DividendGrowth.ca

The Connolly Report (since 1981) is no longer printed. It's a blog for subscribers inside this site. The blog is four or so pages a month with scores of ideas, links, yield and dividend data (going back decades) about dividend growth investing. Summaries of printed reports over the last decade (up to December 2018) are inside too. report summaries

About us → information for new subscribers is here

Nov 1 2024 → The Connolly Report blog in October was essentially a practice run for our 2024 year-end, decade-long summary. This decade-long summary is done every year. My dividend data goes back to 1977. We show the list of the companies followed, their dividend and yield in 2014 (ten years ago) and their dividend and yield this October. On average, the dividend grew by 8.4%. Does your retirement income grow by eight point four percent a year? We are not counting capital gains here. Our yield grew to 6.9% and prices were up 6.7% a year over this decade. So, every year in the last decade we averaged 8.4 + 6.7 = 15%. This has nothing to do with the stock market. We invest in a few individual companies directly. Then we wait for the yield and price to grow: the strategy depends on the growth of the dividend.

• July 20 2024
• A 26% dividend yield eventually was the topic of Rob Carrick’s column: how to set yourself up to get 26%. On the date of the Rob’s column Fortis’ yield was 4.2%. How do you get the yield up to 26%%. It’s easy! You can do it too. Here’s some detail behind how to do it. In 2000 when the dividend was 46¢ the yield 4.2% as the price of Fortis $9. The next year FTS’s dividend rose to .47, then .49, .52, .54, .59. In 2006 there was a bigger dividend jump to .67, .82 then $1.00 per share in 2008. The financial crisis did not bother Fortis’ dividend (it’s an electrical utility), so in 2004 the dividend rose to $1.04 and in 2010 way up to $1.12. At the $1.12 dividend level, the yield had grown to 12.4% (1.12 / $9.). Continuing to $1.16, $1.20, $1.24, $1.28, $1.40, $1.53, $1.63, 1.73, 1.83, and in 2020 $1.94. Just now Fortis’s dividend is 59¢ a quarter, $2.36 a year (up 4.3% this year alone). Do your wages rise by 7% a year? Your retirement income can.
• So, what’s the strategy? You buy one of these great dividend growing companies. Then you wait. Are you the patient? It’s the eventual cash flow you’re after. Save up your money and then buy another well-managed company in another sector: a financial, say. Eventually you will have a few fine companies. You define how many is ‘a few”. This process as nothing to do with the stock market. You are investing. No ETFs. I own no bonds (fixed income, never!). Return is yield plus growth. It’s as simple as that. You don’t need or want an advisor. Your wealth, eventually, will grow. It’s the cash flow you’re after. The cash flow makes your companies safer and more valuable: as a result your risk of poor returns falls sharply. Bill Gates knows dividends are important: he receives over a $million$ a day (yep . . . a day) in dividends from five holdings. One is CNR.

You ask: is Fortis a good buy now? We keep track of our company’s average yield inside this site. For Fortis the yield average over the last couple of decades is 4.3%. FTS’ current yield is roughly the same. So, Fortis is properly priced…not a bargain, not expensive. Yield is my main valuation indicator. I use CAPE to verify yield (cyclically adjusted P/E). All our data is ten year. Fortis’ cape is 25, average cape of the companies I follow is is 20 - so, FTS is a bit expensive by cape. Our new ten year valuation spreadsheet with year-by-year dividends comes out in late September when we get back from Nova Scotia. This September will be special. I started teaching business sixty, yes 60, years ago. Louise and I got married three weeks before . . . We went to Newfoundland for our honeymoon. It’s A1! ♦

• Here’s proof. Think on this for a jif. If the yield was 4.2% in 2000 and the yield is 4.3% today and as the dividend went up by some 7% a year over the period, the price must have risen by about the same amount. It did. As the dividend grows, so does the price, eventually. Your pot gets bigger. Some other companies we own with date of purchase and the yield now: BMO 1987 87%, NA 2007 15%, ENB ‘04 29%, Emera ‘03 19%, Atco in 2003, yield grown to 16%, Great West Life ‘09 15%. ♣ Not all our holdings went double digit though. I purchased SunLife Financial in 2005 at $43. With the current dividend, the yield is just 7%. After the financial crisis at $20, SLF’s yield would have been 15%. Your initial purchase price is important.

