Report Summaries

1. A half page each about two studies on dividend stocks.
A) Stocks which do not pay dividends flounder in storms based on David Stanley's ideas in October's MoneySaver and
B) Valuation at the time of purchase matters a lot. 11% was the real average return for stocks purchased when the yield was in the high range versus 4% forward average annual real return for those stocks in the expensive quintile. MESSAGE: Don't buy expensive [popular] stocks: use valuation measures like yield and P/E.
Detail on second study at US equity returns: what to expect
2.Some comments on BCE, Leon's and a few other stocks. Two yield charts…both banks well above their average yield…the highest yield since 2000, actually. I have found, over the years, that yield valuation signals work.
3. The list with some comments and a new column for 'price to sales' ratio - this issue only
4. The recent price stability of our dividend stocks, with a table showing August low price and current price
To weather storms, the solution for me is not diviversification, it's concentration…in dividend stocks. “Our policy is to concentrate holdings.” Berkshire Hathaway 1978 Annual Report.
Are corporations tangible values?

1. More Canadian data on how well Canadian dividend growth stocks do…better than the Yale endowment fund, it seems.
A few comments on Capital Ideas Evolving…Peter L. Bernstein's new book.
“A stock dividend is something tangible, it's not an earnings projection…” Richard Russell
two yield graphs of banks - neither has had a higher yield since 2000
2. P/E contraction since 2000 - it's effect on the price of a dividend growth stock…a short paper
3. The list and some comments on it - eight more dividend increase announcements.
#1 in the list this time was #2 last time; #5 last time is now #3 all banks. The other banks are much further down the list. Positions four, five and six are life insurance companies.
The average dividend growth of stocks in our list in 2007 is 12.2%. How long will it take your capital to double at that rate?
4. A summary of a 42 page paper by my neighbour Dr. Peter Kirkham, titled: Are life insurance stocks good investments? Some of my comments on life insurance stocks too…how I select the one we own;
two year average G%D data for 10 stocks near the top of our list; a comment on BCE and a market comment by Richard Russell.

1. Average annual return of Canadian dividend growth stocks in the last decade: a)- 2.3%, b) 14.6%, c) 19.8%, d) 22.2%.
two yield charts of stocks near the top of the list - one a bank, one a life company - both have had recent dividend increases and one has not had a higher yield since 2000
2. A FIRST for the Connolly Report - chart of Power's G%D from 2005…with some comments about our Graham figure. Some data on two indicies: What would the DJIA be up to if dividends were included? Forget 13,000 plus, we're talking hundreds of thousands. Why I don't index invest:-( Also on page 2…“The biggest mistake in investing is…
3. Our list of common stocks in order of difference from their own yield average - nine dividend increases this issue - comment on BCEas well as a couple of stocks both at the top and the bottom of the list - two high yield banks briefly compared
4. Dividend increase announcements - some thoughts and calculations - one specific example - “Why don't I own this?” was my proof reader's comment.
Original copies of this April report are still ( as of October 2007) available for a $10 bill

1. Our Risk Controls - After the Shanghai slide, some ideas on why we [dividend growth investors] do not have to worry about market twitches or even gyrations. And also on page 1, a new chart of the average yield of our revised list going back to 2003 with weekly plots and comments on zenith and nadir points. On Friday the 13^th of April, the average of the [revised] list was 2.76% - useless information unless you know the peak and trough points. On May 26, it was 2.69%
2. PG/DG - Price Gain vs Dividend Growth over the last five years. There's a new column in our table this issue: it's beside the dividend growth data so we can compare price appreciation and dividend growth. This data provides further evidence that as the dividend grows, so does the price. It's right some interesting data.. Rob Carrick liked it too [R.O.B. Saturday April 7. Carrick's data was 10 years, mine five. They were quite similar.]
3 Our Table - stocks are moving up and down much more so than in our former in-order-of-yield list; Power, for instance. A dividend increase announcement, realize, will often push a stock up 25 basis points. Two more tell-tale dividend announcements are expected soon.
I was comparing G%D and P/E data: the stock with the lowest G%D is also the one with the lowest P/E.
If you have trouble understand all the data in the table, try this:
The first three numeric columns all deal with yield, the next three all price and the next three all growth.
4.Page four includes a few ideas on a dividend growth retirement distribution portfolio…will your money last as long as you do? There are two yield charts also - one from #1 in the list, the other is the common stock which is #3.

