Differences

This shows you the differences between two versions of the page.

--- home [2025/03/30 15:10]
tom
+++ home [2025/04/08 11:54] (current)
tom
@@ Line 14: / Line 14: @@
 [[About us]] → information for new subscribers is here
+April 2 2025
+  * On April 2 2025, from Don’s rose garden, the tariff chaos began getting more serious. Markets reacted quickly. If you are an investor who buys individual companies for the dividend, through your direct investing account, you receive your dividends directly from your companies. There is no third party. No wealth manager. As a result, you are not in ‘the market’. You can enjoy any market mayhem. It’s true. Your **return will be the yield on your company’s stock plus its growth** . The price of your company will track along with cash flow growth. If you selected fine companies with a long record of dividend growth, a decade at least, there is no reason for concern. Really. After about a decade (proof inside this site), your yield alone will beat the market. Yields grow.
+  * What’s wealth? Is wealth the growing cash flow, or the price of the asset?
+  *
 March 2025
-  * Ten-year annualized return to 2025, so far, for S&P’s 500 was 7.93%. That’s about normal*. Over the same decade, though, from 2014, the Dow Jones Canada Select Dividend Return was just 2.75%. How come just 2.75%? It’s a long story, but essentially professionals do not select the right companies. (Notice that the title does not say dividend growth). Over the last ten years, the average dividend growth of the 24 companies the Connolly Report follows¡ was 8.2%. Our yields, on average, grew from 3.1% in 2014 to 6.9%. * I would not buy an index now (March 20 2025): It’s way to expensive now!
+  * Ten-year annualized return to late March 2025 for S&P’s 500 was 7.93%. That’s about normal*. But things are no longer normal. Over the same decade, though, from 2014, the Dow Jones Canada Select Dividend Return was just 2.75%. How come just 2.75%? It’s a long story, but essentially professionals do not select the right companies. (Notice that the title does not say dividend growth). Over the last ten years, the average dividend growth of the 24 companies the Connolly Report follows¡ was 8.2%. Our yields, on average, grew from 3.1% in 2014 to 6.9%. * I would not buy an index now (March 20 2025): It’s way to expensive now!
-  *  Here an example of the annual dividend from one company we follow going back to 2000: .09 .10 .11 .12 .15 .17 .19 .21 .23 .25 .26 .28 .31 .33 .35 .38 .40 .42 .43 .48 .50 .60 .63 .695 and .765 in 2024. Does your income grow 8.9% a year? (It’s a double at 7.2%). Is your investment return this steady? There is the bonus also: **price tracks the dividend rate** (price on this fine Canadian company went from $5 to $45 - a CAGR of 9.2% - the yield has now grown to 15% (actual cash coming in quarterly) See why I do not buy bonds (there has to be growth). Income growth drives total return. Wealth builds year-by-year. Think about this retirement strategy. Your wealth managers will not suggest it, as she/he probably does not know or believe it works.
+  *  Here’s an example of the annual dividend from one company we follow going back to 2000: .09 .10 .11 .12 .15 .17 .19 .21 .23 .25 .26 .28 .31 .33 .35 .38 .40 .42 .43 .48 .50 .60 .63 .695 and .765 in 2024. Does your income grow 8.9% a year? (It’s a double at 7.2%). Is your investment return this steady? There is the bonus also: **price tracks the dividend rate** (price on this fine Canadian company went from $5 to $45 - a CAGR of 9.2% - the yield has now grown to 15% (actual cash coming in quarterly) See why I do not buy bonds (there has to be growth). Income growth drives total return. Wealth builds year-by-year. Think about this retirement strategy. Your wealth managers will not suggest it, as she/he probably does not know or believe it works. Anyway, your broker would not make any fees from the growing yield strategy.
-**NOTE**: our income does __not__ depend on the stock market. Our income comes directly from the companies we own (deposited in our account). There is no middle-person trying to sell an ETF.
+**NOTE**: our income does __not__ depend on the stock market. Our income comes directly from the companies we own (deposited♣ in our account). There is no middle-person trying to sell an ETF.
-  * NOTE: #2 Realize that the first dividend increase from 9¢ to 10¢ is an increase of 11%. And that continues year after year: piddly at the start but a powerful yield now at 15% plus the price gains and the safe feeling.
+  * NOTE: #2 Realize that the first dividend increase shown just above from 9¢ to 10¢, though just a penny, is an increase of 11%. And that continues year after year: piddly at the start but a powerful yield now at 15%, plus the price gains and along with the safe feeling. Charlie Munger said “the big money is in the waiting”. Waiting for what? The dividend yield to grow.
   *