—-

zero point eight percent (0.8%) was the return on equity funds (omitting Shopify) run by professionals in 2020. The TSX was double that at 1.6% in 2020. Oh my! Eighty eight percent of professional wealth mangers lagged the index (88%). This is why you must learn to invest in a few fine individual companies. The dividends on stocks followed inside this site rose 8% last year. This rising income made the companies more valuable: prices were up by 6.1%.

About Us

• CNR’s dividend at the turn of the century was 12¢. In January of 2024 CN’s dividend was $3.38. That’s 14.9% a year. Dividends are a big deal. As dividends go, so does the stocks’s price. CNR’s price went from $7 to $78. Our income doubles every decade of so. So does our capital.

why_dg_oct_2016.pdf Dividend Growth Investing

• How can it be? How can a dividend increase affect the price of a stock? Especially if it's only a cent or two. It's unbelievably simple: an investment that produces more income becomes more valuable. Metro's dividend in 2019, for instance, increased from 18¢ to 20¢. That's up 11%. Do you believe that MRU's price will rise by 11% also? It will. The proof, developed over decades, is inside. Another: BMO's dividend went from $3.78 to $4 in 2019: up ♠♠7.3%. As a result, BMO's price will rise too. Year after year wealth/capital builds, driven by the growing income.

January 2023- Ask Your Adviser - A Rob Carrick’s column in early January 2023 had the headline “Five things to talk with your investment adviser about after the sad returns of 2022”. I’ve been thinking about what Rob said. Is a one year period enough to judge returns? Certainly not. Although total return was mentioned, Rob is mainly talking price returns. Most investors do. Over time, however, return on equities will track the sum of yield plus dividend growth. In the last decade, the CAGR (compound annual growth rate) of the 28 stocks I follow has been 8.79%. This is what really matters. ♦ My questions to ask your adviser, because of this, are quite different. First of all, I would not, and do not have an advisor. Advisors don’t have the answers. They are paid to peddle product and have no skin in your game. Most are not fiduciaries. An advisor should tell you that return has two parts: the investment return and the speculative return. The investment return, yield plus growth) is fairly stable, predictive, in fact. The speculative return fluctuates with human emotion. It is the speculative return that is falling. ♣ We could ask the adviser why they did not call in 2021 when the market was very high? Actually, I do not invest in the market. The market is a giant distraction for the business of investing. In the last major bear market, starting in 1964, the Dow was 874: in 1981;_— the Dow was 875. I do not buy index funds. ♦ Did the advisor inform you inflation was about to increase and suggest you cut back on bonds (fixed income) and move more into equity with its growing income. A growing income makes a company more valuable and drives up its price. Actually, returns from equities, over time, make stocks safer. Safer than bonds, in fact. ♦ My retirement income doubles every decade, on average: This means my capital will double also. ♠ In my view, advisor’s biggest error is not apprehending yield growth. As a result, an advisor does not know how to protect a portfolio. They are infected by modern portfolio theory. It’s just a theory and it’s wrong. Return, for instance, is not really related to risk. Return is more in the price you pay. Return, is the long run, tracks the sum of your initial yield and dividend growth. Price gains are driven by this increasing cash flow. Never buy a stock without knowing its ten year record of year-over-year earnings and dividends. The Connolly Report 2022 summary of dividend growth, year-by-year, over the last decade is inside this site. And the summaries go back decades, each overlapping each other. This is the real way to measure your return, your portfolio’s progesss.

* divup_priceup_77_87.pdf ← Evidence that as the dividend rises, the price will too (Aug 2020).

• Dividend growth investors focus on the income their assets produce. Over the years, in aggregate, our dividends grow. From January 2008, the 24 Connolly Report dividend growth stocks grew 8.6% a year. The 2008 yield was 3.2%, so our return was 11.8%. Very few income funds grow their distributions. Dividend growth investors do not have to depend upon the size of the pot to fund our retirement. And here's the real bounty: our pot keeps growing as retirement progresses driven by dividend increases. A company that provides more income is more valuable: so, it's price rises too. It's not only true, but common sense. You can still join our group.

