MP Market Review – December 12, 2025

Intro

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

Timely Ten (Canadian version)

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

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

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

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

Timely Ten (United States version)

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

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

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

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

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

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

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

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

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

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

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

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