Market Comment in early August 2011 after the S&P downgrade of American bonds: as stock prices fall, our yields rise…our next purchase will mean more retirement income per dollar invested. Life is good. An example: BCE at $36.20 now offers a dollar's worth of dividends for $17.48 (1 / yield). The Strategic Dividend Investor by Daniel Peris has a six-page analysis of telecom stocks, including BCE, which alone is worth the $22 price of this excellent book on dividend growth investing.

• The bottom of the market after the 1929 crash was in 1932…three years on. Expect March 2009 lows to be tested and maybe even be breached now that the bull run in the cyclical bear has ended. The normalized ten-year p/e of my list is still a high 17.4. We had single digit P/Es as recently as the early 1980s.

“Safe Saving Rates: A New Approach to Retirement Planning” is a recent paper reviewed in The Economist of July 23 2011. Wade Pfau, the author, maintains that people should focus on their savings, not withdrawals. I focus on savings, but in a different way entirely. It's not mentioned in the column. Dividend growth investing does not hinge on the value of the stockmarket at the retirement date. Dividend growth investing produces a growing income from retirement assets, so that, if you start young enough, and with some luck, you might not have to eat into capital at all. Anyway, here's The Economist review of the paper from the National Graduate Institute for Policy Studies in Tokyo: http://www.economist.com/node/18988664

• Yield on Cost: If you do not yet “get” yield on cost, the current dividend divided by the purchase price, let me put it this way. The other day a $416 quarterly dividend cheque from Bank of Nova Scotia arrived in the mail. It was the result of my purchase in 1990 of 200 shares (with splits, now 800 common shares). Each year we now receive more than half the money back in dividends we paid for the shares. Now that's a retirement asset. After splits, our purchase price is just under $4 and the current price of of BNS is over $50. Dividend growth drives price growth. Believe it. Investigate dividend growth investing. The best new book on the topic is The Strategic Dividend Investor - why slow and steady wins the race - by Daniel Peris. It's about $20. If you do not buy and read this book, you deserve the yields you are getting on GICs. Here, from June 2010 Connolly Report, Volume XXX, No. 3 (a one-page PDF), is what you're missing (growing income), if you don't “get” yield on cost YOC_BNS

• Annuities are sold with the hook of tax-efficent cash flow. Well of course, some of the cash flow is tax-efficient…you are getting some of your own money back and there is no tax on that. Do not buy an annuity for that reason. Buying annuities when interest rates are low is not a good idea either.