Last updated by BM on March 25, 2024
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, dividend growth stayed the same and has increased by +7.4% YTD, highlighting the dependable growth in our income.
- The YTD price return of ‘The List’ was up from the previous week with a return of +4.0% (capital).
- Last week, there was one dividend announcement from a company on ‘The List’.
- Last week, there was one earnings report from a company on ‘The List’.
- No companies on ‘The List’ are due to report earnings this week.
DGI Scorecard
The List (2024)
The Magic Pants 2024 list includes 28 Canadian dividend growth stocks. Here are the criteria to be considered a candidate on ‘The List’:
- Dividend growth streak: 10 years or more.
- Market cap: Minimum one billion dollars.
- Diversification: Limit of five companies per sector, preferably two per industry.
- Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.
Based on these criteria, companies on ‘The List’ are added or removed annually on Jan. 1. Prices and dividends are updated weekly.
While ‘The List’ is not a standalone portfolio, it functions admirably as an initial guide for those seeking to broaden their investment portfolio and attain superior returns in the Canadian stock market. Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our Canadian dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.
For those interested in something more, please upgrade to a paid subscriber; you get the enhanced weekly newsletter, access to premium content, full privileges on the new Substack website magicpants.substack.com and DGI alerts whenever we make stock transactions in our model portfolio.
Performance of ‘The List’
Last week, dividend growth stayed the same and has increased by +7.4% YTD, highlighting the dependable growth in our income.
The YTD price return of ‘The List’ was up from the previous week with a return of +4.0% (capital).
The best performers last week on ‘The List’ were TFI International (TFII-N), up +6.59%; Stella-Jones Inc. (SJ-T), up +4.72%; and Magna (MGA-N), up +4.38%.
Alimentation Couche-Tard Inc. (ATD-T) was the worst performer last week, down -6.95%.
| SYMBOL | COMPANY | YLD | PRICE | YTD % | DIV | YTD % | STREAK |
|---|---|---|---|---|---|---|---|
| ATD-T | Alimentation Couche-Tard Inc. | 0.9% | $77.90 | 1.5% | $0.70 | 17.4% | 14 |
| BCE-T | Bell Canada | 8.7% | $45.86 | -15.4% | $3.99 | 3.1% | 15 |
| BIP-N | Brookfield Infrastructure Partners | 5.5% | $29.41 | -4.2% | $1.62 | 5.9% | 16 |
| CCL-B-T | CCL Industries Inc. | 1.6% | $71.14 | 23.0% | $1.16 | 9.4% | 22 |
| CNR-T | Canadian National Railway | 1.9% | $179.28 | 7.4% | $3.38 | 7.0% | 28 |
| CTC-A-T | Canadian Tire | 5.2% | $133.51 | -3.7% | $7.00 | 1.4% | 13 |
| CU-T | Canadian Utilities Limited | 5.8% | $30.77 | -4.2% | $1.79 | 0.0% | 52 |
| DOL-T | Dollarama Inc. | 0.3% | $101.32 | 6.6% | $0.28 | 5.8% | 13 |
| EMA-T | Emera | 6.0% | $47.68 | -6.1% | $2.87 | 3.0% | 17 |
| ENB-T | Enbridge Inc. | 7.6% | $48.21 | -0.4% | $3.66 | 3.1% | 28 |
| ENGH-T | Enghouse Systems Limited | 3.2% | $31.57 | -7.1% | $1.00 | 18.3% | 17 |
| FNV-N | Franco Nevada | 1.3% | $114.38 | 3.9% | $1.44 | 5.9% | 16 |
| FTS-T | Fortis Inc. | 4.4% | $53.79 | -1.9% | $2.36 | 3.3% | 50 |
| IFC-T | Intact Financial | 2.2% | $219.30 | 7.9% | $4.84 | 10.0% | 19 |
| L-T | Loblaw Companies Limited | 1.2% | $152.83 | 18.9% | $1.78 | 2.4% | 12 |
| MFC-T | Manulife Financial | 4.9% | $32.66 | 13.1% | $1.60 | 9.6% | 10 |
| MGA-N | Magna | 3.5% | $54.82 | -1.2% | $1.90 | 3.3% | 14 |
| MRU-T | Metro Inc. | 1.8% | $72.48 | 5.8% | $1.34 | 10.7% | 29 |
| RY-T | Royal Bank of Canada | 4.1% | $135.26 | 1.7% | $5.52 | 3.4% | 13 |