♦ Here’s proof that the dividend growth strategy works. (As you read this, ask yourself if this is believable.) A decade ago, in 2012, BCE’s yield was 5.8%. As I key this in mid-September 2022, BCE’s yield is 5.8%. No big deal, eh. Ah.h.h but it is! In 2012 BCE’s dividend was $2.17 a share. Now (2022) the dividend is $3.64 per share, per year. From $2.17 to $3.64 is an average 5.3% increase every year (CAGR). Now here’s the wealth building kicker. As the dividend goes, so does the price. In 2012 BCE’s price was $42 a share. I’ve been studying dividend growth for over 40 years and know/believe that, over this time, BCE’s price should be about $70 per share…up 5.3%, the same rate of increase as the dividend increase. Look BCE’s price up and check. It’s truly amazing! Is your income growing at 5.3%? ♥ What’s the return now on BCE bought a decade ago? Eleven percent (return = dividend yield + dividend growth). Add the starting yield 5.8% and its growth rate of 5.3% (11%) Are you making 11% on your investments? ♥ Here’s the dividend,year-by-year: $2.17, 2.32, 2.44, 2.57, 2.84, 2.98, 3.13, 3.33, 3.46, $3.64 ← Dig out this dividend data before you buy any security. If the dividend does not grow, you are essentially betting/hoping the price will rise. One more thought. If the current price is less than the CAGR of the dividend, spiff up: investigate. Perhaps you'd notice that BCE's yield now is over a point above its own average yield. Data like this is compiled inside this dividend.growth.ca site. I’m working on 2022’s full list. How does 5.3% dividend growth compare, you ask? It’s more than two percentage points below the average of our full list. But interestingly, if you invested $12,500 in BCE in 2011, a decade later, BCE would have produced $8,484 in total income - this is the highest in the list. How come? That’s inside too. Good investment advice is not free.

a_sulliedrrif_2021.pdf September 2021 two RRIF plans, ‘theirs’ and mine

• Your Advisor - If he/she is trying to sell you some product, an ETF, for instance, ask her to jot down (right then) the annual income provided over the last ten years. Tell her you are interested in a growing retirement income. If she won’t or delays, strike 1. ♣ Ask how he measures risk with equities. If she says beta, strike 2. ♣ Ask what the two components of long term return are? They should say yield and growth. Income might be an acceptable answer and maybe capital gains, but your advisor has something to learn: equity return is driven by yield. ♣ A possible strike 3 question: Do you have a B.Comm a degree? ♣ The strike 3 question: fiduciary duty - will you put in writing that you will put my interests first? You’re out . . . of their office.

advisers err some examples of bad advice → September 2022

• Do not consult a wealth manager. Wealth managers are a class of middle-person unknown our forefathers. Their only source of wealth is other people’s money. They have no skin in your game. Invest directly in businesses yourself.
• How many stocks? (Dec 2020) John Maynard Keynes said “A careful selection of a few investments . . .” . In contrast, VEQT, the big Vanguard ETF, has 12,532 stocks. Which would you rather hold, a few quality companies or thousands of mediocre stocks? Do thousands of stocks make things safer? Most of the companies in the Connolly Report list doubled their income in the last decade. Does your retirement income double every ten years? It’s the cash flow that counts.

• May 10 2022 - Price disruptions, generally, began in November 2021. Dividend growth investors are not concerned: we have built in crash protection. We are “self-insured against the uncertainty of short-term market fluctuations” (Charles Ellis, p.76, Winning the Loser’s Game . . . Great book, get it). The facts/proof are inside (blog April 2022).

• Portfolio Selection is my main March 2021 topic . . . starting from scratch. Which will be the first purchase right now for her new $75,500 TFSA. How does one decide. After 40 years of experience, it's well worth the $50 folks to get access. Also, in March, the revised Graham formula valuation sheet. Which of 30 dividend growth stocks are expensive using Ben Graham's formula from Chaper 14(ATD,for sure), which eight, with a long record of annual consecutive dividend growth, have sensible prices.
• Why would you allow/trust a third party (advisor, so-called wealth manager), who has no interest in your welfare/no skin in your plan, to come between (sell) you and your company? Learn how to do it yourself.

