Last updated by BM on September 10, 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’.
- This week we share ‘Why DGI is the Key to Long-Term Wealth: Our Model Portfolio Quarterly Update’.
- Last week, dividend growth of ‘The List’ stayed the course and has increased by +8.8% YTD (income).
- Last week, the price of ‘The List’ was down slightly with a return of +10.4% YTD (capital).
- Last week, there were no dividend announcements from companies on ‘The List’.
- Last week, there were two earnings reports from companies on ‘The List’.
- This week, one company on ‘The List’ is due to report earnings.
DGI Clipboard
“I measure our progress primarily on the basis of the income we are collecting and the growth of that income through dividend increases.”
– Josh Peters
Why DGI is the Key to Long-Term Wealth: Our Model Portfolio Quarterly Update
For those new to the blog, our model portfolio is being built and managed based on an initial $100,000 investment over the first four years of our business plan, with monthly contributions of $1,000 beginning in year two. The inception date was May 1, 2022. The portfolio is used as a template for those wanting to start with Dividend Growth Investing (DGI) before committing to more significant amounts of capital.
PAID subscribers have access to every buy/sell alert and full quarterly reviews as we build a powerful dividend growth portfolio of high-quality Canadian companies.
In our most recent quarterly report of our Wealth-Builder Model Portfolio (CDN), one chart stood out for me and reinforced my commitment to our DGI strategy. Contrary to the volatility of the market, our income shows a steady and predictable pattern.
As of July 31, 2024, we have invested $79,162 of our initial capital according to our model portfolio business plan. Our annual income now stands at $3,094, resulting in a current portfolio yield of 3.9% and growing ($3,094 divided by $79,162). Our yield will eventually surpass what can be earned from other fixed-income investments thanks to dividend growth, but there’s another component to our strategy that fixed-income alternatives lack: capital growth.
While we have predictability of income growth with our DGI strategy, capital growth is driven by market forces—requiring patience. As dividends increase, the share price typically follows suit over time. We are starting to see this correlation in our model portfolio. Our portfolio value has now increased to $89,957 (including dividends and dividend reinvestment).
Wrap Up
We understand that our portfolio value will eventually rise alongside our growing cash flow, but tuning out the market noise can still be challenging. When I was new to DGI, I found it helpful to focus on the income side of our strategy, especially the steady growth that comes with each dividend increase. Capital growth will follow naturally over time.
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 are added or removed from ‘The List’ annually on January 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 of ‘The List’ stayed the course and has now increased by +8.8% YTD (income).
Last week, the price return of ‘The List’ was down slightly with a return of +10.4% YTD (capital).
Even though prices may fluctuate, the dependable growth in our income does not. Stay the course. You will be happy you did.
Last week’s best performers on ‘The List’ were Telus (T-T), up +5.01%; Enghouse Systems Limited (ENGH-T), up +4.15%; and CCL Industries Inc. (CCL-T), up +3.32%.
Magna (MGA-N) was the worst performer last week, down -6.35%.
| SYMBOL | COMPANY | YLD | PRICE | YTD % | DIV | YTD % | STREAK |
|---|---|---|---|---|---|---|---|
| ATD-T | Alimentation Couche-Tard Inc. | 0.9% | $76.86 | 0.1% | $0.70 | 17.4% | 14 |
| BCE-T | Bell Canada | 8.2% | $48.50 | -10.5% | $3.99 | 3.1% | 15 |
| BIP-N | Brookfield Infrastructure Partners | 5.2% | $31.08 | 1.3% | $1.62 | 5.9% | 16 |
| CCL-B-T | CCL Industries Inc. | 1.5% | $79.61 | 37.6% | $1.16 | 9.4% | 22 |
| CNR-T | Canadian National Railway | 2.2% | $156.46 | -6.2% | $3.38 | 7.0% | 28 |
| CTC-A-T | Canadian Tire | 4.5% | $156.00 | 12.6% | $7.00 | 1.4% | 13 |
| CU-T | Canadian Utilities Limited | 5.2% | $34.54 | 7.5% | $1.81 | 0.9% | 52 |
| DOL-T | Dollarama Inc. | 0.3% | $128.27 | 35.0% | $0.35 | 29.5% | 13 |
| EMA-T | Emera | 5.6% | $51.13 | 0.7% | $2.87 | 3.0% | 17 |
| ENB-T | Enbridge Inc. | 6.7% | $54.79 | 13.2% | $3.66 | 3.1% | 28 |
| ENGH-T | Enghouse Systems Limited | 3.3% | $30.61 | -9.9% | $1.00 | 18.3% | 17 |
| FNV-N | Franco Nevada | 1.2% | $117.88 | 7.0% | $1.44 | 5.9% | 16 |
| FTS-T | Fortis Inc. | 3.9% | $60.52 | 10.3% | $2.36 | 3.3% | 50 |
| IFC-T | Intact Financial | 1.9% | $250.64 | 23.3% | $4.84 | 10.0% | 19 |
| L-T | Loblaw Companies Limited | 1.1% | $174.25 | 35.6% | $1.92 | 10.0% | 12 |
| MFC-T | Manulife Financial | 4.4% | $36.73 | 27.2% | $1.60 | 9.6% | 10 |
| MGA-N | Magna | 4.8% | $39.36 | -29.1% | $1.90 | 3.3% | 14 |
| MRU-T | Metro Inc. | 1.6% | $84.91 | 23.9% | $1.34 | 10.7% | 29 |
| RY-T | Royal Bank of Canada | 3.5% | $164.08 | 23.3% | $5.72 | 7.1% | 13 |
| SJ-T | Stella-Jones Inc. | 1.2% | $92.25 | 20.4% | $1.12 | 21.7% | 19 |
| STN-T | Stantec Inc. | 0.8% | $105.70 | 1.0% | $0.83 | 7.8% | 12 |
| T-T | Telus | 6.7% | $22.86 | -3.6% | $1.53 | 7.1% | 20 |
| TD-T | TD Bank | 5.0% | $81.89 | -3.3% | $4.08 | 6.3% | 13 |
| TFII-N | TFI International | 1.1% | $139.81 | 6.6% | $1.60 | 10.3% | 13 |
| TIH-T | Toromont Industries | 1.6% | $120.76 | 7.1% | $1.92 | 11.6% | 34 |
| TRI-N | Thomson Reuters | 1.3% | $166.24 | 16.0% | $2.16 | 10.2% | 30 |
| TRP-T | TC Energy Corp. | 6.1% | $63.34 | 21.1% | $3.84 | 3.2% | 23 |
| WCN-N | Waste Connections | 0.6% | $182.62 | 23.3% | $1.14 | 8.6% | 14 |
| Averages | 3.2% | 10.4% | 8.8% | 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.
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