First Quarter 2015

Bonds are not as safe as folks think 1. Bonds held in a fund or ETF lose their guarantee of money back (the maturity date disappears in a fund). 2. Interest rates are historically low: when they eventually rise again, the bond's price will fall. 3. Bonds fluctuate in prices just like stocks. 4. Bonds only provide a fixed income. TC: I do not buy bonds, never have, never will. If you understand the essence of dividend growth, you'll know why.

  • Inside this site I'm writing about a stock which increased it's dividend by 1¢ and the stock's price went from $12 to $15 within a couple of weeks as a result. Why? The increase in the dividend was 20%. A twenty percent increase in the stock's price because of one penny. It happens all the time. Not as quickly, usually, but eventually. For just $50 you too can be in the know about the effect of dividend increases. Dividend growth investing can be exciting.
  • Target Date Funds decrease equity holdings as you age. Dividend growth investors do not. We decrease bond positions as we realize our dividend growth stocks get safer as they age. For this reason, dividend growth investing mitigates the longevity risk.
  • MONTHLY INCOME FUND - I'm glad I do not hold a Fidelity Monthly Income Fund because in the small print Fidelity says “In order to pay a steady cash flow monthly, in current market conditions, the Fund will pay out interest income plus a portion of the money you originally invested (also called a return of capital). Please do not confuse this payout with a fund’s “yield” or “rate of return”. The monthly distribution rate may change at any time if market conditions change, and the rate will be reset at the beginning of every year. TC: I wonder what happens to the dividends? And the MER of one funds ad I saw was 2.2%. It looks to me like the income from the fund will not even pay the fund's fee so you are, most likely, just getting your own money back. Crikey!
  • Five problems with balance funds are pointed out here:

Subscribe to The Connolly Report on line. I've been studying dividend growth stocks for over thirty years. I know how they work. Just now I'm revising my list of fifty Canadian dividend growth stocks. It will available inside this site to subscribers. These top dividend growers will be listed on a page PDF in order of the difference between the current price and the Graham price* so that the less expensive stocks are on top of the list. I've added a yield column, also, so you can select the best dividend growers with the highest yields. It's the combination of yield and dividend growth that builds wealth, that drives the stock price up.

*The Connolly Report uses the formula in Ben Graham's book The Intelligent Investor, Chapter 7. Take the square root of ((the average of three years trailing earning per share, multiply by book value per share) and then multiply by 22.5) Then you compare the Graham price to the current price. I've tracked the Graham % Difference (G%D) for the stocks I follow for well over a decade. Unfortunately, not much worth buying is cheap just now, but we are building a little watch list for when the 'dip' arrives. And, as far as I know, I'm the only one using C.A.P.E. on individual stocks as a valuation method.

To subscribe, contact our daughter in Toronto at:

Your can also send Denise a $10 bill (cheques are not legal tender) and obtain a copy of the current Connolly Report to see what our efforts are about.

Denise Emanuel 475 Scarborough Road Toronto ON M4E 3N3

  • A recent blog item inside this site commented on TSX dividend aristocrates by S&P. They are not very aristocratic. Their top stock just reduced its dividend from 30¢ to 15 cents.
first_quarter_2015.txt · Last modified: 2015/04/18 13:16 by tom
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