• Nov 2021 An index fund is a product created by ‘the street people’. It is flawed. Fatally flawed, actually. You can’t win with an index fund. It’s an average. Certainly an index contains good stocks but mostly the holdings are sub-par. But this is not the fatal flaw. Valuation is. The average long-term return of the market is some 9%. Folks are lead to believe that they can obtain the return regardless of when they invest. This is not true. Valuation matters: when you invest is critical. As I write this in late November 2021, the market (index) at 21,700, is way overvalued. Returns from here will be negative.

• Wealth Simple’s site writes “Diversify your investments means you can minimize risk and maximize rewards.” That’s not true. If you own bonds, the equity portion of your portfolio must do double duty to achieve normal returns.
• Feb 2022 - “If you are planning to retire in ten to 15 years, we think you should consider buying stocks that have long histories of dividend increases. While investors tend to look at the current yield (indicated dividend divided by share price) of a stocks, we believe yield on cost (the indicated dividend divided by the per share purchase price) may be a more accurate measure of the long term value of a dividend.” Standard and Poor’s Outlook Sept 8.
• May 1 2021 - Why do 'they'* over diversify with scores of stocks and even bonds? 'Their'* fund can't be a loser alone. So 'they'* herd, run with the crowd of other *money managers. When 'they' fail conventionally, there's no pink slip. As a result, most wealth managers do not beat the market. More on this inside dividendgrowth.ca in April 2021 blog under HERDING

• In 1990 I spent $2,450 for 200 shares of a bank stock. I registered it in our son's name. In 1998 the stock split 2:1. They mailed him another 200 share certificate. In 2004, the stock split again 2:1. This time they mailed another stock certificate for 400 shares. He has 800 shares now. You can multiply 800 by the current price of the stock to find the total value. For me though, what is interesting and profitable in retirement is the dividend cash flow. With the dividend now up to $3.60 a share, these 800 shares pay $2,880 a year. That's more than I paid for the stock. My I love dividend growth investing. Inside this site there's a table detailing the progress of the price and the dividends and yield and p/e over over the last 30 years for BNS. Today January 22, 2021, I completed a table showing much the same data going back 20 years on 25 other Canadian stocks that have a long record of dividend growth every year. You can learn how to build $2,450 into $60,000 inside dividendgrowth.ca and have a worry free retirement. If you purchased a stock like this every year . . . This magic, however, does not work with ETFs. You have to buy stocks directly in a company yourself, not through a stock market middleperson. Shun wealth managers. It's easy…one a year. Consider this idea.

January 2021 blog inside this site (five pages): 20 year, year-by-year, dividend data which is updated for splits; you can take $7,000 per year from a $100,000 portfolio; our updated Streaker (at least decade long dividend growth record) List; my own 2020 RRIF withdrawal was 80% dividends (we eat less capital).

“Facing uncertainty, investors opt for security and attractive yields.” was a headline I saw in Investment Executive the other day. I smiled. I did not read the item. Is it not nice that we (growing income investors) do not need to worry about these matters? Our yields from good companies bought years ago are more than attractive now and these yields are still growing. This provide security: a stock providing an increasing cash flow become more valuable regardless of what the market is doing.

• Target date funds bungle* up your retirement finances. How? Just as your equities become safer, before retirement via the build up of intrinsic value, target date funds automatically sell your stocks and buy more bonds. Just say no to target date funds. “As an investors time horizon lengthens”, Warren Buffett says, “equities become progressively less risky than bonds.” (2018 Letter, page 6) or this by Mr Buffett on February 27, 2021 “bonds are not the place to be these days” Tragically, more employers are defaulting to target date funds for pension plans. Absolute stupidity! And when bonds are in a fund, they lose their guarantee of your money back. ♣ I do not own bonds, never did, never will. Why not? The dividend on one stock in our portfolio was 32¢ when I retired in 1996. Now that dividend is $3.60 a share…up 10% a year. Why would I want to shift to fixed income? * bungle is informal for: mis-manage, work badly, damage or malfunction