| SJ-T | Stella-Jones Inc. | 1.4% | $77.62 | 1.3% | $1.12 | 21.7% | 19 |
| STN-T | Stantec Inc. | 0.7% | $116.98 | 11.8% | $0.83 | 7.8% | 12 |
| T-T | Telus | 6.9% | $21.76 | -8.3% | $1.50 | 5.2% | 20 |
| TD-T | TD Bank | 5.0% | $81.27 | -4.0% | $4.08 | 6.3% | 13 |
| TFII-N | TFI International | 1.0% | $161.03 | 22.7% | $1.60 | 10.3% | 13 |
| TIH-T | Toromont Industries | 1.5% | $127.49 | 13.0% | $1.92 | 11.6% | 34 |
| TRI-N | Thomson Reuters | 1.4% | $156.36 | 9.1% | $2.16 | 10.2% | 30 |
| TRP-T | TC Energy Corp. | 7.0% | $54.97 | 5.1% | $3.84 | 3.2% | 23 |
| WCN-N | Waste Connections | 0.7% | $170.88 | 15.3% | $1.14 | 8.6% | 14 |
| Averages | 3.4% | 4.0% | 7.4% | 21 |
Note: Stocks ending in “-N” declare earnings and dividends in US dollars. To achieve currency consistency between dividends and share price for these stocks, we have shown dividends in US dollars and share price in US dollars (these stocks are listed on a US exchange). The dividends for their Canadian counterparts (-T) would be converted into CDN dollars and would fluctuate with the exchange rate.
DGI Clipboard
“The market is a distraction to the business of investing.”
– John C. Bogle
The DGI ‘Double-Double’ Strategy
The “double-double” is a uniquely Canadian term that most of us attribute to Tim Hortons. It will get you a coffee with two creams and two sugars (or double cream, double sugar). If it were up to us, we would also add the term “double-double” to the growing list of all the things we have found magical about dividend growth investing (DGI).
By tracking the dividend growth rates of our quality dividend growers, we have found it easy to predict when both our income and capital will double in value. After all, if we get the dividend growth right, the price growth will follow.
Let’s look at the dividend growth rates of ‘The List’ over the last ten years to illustrate.
The ‘Total’ row shows the value of owning one share in each company beginning in 2014. Although not every stock on the list doubled its dividend, the list in aggregate more than doubled, with the dividends growing from $28 in 2014 to over $62 in 2023 for an annualized growth rate of 9.6%. The same holds for the price of the stocks. One share in each company on ‘The List’ was worth ~ $1000 in 2014 and is now worth almost $2500 at the end of 2023. They, too, grew on average at an annualized rate of 9.1%, which again more than doubled our investment. Our annualized total return is even higher at 11.2%, as it contains both the dividends paid and price increases.
From an earlier post on The Rule of 72, we know that any investment with a rate of return equal to 7.2% or higher will double in value every ten years. Knowing this, we only have to pay attention to the annual dividend growth rate to predict our probable returns over a longer-term horizon.
Our dividend growth rate is already 7.4% in 2024 (See the ‘Performance of The List’ chart earlier in this post). If this growth rate continues and we apply the Rule of 72, our income and capital should double again over the next decade.
If our dividends double and our capital doubles every ten years, we will outperform most investing strategies. Dividend growth investors call this a ‘double-double’. By paying attention to the dividend growth rate from quality companies purchased at sensible prices, we can sleep easy at night, knowing our investment returns will eventually follow.
Dividend growth investing is simple to understand but not easy to do. Ignoring the noise and narratives of the financial markets is the hard but necessary part of our work.
Check us out on magicpants.substack.com for more info in this week’s issue….