1. Low yields; abundance of liquidity; a financial-market wobble*? Yield charts from 1999 for two new stocks in list with annual dividends added by hand along the bottom of each. One chart shows the dividend quadrupled from from 20¢ in 1999 and, of,course as we know, so did the capital quadruple. Dividend growth drives capital growth. Capital in this case went from 100 shares bought for $3,800 in January 2000 to 300 shares (after two splits) valued at over $16,500 now. This stock was added to the main list. As this stock, and others in our list were rising, people (I do not use the word investors as they were most likely sold the mutual funds they hold) with mutual funds were afraid to open their statements: their funds must have owned the wrong stocks…and 'they' say professionals outperform. By definition, 50 percent of professionals can't outperform. Right?
2. Comment on forty other dividend growth stocks sorted: 1. into five year average annual dividend growth order, 2. into Graham value order and 3. into yield order. Only one stock appeared near the top of all three lists. Three stocks from the forty were added to the main list, two were close in dividend consistency and quality and might be added later.
3. Page three has the three sorted lists of forty dividend growth stocks plus four yield charts, again with dividend data hand written in on the bottom. Two yield charts are of stocks that just about made it to the list, in case your choice is different from mine. There's more comment on the sorted lists here and on the yield charts. A couple of yield charts show stocks well above their average yield.
4. The revised main list (three common stocks added, three with poor dividend growth taken away) along with revised five year and one year dividend growth data (12 dividend increases), updated earnings figures and payout ratios, and below the list some comment on stocks in the list the list. Again, my list is in order of a stock's own difference from average yield. Position in the list data is gone. Graham figures are updated to 2006 for the banks as their year-ends are in October.
*Treasury bills yield more than 10 year Canadas…be cautious!
Richard Russell February 12, 2007: “the inverted yield is saying that the bond market along with the PIMCO crowd believes the economy is going to “soften” in coming months and as a consequence yields in general will be heading lower.
I wouldn't argue with that opinion or “forecast” at all. So let's just suppose that the economy does soften in the months ahead. My first thought is that housing is going to get hit – and hit probably harder than it has been hit so far. If this happens, the Fed is going to “freak out,” because a “hard landing” in housing is the one thing the Fed does not want to see.
What would be the Fed's reaction be to a softening economy and a further unraveling of the housing situation? The Fed's reaction would be to bring rates down and keep the money spigots wide open.”

1. Comments by Martin Barnes (BCA), Carlyle Dunbar and Stephen Roach - two long term yield charts
BMO as an example of dividend growth…our yield now up to 18.8% on 1987 purchase price of $13.80
We are beating the market by just holding.
2. TransCanada now lowest in our list sorted by yield difference…and other comments about the list including:
if you had money to invest, and even though prices are frothy, what to do…how to work data in the list - two pertinent short term yield charts
3. THE LIST - average yield now 3.04% - Ten dividend increase announcements…the largest up 33%
Since last issue and the income trust announcement of October 31, the average price of stock in the list has increased by $3.97 (highest CM up $14.57) and the average percent increase was 9.3% (Fortis up the most percent wise 20%).
I'm glad I did not yield to the lure of income trusts and I am enjoying seeing the ones who did squirm!
“They say that more money has been lost chasing yield than in any other area of investing.” Richard Russell Dec 26 2006
4. Single Best Investment by Lowell Miller - comment on the introduction to this fine revised book on dividend investing.
Behavioural Finance by James Montier another great book if you have an extra $150 and are good at Statistics.
Electrical utilities and BCE…half a page of comment.
Target prices set one year ahead at 22%: half-life of target prices10 weeks - ignore them

1. A list of Canada's top dividend payers in order of the hundred of millions of dollars of annual dividends paid; to keep us on track, another example of dividend growth: our Fortis now has a 12.3% yield; quotations and comment from a column in the Sunday Times (not the American one) about behaviour control and investing
2.Telecoms - some thoughts about BCE's conversion to an income trust, BCE has moved way down the list; a few sentences about Loblaw, Jarislowsky; two yield charts: both Power group companies
3. The list in order of difference from average yield, again - five companies all in the same sector are on the bottom (expensive); four more dividend increases - two yield charts. The bank which was on the top of the bottom portion of the list last time, is now way up in the top portion…its yield has not been higher in years.
4. “Determining if the price is reasonable” - some thoughts…using the common that was #5 in our list last time and which would now be #1 if MBT were not in the list. Its yield graph, with some hand written detail is included. This stock's yield is still very high and its four dividend increases over the last two year have amounted to 36%.
MY DECEMBER ISSUE WILL BE LATE AGAIN - we're off to France in early December with the six cousins and their spouses and leaving our 'kids' at home for Christmas. December's issue will be mailed in early January 2007.

