Dividend Growth

Growing retirement income from certain dividend-growing common stocks.
Since 1981

“Any good investment idea”, Warren Buffet says, “can be put in one paragraph.” Here's mine in a sentence. When they are value priced (measured by yield), I buy premium common stocks with a good record of dividend growth and hold them for the increasing income: as the dividend rises, so does the share price. Charles Dow, years ago, used yield to measure value too. So did Robert H. Heilbrum and Geraldine Weiss.

I mailed my October issue on Wednesday 17th. [Average of list : 3.00 on Nov 16]

If you are just starting dividend growth investing, look to Rob Carrick's column in the Report on Business of Saturday, September 8 2007 under the title of 'Dividend Deluxe: A plan for stellar long-term gains'. Mr. Carrick has a list of 20 dividend growth stocks - ten happen to be from my list and ten others. All, however, were mentioned in my February 2007 report. Rob shows the current yield on the shares bought ten years ago, the 10 year compound average annual dividend growth for each stocks, and, suprisingly for the Globe and Mail, the current quarterly dividend per share. Eight of these common stocks have double digit yields now…and he's not counting price appreciation either. Seek out the column, read it again. Keep it for reference. Mr Carrick understands dividend growth investing: it's a fine summary. Yield on original cost is a concept you will not see mentioned very often: few believe in it. Fewer still have the patience to make it work for them. If you are an impatient and undisciplined (don't pay off your credit card on time), dividend growth investing is not for you. You might as well resign yourself to being fleesed by mutual fund fees.

Life Cycle Funds - These funds are fatally flawed. Aug 18 2007
How to Start dividend growth investing - some ideas - new June 2007
Dump Your Mutual Funds - some ideas…July 2007
STORY STOCK - You're heard positive things about a stock…but it's on bottom of our list…some thoughts
Bonds - some thoughts May 2007 For instance, bonds do not stop stock prices from falling.
Exchange-traded funds - a few thoughts. June 2007
books… I've read recently

Diversify globally? The headline of CIBC's Investors Edge summer 2007 news recommends that you “Diversify globally to broaden your investment horizons”. I don't. They said “stock markets around the world do not move in perfect unision”. It's true: they don't move in perfect unsion. But they usually move in unision: they certainly did after July 19 this year. Interest rates went up with the liquidity crisis, so bonds prices fell with stocks. In my view, this argument for global diversification is tosh. I reckon they are trying to push their higher MERs global funds.

PRINCIPAL PROTECTED NOTES - Don't be wooed by the hype.
CIBC call 'these things' Premium Income Generation Deposit Notes and their ad in the Kingston Whig Standard on Feb 21 2007 claimed a “Guaranteed coupon of 6% payable in Year 1” This seems terrific: 6% in year one is indeed tempting. But that might be all you get: 6% first year and nothing at all in years 2, 3, 4 and 5. The small print in the ad says it all. And they love the word 'potentail'. The ad continues: “Potential coupons up to 10% in Years 2 to 5 based on the price performance of 10 companies”. Notice too that guarantee of your money back is at maturity…five year from now.
http://www.osc.gov.on.ca/About/CSA/csa_20060707_investorwatch-ppn.pdf
http://www.fundlibrary.com/research/content/structuredproducts.pdf
For some terrific information on principal protected notes, copy the above URLs into your brouser.
Do not buy principal protected notes. In fact, if a planner trys to sell your one, get rid of that advisor. They're a rip!
Rob Carrick's Report on Business column on PPNs of Tuesday March 14 was great too.
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20060314/RCARRICK14
My thoughts, briefly: Your principal is protected, but not from inflation. You might not get any income from a PPN…or any gain, either. There's a penalty if you sell early. A secondary market may not exist so you might be effectively locked in for the duration…five to eight years. And it's all legal! Imagine buying an investment that does not pay income. That's like buying a common stock which does not pay a dividend:-). Think for a jiff: how are they going to guarantee your money back? And after that premium is paid, how much money is left ot invest to earn a return. And billions of dollars of these 'things' have been sold. The commissions are high…it's that simple. What a world! One can't help wondering: if principal protected notes are likely to be so profitable, why are these financial planners sharing the concept with us.

TD Canada Trust calls it the Managed Assets Program (TD MAP) - Does MAP sound like WRAP. YEP! These are wrap accounts: “a mix of mutual funds”; “professionally designed”, TD says. That's right. Another layer of management so you pay an extra fee.The financial planner used to pick the mutual funds. Now the planner does less work and you pay more.
Each fund contains something like 60 stocks. Why would one need more than one fund. Shake you head! Talk about over diversification

Christian Peacemaker Team - My first cousin, Bob Holmes works with the Christian Peacemaker Team. At age 72, he's five years older than I am. You might have hear Bob on CBC's The Current in December. He was in Iraq last fall but was not one of the team members kidnapped in Iraq. Usually Bob works in Hebron trying to help ordinary Palestinians mitigate the horrors of the Israeli occupation. I support him and the Peacemaker Team by sending money to CPT at 25 Cecil St., Unit 307, Toronto ON M5T 1N1 You can obtain more information at: http://www.cpt.org
There are now more than 420,000 jews settled in Israeli occupied Palestine and they are still expanding the illegal settlements (since the Oslo Accord, over 40,000 more acres). What a mess!
Christian Peacemaker is a volunteer organization that sends teams to crisis zones around the world. Their activities in Canada include a clear-cutting issue in Kenora, Ont., that has pitted native people against forest giant Abitibi-Consolidated. In Iraq, the group has monitored elections, advocated for prisoners of the Abu Ghraib jail, and helped with human rights activities.