—-

Salary for Life by Henry Mah published Jan 2022. Henry answers questions about dividend income investing. I have just finished reading this book. It’s excellent. If you wish to learn about dividend growth investing, Henry's ideas will certainly help. Here's a sample from Chapter 5 (page 128)“ “Because capital preservation is always a concern for older investors, I strongly recommend that all stock investments be made in the highest quality dividend growth stocks you can find. Don't speculate or seek higher yielding stocks. Stick with the best of the best and take comfort in knowing that your investments will be safe and more productive than any fixed asset product.” https://www.amazon.ca/Salary-Life-You-Future-Generations-ebook/dp/B09N9QQZ77 Henry Mah’s previous book: https://www.amazon.ca/Income-Investing-Explained-Questions-Answered-ebook/dp/B08GCD53JL/ref=sr_1_1?dchild=1&keywords=Income+Investing+Explained+paperback&qid=1598978149&sr=8-1 * * * Think of a leading company’s common stock (never preferred) as a perpetual bond with a rising coupon/ yield. The more it rises, the safer your holding becomes. Eventually (after a decade or so), you’ll beat the market with yield alone and your capital will rise at much the same rate. Proof/data is inside dividendgrowth.ca * * The December 2020 blog is inside this site. The 2020 data summary is there at the top of the December blog page: 28 companies showing year-by-year dividends for a decade across the page. And, on the left side is the average 2010 price, on the right side, the late 2020 price. This allows us to show CAGR for dividends over the ten years and CAGR for price for the same ten years. This data exposes the secret of dividend growth investing. It is there in plain sight with an 80% correlation: dividend growth of the 28 companies was an average 8% a year, price growth was 6.2%. You can easily pick out the winners (top of list which is in yield on 2010 price order) and the losers at the bottom. $50 for access to this PDF and ten years of Connolly Reports (back to 2009). to me in Kingston or our daughter in Toronto. If your retirement income is growing by 8% on average, it is more than doubling every decade. Does your retirement income double every ten years? Find out about dividend growth. * I put numbers to my statements so you can verify their veracity. An example: return is dividend yield plus its growth, plus or minus a wee bit for change in p/e Actually, I use cyclically adjusted p/e (cape). CAPE is much more accurate valuation measure as it’s ten years of earnings, averaged; not the volatile and often manipulated quarterly data used by the industry. * * The wealth management industry has no skin in their game. And it really is a game for them (with your money). And in most cases, 'the middle people' have no obligation to put your interests first; no fiduciary duty. Do not outsource the job of managing your retirement portfolio to a professional. Most are infected with modern portfolio theory and have desecrated the traditional fundamentals of investing. Advisors do not realize that only four percent of companies provide most of the return. They want to sell you scores of securities (ETFs). And professional don't beat the market. As a result, they have changed the yard stick. Nasty people! Now they set up their own benchmark so folks won't notice professionals are losers, most of the time. Learn to invest on your own. It is easier selecting a few quality dividend growth stocks (and that's all you need) than being sold one of over one thousand ETFs. Most are steerage class. The ETF you are sold depends upon the advisor latched onto you. Nov 3 2020 * * * Sept 2020 - Does the ETF the predator is trying to sell you provide an increasing income? Ask. Insist on seeing the last ten years of distributions for the ETF. Why this question? It's the increasing income that drives things*. Growing income is what you want during retirement. The more your income grows, the less of your savings you'll have to withdraw. Ten years ago our largest portfolio provided $26,367 a year in dividends: now it's over $40,000. * price in particular. - ETFs - Nov 2021 - Remember/realize that ETFs were invented so that some ‘middle-person’, ill-educated advisor could get between you and direct investing in a fine company and siphon off a fee. * * * Risk Profile Questionnaire (new Aug 2020) - When you open an account, 'they' want you to fill in their risk profile questionnaire. DECLINE IT! Say no! Tell them you are aware of the risk and that you have a clearly thought out asset allocation. If you wish, tell them you mitigate risk with quality companies and that you believe “as an investor's time horizon lengthens…equities become less riskier than bonds” (Warren Buffet's Feb 20 Letter, page 6). ♣ If you want to get out of their office with out getting hooked by them, here are two questions they can't answer. #1 Going back ten years, tell him/her to write out the annual distributions from the specified ETF. You are interested, tell them, in a growing cash