1. “buy a wonderful company at a fair price” - Are current prices fair? Some ideas and two yield charts of companies with still high yields after the recent run-up in prices. Five stocks still have yields higher than they were inJune.
2. On the page opposite the list, a few comments about stock in our list including the banks. Two bank yield charts.
3. The list sorted in order of difference from average yield again. Fortis is on the bottom, Manitoba Telecom on the top. I would not buy either. Six commonsannounced dividend increases, three in our list, three not. A paragraph and a yield chart of a possibily for a stock to replace Aliant in the list…a Canadian retail chain which has paid a dividend since 1960 and has had 41% five year dividend growth…but not before that, and, with another but, it's - 45%G%D. Some Graham values for other stocks too.
4. Comment on a 19 page paper extolling the view that bank common shares could replace bonds in a protfolio. Bank of Nova Scotia's average annual return since 1990, for instance, has been 31%.
NO COPIES LEFT

1. A page of comment (with a yield chart) on one common stock which is currently above its yield average, has a decent Graham valuation and recently increased its dividend by 17%. Yield charts on five more stocks which currently have yields above their average yield are contained in this report. The signal is strong on these six stocks. What we don't know, of course, is whether the signal will be stronger in the weeks and months ahead.
2. Explanation of the list on the opposite page, which, for the first time in 25 years, is in a different order. Included are a few comments on the revised Graham numbers. Some of our stocks are more reasonably valued by Graham's square root formula now.
3. The list in order of difference from average yield - 14 stocks have yields above their average yield. The last column in the table showing the percent decline of each issue from its recent high price…all are down. Six of our commons have had recent dividend increases. They vary from 2.5% to 26.5% - four are banks
4. “rejoice when markets decline” - current comment (the bear is returning…it's more than a correction) - some thoughts on BCE's plan of arrangement for Aliant - proof that dividend growth stocks do better: 17% average annual return for dividend-growing stocks vs 1.3% for non-dividend payers over the last ten years.
Libraries in Cobourg and North York s' main branch on Yonge Street carry the Connolly Report and, by law, I am required to send two copies to the National Archives in Ottawa.

1. An up-date (from Feb 2001) of my own little RRSP…how it has done since 1996…tripled in value during the period when folks who owned mutual fund were afraid to open their statements. By investing on my own, I reckon I save $2,650 a year in fees to the fund industry. I love it!
2. A most interesting list of our stocks and ten HDGs in order the sum of: their dividend growth over the last five years and their yield now…with comment.
3. Two tables: our stocks and a couple others in order of their Graham value: unfortunately, all are negative but one…stocks are expensive still. The other table is a list of our stocks, and the same few others few others, in order of the difference from current yield to their average yield. Twelve stocks are currently above their average yield. I added a comment on each one of them.
4. Our list in order of yield, as usual, with seven bolded. The small print under the table is slightly revised: my objectives are changing.

Page 1 will have some more information about the revised dividend tax credit; a few thoughts on the Tim Horton IPO + 2006 additions to Mergent's Canadian dividend achievers.
Page2 - some thoughts on holding dividend-paying stocks for a long, long time + yield chart of the 30 year Canada bond with T-bills and yield of our list (it's low). Five stocks have yields higher than their own average yield … the chart of one of these in included (three were in last issue…the other is BCE.
page 3 - looking for stocks in an expensive market: a couple from my HDG list and more comment on Loblaw + an adroit statement from Jeremy Grantham and from James Grant. A list of medium yield stocks with some thoughts about how the bottom stock in the list could be the best buy + two charts: one an example of a “medium” yield common and one a position in the list chart.
page 4 - the list: Dofasco is gone…updated data on dividend growth for the five year up to December 2005 ; all the Graham percent difference numbers are negative now, but there are a few high ones + 13 recent dividend increases which “insulate you against a cooling market” and a list of our stocks which are below their average yield…not to buy

