Last updated by BM on January 23, 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 positive +4.1% YTD price return (capital). Dividend growth of ‘The List’ ticked upwards to +3.7% YTD, demonstrating the rise in income over the last year.
- Last week, there was one dividend increase from a company on ‘The List’.
- Last week, there were no 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
“We all hope for capital gains, but the only thing we can really count on is the dividend” and “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
– Warren Buffett
As successful dividend growth investors, we understand that rising dividends are a foundation for higher share prices over time.
Here is the Compound Annual Growth Rate (CAGR) of dividends and the CAGR of price over the last decade so that you can study the evidence that as the dividend grows, so does the price.
A few things are to be gleaned from this historical data.
First, the current yield of ‘The List’ is rising. Stocks were expensive in 2013 and are more sensibly priced now than they were a decade ago.
Secondly, the historical growth yield of ‘The List’ at 6.6% is only about 1% lower than the total annualized return (7.7%) of the TSX composite index over the last decade. Dividends alone, received from companies on ‘The List’ bought ten years ago, will soon outperform the total return of the index after a couple more years of dividend growth.
Nineteen of the twenty-seven companies on ‘The List’ more than doubled their price in the last decade, and you would be hard-pressed to find a dividend ETF or dividend mutual fund that outperformed the total return (CAGR 10Y TR) of ‘The List’ in the last ten years.
Finally, notice the alignment of dividend growth (CAGR 10Y DG) and price growth (CAGR 10Y PG). For the last decade, they have been almost identical, with annualized returns of 10.0% and 10.3%. An increasing income, over time, drives our capital returns.
Once again our yearly decade long, annual year-by-year dividends sheet shows our dividends are stable and predictable. Understanding how dividends work and how they ultimately drive portfolio performance is one of the most powerful concepts to understand about investing. It is what we do differently that sets us apart from the crowd.
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 positive +4.1% YTD price return (capital). Dividend growth of ‘The List’ ticked upwards at +3.7% YTD, demonstrating the rise in income over the last year.
The best performers last week on ‘The List’ were Algonquin Power & Utilities (AQN-N), up +7.81%; Loblaws (L-T), up +2.02%; and CCL Industries (CCL-B-T), up +1.28%.
Toromont Industries (TIH-T) was the worst performer last week, down -3.56%.
Recent News
Confused about investing in 2023? Here’s a tried and tested approach. (Globe & Mail)
My friends say I am old-fashioned and traditional, and my views don’t mesh very well with current times and the younger generation. I hope they don’t read this article, or they may have to change their opinion. The author likes our tried and tested approach. We simply wished he had mentioned dividend growth companies as a further return catalyst.
The three lessons from the article align well with our DGI Truths, and Mr. Buffett’s quote puts a stamp on them.
Why your dividend stocks could use another look (Globe & Mail)
https://www.theglobeandmail.com/investing/markets/inside-the-market/article-dividend-stocks/
“This is no longer the old dividend universe where you could cobble together a dozen dividend-paying names, buy them and forget it,” Craig Basinger, chief market strategist at Purpose Investments, wrote in a report.
The author suggests that yield-hungry dividend investors will look elsewhere for income, with rising interest rates making fixed-income a safer bet. The impending recession will also not bode well for many dividend-paying companies with high debt levels.
Nothing new here, as most financial media strategists tend to paint all dividend-paying stocks with the same brush.
We do things differently. We assemble portfolios of high-quality companies with consecutive dividend growth streaks bought at sensible prices. Dividend growth investors have been around for decades and have seen their share of high-interest environments and recessions with little long-term impact on their returns.
Dividend Increases
One company on ‘The List’ announced a dividend increase last week.
Franco Nevada (FNV-N) on Tuesday said it increased its 2023 quarterly dividend from $0.32 to $0.34 per share, payable March 30, 2023, to shareholders of record on March 16, 2023.
This represents a dividend increase of +6.25%, marking the 16th straight year of dividend growth for this quality royalty and streaming company.
Earnings Releases
Two companies on ‘The List’ are due to report earnings this week.
Metro (MRU-T) will release its first-quarter 2023 results on Tuesday, January 24, 2023, before markets open.
Canadian National Railway (CNR-T) will release its fourth-quarter 2022 results on Tuesday, January 24, 2023, after markets close.