flow in retirement. #2 Ask them to hand-write out the promise that they will put your interests before theirs (FIDUCIARY DUTY). Advisors pay no price for being wrong. Your interests and the person trying to sell you the ETF are not aligned. Don't let advisors 'play' with your hard-earned retirement savings. And they do 'play' with very polished nonsense and by clicking a few URLs. * —- * Setting up a portfolio yourself: (Rob Carrick, Nov 14 2019) https://www.theglobeandmail.com/investing/markets/inside-the-market/article-as-a-diy-investor-do-i-need-an-adviser-to-review-my-portfolio/ I would suggest that you do not want or need an advisor (certainly not a robo advisor) to set up a portfolio for you. Advisors, knowing little about investing, will put you into ETFs (a lot of mediocre securities providing little income). People who flog ETFs aren't social workers: most have no fiduciary duty to put your interests first. To build wealth, you must learn to set up a portfolio yourself. It is easy. There are close to a thousand ETFs. There are only a few score of good dividend growing companies. I use the acronym TULF to help select a Telecom stock (with recurring income); a Utility that has decades of consecutive dividend increase (your retirement income); a Lower yield stable, food retail stock and a Financial (any big bank). Rob Carrick wrote about TULF in November of 2016: https://www.theglobeandmail.com/globe-investor/inside-the-market/how-to-build-a-dividend-portfolio-from-the-ground-up/article32612979/ https://www.theglobeandmail.com/globe-investor/inside-the-market/the-case-against-dividend-etfs/article32545975/ * portfolio protection - It's not the bonds that protect, it’s the growing income. May 2022 - Don’t believe it. The proof is inside dividendgrowth.ca There is a list of a dozen different way to prove this. I’ve been working on this for over forty years. * * Learn to invest directly in companies yourself, not through middlemen (the so called wealth managers) whose income is from other people's money (annual fees). It's rather easy, really, to do it your self. There are only a handful of great Canadian companies to select from. With ETFs, on the other hand, there are over a thousand. * 25% more - July 24 2020 - How you can increase the cash flow from your retirement capital by 25%? Connolly Report June 2020 blog. SWR - You can raise you sustainable withdrawal rate from the 4% promoted by Wm Bengen to 5%. I have in hand a five page paper on this topic by Jan Blakeley Holman at an investment firm in the States. She's correct. Actually, you can raise your safe withdrawal rate to 7% a year with dividend growth according to Peter Lynch. I link the ‘Worth’ column in our January 2021 blob inside this site and comment on it and the criticism of Lynch’s column. ♦ Feb 5 2020 * Wealth Management - When you hold * individual stocks in a discount brokerage account, there are no on-going annual charges. The banks and other financial intermediaries do not make money on your money. For the financial institutions, this is not good. As a result, they had do to something to generate fees, for doing, essentially, nothing! They invented a contrivance: ETFs. The banks now even discourage you from buying individual stocks. * HOLD! And I mean hold. You must understand why dividend growth investors hold. With each dividend increase, our yield grows. The company becomes more valuable. So, logically, the firm's stock price must increase. Move from being a dividend investor to a dividend growth investor. You can't build wealth with a dividend ETF. They are packed with higher yield dividend stocks. The managers have forgotten that return = yield + growth. Yield alone does not do it. Here is evidence from 12 companies that shows as the dividend goes, so does the price (from 2008 to 2018). And this period, notice, contains the financial crisis. https://www.theglobeandmail.com/investing/markets/inside-the-market/article-the-934-per-cent-yield-and-other-tales-from-canadas-dividend/ * Feb 18 2020 - Huge. There is a huge difference between a dividend stock and a dividend growth stock. You can't build wealth with ordinary dividend stocks (unless you are lucky and happen to latch on to a company that some day the market gets excited about. The key to our success (explained inside this site) is rising yield/growing cash flow that make the stock more valuable. * The purpose of data, charts and comments inside this site to assist readers to set up and run a dividend growth portfolio for themselves; a portfolio to deliver growing income in retirement (up 8.2% in 2019) This information is, unfortunately, not free. It is unbiased, though, and built on close to 40 years of research and experience. Refer to the About Us page for details. Join our group. * July 2020 - You have to ask if advisors really have your interests at heart when their organization is fighting the authorities to keep deferred sales charges…commissions spread out over years ahead. —- * About Us * What"s inside this dividend growth