February 24, 2023

MP Market Review – February 17, 2023

MP Market Review – February 10, 2023

MP Market Review – February 03, 2023

MP Market Review – January 27, 2023

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