1. Value Investing - a brief book report ; then three reasons why our strategy is safe; How the enhanced Canadian dividend tax credit could affect taxpayers in the $36,000 to $71,000 tax bracket; MBT's dividend?; yield chart summary: five stocks have 'kind of' high yields and six are in the medium category…the rest are low and hence expensive.
2. ATCO - an example of a stock with a historically low yield; nervous about 2006 - an idea; The Investment Zoo pages 45, 46 and 47; Dofasco, and also on page 2…
The only six Canadian stocks S&P rates as A+ are…drum roll. We follow five of them and only one is a bank. I'll do a yield chart on the sixth for February; in the mean time - two yield charts from S&P's top six Canadian stocks list.
3. What about a portfolio with 100% common stocks - Stephen Jarislowsky's comments from an interview with him;
Asset Allocation in retirement: our way is not the way 'life-cycle' mutual funds recommend. Two more charts: one a yield chart of a stock near the top of our list that has a high yield…I parked money in it last month. The other chart is a 'position in the list chart' of a bank which has moved up the list smartly…but it's yield is not really all that high
4 The list - quite a few changes in position this time- final reminder about renewals - five more dividend increases, one of them up 37%.

- no copies to non-subscribers - page two is premium content
1. Stocks are expensive, a quotation from Unexpected Returns; telecoms after VoIP; list of six stocks with high current yields; comments by Bill Gross, Richard Russell and David Dreman; there are a couple of stocks with little conflicting data
2. An illustration of the relationship between rising dividends and higher prices - HDGs - premium content
3. Four yield graphs - three with yields higher than average - Why I'm considering certain HDGs now.
4. The list with two new additions, more dividend increases and first notice about renewals for 2006

Sorry. Copies of August issue are not available to non-subscribers. (Libraries in Cobourg and North York ' main branch on Yonge Street' carry the Connolly Report.)
On the front page of August: 18 HDGs are listed in 3 orders with lots of data and some comment - one has a positive G%D. Page 2 has a tall, thin table: the combined list of page one HDGs and the page four regular dividend stocks, in order of their DG+YLD figure, with comment.
Page 3 is a review of The Investment Zoo, different than the one linked on this site.
Page 4's table has three new stocks in the list. Two overvalued common stocks, and Terasen, have been replaced.

Page one contains a four column table with our higher yield stocks listed in the order of : yield, Graham percent difference, price to book and price earnings. It's interesting to see where the same stock is in each list. There are five stocks (including two banks) at the bottom of at least three lists…certainly overvalued.
2. Berkshire Hathaway buying an electrical utility, Tweedy Browne with 21% cash in its $12 billion portfolios, bond yields down (chart of 10 year Canada…yield below 4%) and a chart of highest yielding bank's position in our list.
Stephen Jarislowsky's book: The Investment Zoo - a few snippits - buy it for your children
3. TransAlta (high yield, no dividend growth) versus Sun Life Financial (lower yield but high dividend growth) a full page discussion with interesting data.
4. Our prices are up even more - only one stock with a positive Graham number - lots more dividend increases

Page 1 begins with a one sentence quotation from James Grant about holding cash and a few sentences from Warren's Buffet's most recent Letter to Shareholders of Berkshire Hathaway. There is a paragraph with ideas from The Future for Investors by Jeremy Siegel on dividend investing and a paragraph about how Siegel's work applies to what we do. Certain stocks are preferred over others. Interestingly, ten years ago, in my April 1995 issue I reviewed Siegel's first book: Stocks for the Long Run.
2.There are six short term, weekly plot, yield graphs with comment. Most yields are low; but of the stocks I follow, three have yields which are 'kind of' high. One in particular stands out as in high range.
3. Page three offers some calculations as 'proof' that return = yield plus dividend growth and some thoughts on the low yield of TSX and what might happen next. There is a summary of the top five common stocks in my HDG lower yield list too in order of their Graham number.
4. The table of data now has two columns with updated Graham figures using 2004 earnings and dropping 2001 numbers. There are substantial changes: three stocks have positive numbers, and four, all in the same industry, are close behind with only single digit negatives. The most undervalued stock in the list, and it's moving up the list fast, according to both Graham data and P/E is . . .