site? https://risingyieldoninvestments.blogspot.com/2019/09/am-i-too-focused-on-just-one-thing.html The valuation of the market at the point when you are sold an index ETF significantly determines the return you will return. The market made a new highs in early 2020. What's next? The market went up for years. It was foolish time to buy. Better prices have arrived. ETFs, know, are essentially cattle class ante: no service, no fiduciary duty, clutches of mediocre stocks and you still pay annual fees. For what? A couple of clicks by someone who knows little about real investing because they have been infected by modern portfolio theory. * Advisors pay no price for being wrong: best to avoid them and their ETFs. * Retirement Planning - “If you are planning to retire in 10 to 15 years, we think you should consider buying stocks that have long histories of dividend increases. While investors tend to look at the current yield (the indicated dividend divided by the share price) of a stock, we believe yield of cost)the indicated dividend dividend by the share purchase price) may be a more accurate measure of the long term value of a dividend.” [S&P's Outlook]. Standard and Poors listed 22 stocks in order of their yield on cost. The average, after a decade was 15%. Are you getting 15% on your retirement investments? Connolly Report Oct 2004 Retirement income up from 25¢ a share to $3.60 on one of the companies I bought in 1990. Two hundred shares were purchased for $3.64 each. Two 2:1 splits since then mean we now have 800 shares paying $3.60 a year. Details going back the 30 years are inside for subscribers (Oct 2020 blog page). And notice, we are getting 100 percent of our money back each year now ($3.64 price vs $3.60 dividend). * May 19, 2020 → Retirement Investing If anyone would, you'd think Jonathan Clements, a reporter with the Wall Street Journal since 1990, would get it right. But he didn't. Mr Clements omitted the concept of dividend growth in a column on retirement investing. In the opening statement of his February 1, 2004 column in the Sunday New York Times (link: February 2004 Connolly Report), Clements argued “that the stock bond mix you hold in retirement shouldn't be radically different from the mix you held just before quitting the work force”. He is right of course, and Clements had some compelling arguments and other good ideas in the column. But he missed what could have been his best point. Clements said “if you are determined to spend only income, there isn't much incentive to hold stocks, with their miserable 1½% average dividend yield. Instead we are almost inevitable driven to buy bonds and other investments that generate a fair amount of income.” TC: If a person owned common stocks before retirement, as Clements maintained in his opening sentence, surely some of those stocks, with dividend growth, would be yielding more than the index yield of 1½% going into retirement. If the dividend goes up, Mr Clement, the yield rises too. Look into dividend growth. After a decade, the average yield on original cost of Connolly Report stocks was 8.1%* (eight point one beats the market with out counting capital gains). Now, here's the bonus…the double double (Tim Horton and I both went to St. Mike's). CAGR on dividends was 8.2%* and, because dividend growth drives price growth, Jonathan, price CAGR was 8.6%* from 2009 to 2019. With dividend growth a company's yield grows over time and enhances retirement income. In fact, the need for any bonds is often eliminated. In his 2018 Letter to Shareholders, Warren Buffett put it this way: ” . . . eventually stocks become safer than bonds … *The Connolly Report dividend growth summary, year-by-year and decade long CAGR on dividends and CAGR price is prepared every Fall. It's part of your $50 access fee. This year's report might be the last CAGR as next year I'm 41 years with the report and I'm eighty two. Time to quit! * Unordered List Item * “If bonds are supposedly safe”, a reader asked Rob Carrick for his August 24 2021 column, “ why are my bond ETFs losing money?” Rob’s answer was fine, here’s mine. People ‘think’ bonds are safe. Bonds are not safe. Bonds are a risk asset just like stocks. I do not buy bonds, never have, never will. My income from quality common stocks grows, year after year. Good stocks become safer as their cash flow grows. Bonds don’t. * Unordered List Item * After a decade or so, quality dividend growth stocks provide yields which outpace the TSX and that's without factoring in appreciation in the stock price. Learn about this inside. The entry fee is $50. Alternatively, read Building Wealth with Dividend Stocks by Joseph Tigue or ♣ Your Growing Income by Henry Mah. You'll be tens of thousands of dollars ahead. We are hundreds of thousands ahead having started at the turn of the century. If you are not disciplined and patient, forget it and index with an over-diversified ETF full of mediocre issues. Quality does it, holding does it. Facts about dividend, as the dividend goes so does the price, say, do not cease to exist because