The Investment Zoo by Stephen Jarislowsky - the best Canadian general investment book ever.
Lowell Miller's The Single Best Investment - Creating Wealth with Dividend Growth is the best book on dividend growth investing…though with American examples. Book report in December 2006 issue.
Building Wealth with Dividend Stocks by Joseph Tigue who worked for S&P for years is also a great book on dividend investing, but it'sAmerican data. Nine of Tigue's pages are worth the price of the book. Chapter 5 is the best. The essence of dividend growth investing is outlined in the middle of page 66. Book was report prepared for subscribers.

“Researchers can't find the benefits of fund advisers” was the title of James Daw's June 29 2006 column in the Toronto Star. The most common service financial advisers offer involves selecting mutual funds. But, according to a research paper by a team headed by Peter Tufano, a senior associate dean at Harvard Business School, “financial advisers add no value”. Imagine!

The Connolly Report, about dividend growth stocks, by Tom Connolly has been published continuously every two months since 1981…now from downtown Kingston, Ontario. Common stocks can be classified in two major categories: “stocks that can only offer the hope of capital gains and those that offer capital gains but with rising-and reliable-dividend income”.¹ I follow the latter. ¹Donald Coxe, Basic Points, September 2003

Copies of the Connolly Report are available at the Cobourg Public Library, the main North York Public Library on Yonge Street and The National Libray of Canada
or by sending a $10 bill for the current issue to:
Connolly Report, Unit 607, 185 Ontario Street, Kingston, ON K7L 2Y7
The Connolly Report is no longer open to new subscribers. Sorry. There is no waiting list either. I might re-do my web site in late fall 2007 and offer net based subscriptions to current subscribers. After the R.O.B. column about my work, I've been flooded with mail. I'd rather be at the cottage than processing mail.
This is a Canadian (dot CA) site. The offer of an issue for a $10 bill is certainly not open to Americans: Bush junior attacked Iraq illegally. I'm also thinking of American support for Israel, the damage American cotton subsidies do, illegal softwood lumber duties, Bush's refusal to join Kyoto or support the World Court, the waste of money on missile defense, the Byrd Amendment, extraordinary rendition: they deported Maher Arar to Syria for torture. Americans now condone torture. In addition: the Devil's Lake diversion by North Dakota, Guantanamo, Abu Ghraib, and Agent Orange. My report is also closed to Americans because Irving Mintzer, a leading American energy consultant, said “The problem with the Chinese is that they don't know that the Canadian oil is ours and neither do the Canadians”. HELLO! And their Congress does not recognize our claim of sovereignty in the Artic. Some American wineries mature their wine with wood chips in steel barrells: imagine! I don't buy American wine or coffee at Starbucks!
I also support the international campaign of boycott, disinvestment and sanctions against Israel. My first cousin, a member of the Christian Peacemaker Teams working in Hebron, has told me about the inhumane suffering of the Palestinian people under the Israeli occupation. Think the cluster bombs the Israelis used and the Israeli bombing of the Lebaonese village of Cuna on July 30 2006. For the same reason I don't buy shares in Finning: they supply bulldosers which destroy Palistinian homes.

“Treasurys [bonds] are no more inherently safe than stocks are inherently value-laden. Safety and value are qualities conferred not by the nature of an asset but by the price at which it is acquired” (James Grant, Forbes Oct 28 2002. Read anything Grant writes.)

Why I refuse to be sold mutual funds:
• EXCESSIVE ANNUAL FEES: Every year, even from no-load funds, the median Canadian equity fund will abscond with $567 in fees for each $25,000 invested (2.27%)…an astonishing amount. And every year, that's annually $567!
• PROFESSIONAL MANAGEMENT virtually guarantees you will lag the market.
• one hundred and sixty more reasons why I don't buy funds: 160 more reasons why I do not buy funds . . .

What counts, ultimately, is the cash flow you receive from the asset and the rate at which the income grows.temporary e-mail: connolly@kos.net
mailing address: T. Connolly, 607-185 Ontario St., Kingston, ON K7L 2Y7

The information and opinions on this site must not be considered investment advice. The information is intended to be for educational purposes. I taught this material for 32 years. I'm an educator: I am not an investment advisor…never was, never would be. No particular security or investment product is recommended or has ever been recommended. Opinions can change without notice. Opinions offered here can never be a substitution for independent analysis and due diligence. This site may contain forward-looking statements. Your guess as the future value of any security is as good as my guess, or that of a broker. Forecasting is dangerous enterprise. There are risks involved with investing. As Peter L. Bernstein says in Against the Gods, “Investors must expect to lose occasionally on the risk they take. Any other assumption would be foolish.” 284 In The Future for Investors, Jeremy Siegel says: “No strategy can guarantee superior performance”. In The Black Swan, Nissim Taleb says “We cannot predict.”. It is virtually certain there will be periods of time when dividend investing will underperform the market. It happened last in 1998-1999 during the technology boom. However, early 2000 was a great time to buy dividend growth common stocks and I said so on page 451 of The Connolly Report of February of 2000, before most people realized the technology bubble had broken. Yield signals work! Good luck.
Thank you for looking at my site.
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