1. My front page has four yield graphs. The two at the top of the page represent stocks with very low yields…do not buy, maybe sell. Two charts, representing the common stocks with relatively higher yields, are at the bottom. I divided all the stocks in the list into these two groups, but most are in-between in mid-February 2005, neither buys, or sells. Interesting one of the banks has a relatively higher yield: the other banks are somewhat higher in yield than usual.
2. Page 2 has two life insurance company yield graphs going back to when they went public in either February of 2000 in MFC's case or in November in Sun's case. Which of the three (GWO too is mentioned also) is closest to its 'buy' yield.
3. Portfolio Review: a case study of six common stocks purchases a few years ago and how, with dividend growth, their 'yield on cost' has increased. Two now have double digit yields. Our dividend strategy can produce increasing annual returns.
4 Our list of common stocks with updated 2005 dividend increase data…quite a few this time.

My February issue will be the first issue in VOLUME XXV - starting into twenty five years…WOW!
February's issue will include a lot of yield charts (four on the front page alone)…most yields are low…not a good time to buy. However, there are a few financial stocks and a couple of others with yields which are not low: they are not high either. As usual, you can decide what to do when you see the charts.
Inside I have a page on portfolio review ideas with yield on cost (YOC) and other data on six stocks I purchased a few years ago. It's rather interesting. Some double digit yields in just a few years (not counting appreciation, though I show the tens of thousands of dollar in gains in the table too). I might also include, if I have room, yield charts on two life insurance companies. The big table on page four will include updated 2005 dividend data and five year dividend growth data.

Nevertheless, the overriding feature of any investment decision right now is still the same: “Any way you look at it, stocks are expensive.” Richard Russell, January 2005

thoughts in early December 2004
1. our prices are up handsomely since early summer lows, thus little value is available - Americans are eating their seed corn - also half a page on: TransAlta's dividend - Manitoba Telecom' yield - BCE's dividend
2. higher dividend growth stocks - a double list of these other 25 common stocks with higher dividend growth; one list in order of Graham's percent difference, the other in order of yield - dividend growth data for each of these 25 in 2004
Russell Metals - comment including stock screening ideas and bar chart of RUS's dividend since 1985
3. Enbridge's yield chart for 2003 and 2004 with comments about ENB's 'buy' yield - Time to sell? two stocks
4. the list with 2004 and five year dividend data, updated Graham values for each - seven recent dividend increases - some stocks have moved way down the list, others have moved noticeably up into more value slots

“the market is not cheap”
1. Banks - Chart of BMO's dividend since 1987 (up 25% this year alone) and position charts for NA and BMO since January 2000. Comments on 'yield on cost” and: Are banks stocks a good buy now?
2. Barron's interview with Martin Barnes - “the market isn't cheap” and other quotations
The New, Emerging Oil Paradigm - summary of a recent paper by Peter Kirkham
3. Five rear returns - our stocks up 72% since October 1999 - other returns in this bear market are negative - eg: S&P 500 is down 4.5% over last five years
Bull's Eye Investing - a new book - some quotations about secular bear markets
4. the list in order of yield with up dated dividend growth data and Graham's value prices

Leon's - I discovered part of the reason, perhaps, why Leon's can increase its dividends at double digit rates. We were looking at LCD televisions (fall of 2005) at a Leon's store along the 401. The price tag on the model we fancied was $1,269. I might have purchased the 20“ LCD at that price, but Louise had done her homework. The price on the Leon's web site for the same LCD was $969. Louise showed the salesperson the web site printout. He retreated. A few minutes later, he returned with an interesting explanation for the $300 price differential. We did not buy the explanation, but we bought the LCD in the store at the internet price. I was impressed by the Leon's operation…polished.
As an aside, we checked LCD television prices at a few other places including Future Shop. Future Shop still has a sign saying they are Canadian. They are, as I remember from the business press, now owned by the American multi-national Best Buy: not Canadian. I much prefer to buy Canadian, to keep the profits in Canada and to have the company listed on the TSE. Needless to say, we did not go for a Starbucks afterwards. We do not shop at Wal-Mart either. The store closing in Jonquiere, Quebec, shows they do not want to pay their employees decent wages and benefits. I suppose they reckon it's better to keep the Waltons on the list of the world's richest people. (S. Robson Walton at $18.3 billion is the world's ten richest person, Jim Walton at $18.2 billion, John Walton at $18.2 also and Alice and Helen Walton in position 13 at $18 billion each. Ken Thompson and family was estimated (past tense now) to be worth $17.9 billion by Forbes as so is placed in position #15.)