-  * National Bank -  The dividend was $2.28 a year when we bought National Bank in 2007. Now (April 2025) the dividend is $1.14 a quarter which is (times four) $4.56 a year. The CAGR on NA’s dividend over those 17 years was 8% on average. Our income grew at 8% a year. I was curious as we hold 600 shares. How did the price do over the 17 years. We paid $27 in 2007. Yesterday it was $120. We don’t usually sell. Why not? Quite simply we hold for the growing yield which is now 16.8%. We’re getting 16.8% ($2,280) on our $16,400 investment. Why sell? Our money is safe. National is quality big Canadian bank. If we sold we’d have to pay tax on the gain. Actually, because of the 2:1 stock split in 2014, we own 600 shares now ($120 x 600 = $72,000). Half the share could be sold to get “get your money back”, making the original 300 shares absolutely safe.  I use dividend income to pay tax on our log house (700 feet of shoreline) property.
+Here’s another ‘direct investing’ example. Dividends are powerful. $72,000 + 17%
-  * Buy now? You might be asking, is NA a good buy now? I use these value indicators: yield now is ??%, it’s average is 3.9%; cyclical P/E 21, average is 19; ten year earnings are $6.19 vs a dividend of ; dividend increase I 2015 was 6.3% with a 16 year track record of dividend increases; CAGR on the dividend has been 8% vs price CAGR of 8.6%. So, NA is a bit expensive. Their web site is NBC.ca
+**National Bank** -  The dividend was $2.28 a year when we bought National Bank in 2007 (actually $2.28 / 2 = 1.14 a year, after accounting for the 2014 stock split). Now (April 2025) the dividend is up to $1.14 __a quarter__ which is (times four) $4.56 a year. The CAGR (compound annual growth rate) on NA’s dividend over those 17 years was 8% on average. Our income, in other words, grew at 8% a year, on average. ♣ I was curious as we hold 600 shares (300 before the split). How did the price do over the 17 years. I don’t follow share price once are yield is double digit. We paid $27 in 2007. Yesterday (April 1st) it was $120 a share. We don’t usually sell. Why not? Quite simply we hold for the growing yield which is now 16.8%. We’re getting 16.8% ($2,280) on our $16,400 investment. Why sell? Our money is safe. National is quality big Canadian bank. If we sold we’d have to pay tax on the gain. Actually, because of the 2:1 stock split in 2014, we own 600 shares now ($120 x 600 = $72,000). Half the shares could be sold to “get your money back”, making the original 300 shares absolutely safe.  I use dividend income to pay property tax on our log house with 700 feet of shoreline near Sharbot Lake and on our fleuve-side condo here in Kingston.
+  *  **Buy now?** You might be asking, is NA a good buy now in April 2025? The Connolly Report uses these value indicators: 1. yield now is 3.82%, it’s average is 3.9%; 2. cyclical P/E 21, average is 19; 3. ten year earnings are $6.19 vs a dividend of $1.14; 4. dividend increase in 2025 was 6.3% with a 16 year track record of dividend increases; 5. CAGR on the dividend has been 8% since 2007 vs price CAGR of 8.6%. So, NA is a bit expensive. Banque Nationale’s web site is NBC.ca
   * Jan 26 2025
-  * Here simply is what I do. Begin by making, say, a $1,000 direct investment in a fine individual company. The annual dividend yield would be about 3%. Now, that dividend yield would grow at 5% a year and the annual appreciation would be about the same 5%. In 20 years your $1,000 would grow to some $4,000 (342%) That’s it. The magic is simple. Believe it works. Thirteen percent eventually on you money (3+5+5). Repeat year after year and gradually build your very own personal pension.
+  * Here simply is what you do. Begin by making, say, a $1,000 direct investment in a fine individual company. The annual dividend yield would be about 3% or so. Now, that dividend yield should grow at 5% a year __and__the annual appreciation would be about the same 5%. In 20 years your $1,000 would grow to some $4,000 (342%). That’s it. The magic is simple. Return is initial yield plus growth. Believe it works. Thirteen percent eventually on you money (3+5+5). Repeat year after year and gradually build your very own personal pension.
   * March 2025 - What’s  important for you to realize off the top here is that with  the growing yield strategy, you continue to accumulate wealth after retirement. That’s a big deal. Your income and capital continue to grow. There is no target date: your pot gets bigger and larger year after year and it’s independent from the market. It’s safer, much safer.
-Nov 1 2024 → The Connolly Report blog in October is essentially a practice run for our 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 year. 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. Seek only quality companies.
+Nov 1 2024 → The Connolly Report blog in October is essentially a practice run for our 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 year. 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. Seek only quality companies.
   * July 20 2024
@@ Line 169: / Line 175: @@
   * **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).
+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
-  * 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 ==

Differences

Contents