one ignores them. —- * Inside dividendgrowth.ca you will learn: * that as the dividend grows, so will the price of your quality rising dividend company. We constantly compare dividend growth and price growth. The correlation, according to Ned Davis Research is over 80% after a decade or so. It's truly amazing! For instance, Empire's dividend was 4¢ a share in 1997. Now the dividend is 46¢, up 11.7% a year. This drove the price from $3.05 to $37 a share, up 12% CAGR. Do your saving grow at 12% a year? * Discover that ETFs allow advisors, who know little about investing, to play with the hard-earned money of savers using the faulty concepts of modern portfolio theory: over–diversification, beta and market efficency. * Inside you will learn how to scrap just about the entire methodology of modern portfolio theory and return to the timeless principles of investing. Take your sacred savings out of the hands of middlemen who have no skin in your game. * Oct 1st 2019 - a short essay on the inferior performance of professionals . . . * * you'd never believe why most pros can't beat the index. It's why I do not buy ETFs. * how to select the few quality companies you need to build wealth. * discover the value of yield data . . . yields send signals * that the real goal of advisors is not aligned with yours * why ETFs are hawked on low fees and what's essentially wrong with ETFs * that yield alone does not move the needle. What does? * how a 'greater dividend return' (growth) lowers uncertainty * why not to be sold preferreds or bonds * the calculation to do before buying a stock * from year-by-year dividend data sheets (not just a five average) going back to the turn of the century for 35 companies * seven characteristics of any investment * asset allocation in May 2019 blog * obtain proof that returns are determined by valuation * * Philip Fisher's ideas on lower-yield but higher-dividend growth companies * why we don't buy bonds . . . since 1979, on $100,000, bonds earned just $1.6 million, equities returned $7.5 million * how quality stocks become safer than bonds (W. Buffett 1918) * Ideas and opinions expressed in this blog should not be taken as any type of guidance. Join the winning group! —- * WARNING about ETFs: By definition, index ETFs can't win. This was proved again beginning on February 24th 2020 ETFs will, going forward, most likely lose again. Returns are determined by valuation: the price you pay to get in. Funds lost the last time the market was high. From 2000 to early 2009 the TSX gained only 0.74% a year. . . less than 1% a year. Over about the same decade, however, the CAGR* for dividend growth stocks was 9.6%. You do not buy an index ETF when the market is high. *compound annual growth rate In 2008, the market was high. From 2008 to 2018, dividend growth on the stock the Connolly Report follows was 9.0%. In the same period, the TSE was up only 1.6%. ♣ There are stocks in the index that do not pay a dividend, let alone raise their dividends. Where will your retirement income come from? Yields on ETFs are low. If you buy a stock that does not pay a dividend, you are betting someone else will pay a higher price than you did. Your savings are sacred: don't let someone who has no skin in the game, play with your money. Learn to do it yourself. —- This investor likes a lot of dividend growth stocks: http://www.theglobeandmail.com/globe-investor/investment-ideas/retiree-prefers-blue-chip-dividend-stocks-over-bonds-and-gics/article24348328/ * Most investors do not know, let alone believe, that as the dividend rises the price of the stock will also rise. Think. If a company is throwing off more cash each year (dividends), it's more valuable. Inside this site I prove this in many ways. Here is just one example from Burton Crane's 1959 book (The Sopisticated Investor, page 13) If an investor had put $10,000 into each of the various 101 NYSE stocks in 1913, by 1953 the dividend received would have been $10,140,258. What had the price of the stock grown to? $10,141,731. As the dividends grow, so does the price of the shares! * ETFs allow so-called 'wealth managers', who know nothing about proper investing, to build a portfolio with a click or two. Ludicrous! I hold individual companies with a long record of increasing dividends. ♣ Here's another reason I never buy an ETF: AIMCo. It seems one of Alberta's pension traders lost some $2.1 billion in trades linked to volatility. AIMCo executives have been fired. Money manages toe the line. Portfolios are all too similar. If the managers don't conform and lose, they're out. We, as a result, with individual portfolios can win by selecting a few the best dividend growth companies and not adding scores of poor quality stocks. Linked just below is a rather good item (May 23 2011) about reasons to buy and hold dividend growth stocks: http://seekingalpha.com/article/271326-9-real-world-reasons-to-own-dividend-growth-stocks?source=from_friend ——— * Living from dividends in retirement WSJ_May10 * * == Subscribers == * View subscriber-only content —-