Last week, there were no earnings reports from companies on ‘The List’.
Below is a snapshot of ‘The List’ from last Friday’s close. For a sortable version of ‘The List’, please click on The List menu item.
‘The List’ is not intended to be a portfolio others replicate. Rather, its purpose is to provide investment ideas and a real-time illustration of dividend growth investing in action. It is not a ‘Buy List’ nor reflects the composition or returns of our Magic Pants Wealth-Builder (CDN) Portfolios. It is only a starting point for our analysis and discussion of dividend growth investing concepts.
The List (2023)
Last updated by BM on January 20, 2023
*Note: The following graph is wide, you can scroll to the right on your device to see more of the data.
| SYMBOL | COMPANY | YLD | PRICE | YTD % | DIV | YTD % | STREAK |
|---|---|---|---|---|---|---|---|
| AQN-N | Algonquin Power & Utilities | 7.1% | $7.18 | 6.7% | $0.51 | -29.0% | 12 |
| ATD-T | Alimentation Couche-Tard Inc. | 0.9% | $62.17 | 3.4% | $0.56 | 19.1% | 13 |
| BCE-T | Bell Canada | 5.9% | $62.46 | 3.7% | $3.68 | 1.1% | 14 |
| BIP-N | Brookfield Infrastructure Partners | 4.4% | $32.95 | 5.2% | $1.44 | 0.0% | 15 |
| CCL-B-T | CCL Industries | 1.6% | $61.06 | 5.2% | $0.96 | 0.0% | 21 |
| CNR-T | Canadian National Railway | 1.8% | $165.02 | 1.3% | $2.93 | 0.0% | 27 |
| CTC-A-T | Canadian Tire | 4.4% | $155.64 | 6.2% | $6.90 | 17.9% | 12 |
| CU-T | Canadian Utilities Limited | 4.7% | $37.96 | 2.8% | $1.78 | 0.0% | 51 |
| DOL-T | Dollarama Inc. | 0.3% | $82.63 | 3.5% | $0.22 | 2.3% | 12 |
| EMA-T | Emera | 5.1% | $54.22 | 3.0% | $2.76 | 3.0% | 16 |
| ENB-T | Enbridge Inc. | 6.3% | $56.02 | 5.0% | $3.55 | 3.2% | 27 |
| ENGH-T | Enghouse Systems Limited | 1.9% | $39.75 | 11.3% | $0.74 | 3.5% | 16 |
| FNV-N | Franco Nevada | 0.9% | $147.13 | 6.5% | $1.36 | 6.3% | 15 |
| FTS-T | Fortis | 4.0% | $55.87 | 1.0% | $2.26 | 4.1% | 49 |
| IFC-T | Intact Financial | 2.0% | $197.82 | 1.0% | $4.00 | 0.0% | 18 |
| L-T | Loblaws | 1.4% | $118.16 | -1.8% | $1.62 | 5.2% | 11 |
| MGA-N | Magna | 2.8% | $63.88 | 11.1% | $1.80 | 0.0% | 13 |
| MRU-T | Metro | 1.5% | $74.46 | -1.4% | $1.10 | 0.0% | 28 |
| RY-T | Royal Bank of Canada | 3.9% | $134.71 | 5.2% | $5.28 | 6.5% | 12 |
| SJ-T | Stella-Jones Inc. | 1.7% | $48.14 | -2.9% | $0.80 | 0.0% | 18 |
| STN-T | Stantec Inc. | 1.0% | $68.77 | 5.3% | $0.72 | 2.1% | 11 |
| TD-T | TD Bank | 4.3% | $89.18 | 1.7% | $3.84 | 7.9% | 12 |
| TFII-N | TFI International | 1.3% | $107.89 | 7.7% | $1.40 | 29.6% | 12 |
| TIH-T | Toromont Industries | 1.5% | $103.08 | 5.5% | $1.56 | 2.6% | 33 |
| TRP-T | TC Energy Corp. | 6.2% | $58.02 | 8.9% | $3.60 | 0.8% | 22 |
| T-T | Telus | 4.9% | $28.47 | 8.2% | $1.40 | 5.4% | 19 |
| WCN-N | Waste Connections | 0.8% | $128.62 | -2.3% | $1.02 | 7.9% | 13 |
| Averages | 3.1% | 4.1% | 3.7% | 19 |
