You must construct an individual portfolio full of dividend growth common stocks to build wealth. Funds and ETFs will not do it.
Connolly Report Vol. XXXIV No.6 Dec 2014 page 808 ♦ FIVE PERCENT MORE A YEAR is possible by constructing an individual dividend growth stock portfolio ourselves rather than going the mutual fund route. Five percent more a year is a whole lot more…tens of thousands of dollars extra on even a small portfolio. It’s market beating. I found this data in the October 2014 Canadian MoneySaver. It was one of David Stanley’s last MoneySaver columns (he’s 75, so am I). Dr David came up with these numbers: five percent more, per year, over five year (18.9% vs 14.0%); and over a decade, again per year, 12.3% vs 7.5%. The TURF* stocks in Dave’s individual stock portfolio were: BCE and Telus; Fortis, Emera and TransAlta; Enbridge and TransCanada; Cdn REIT, Cdn Apt, and H&R; TD, NA and CIBC. The highest return in the table was Enbridge at 19.2%, the lowest TA at 2.9%. The comparison was with total average return of the top 20 balanced funds. ♦ The ten year returns of the TURF* stocks topped ALL funds. *TURF: Telecom, Utilities, Real estate and Financials.
TOUFF – Connolly Report stocks are much the same. Thanks to Dr Stanley's idea, I use the acronym TOUFF: Telecom, Others (Coutu, Cdn Nat, UNS), Utilities, Food retail, Finance, and if you wish, and “ER” for Energy (if there is a long dividend growth) and REITs (touffer).
Why can't you do it with mutual funds or ETFs? The average holding period for a mutual funds in eight months. You can't compound in eight months. Funds are not noted for producing income. Have you ever seen a funds or ETF advertise its yield? It's the growing income from individual dividend growth stocks that build wealth. Here's Metro's dividend growth record from 2000: .05, .06, .07, .09, .11, .13, .14, .15, .16, .18, .23, .26, .29, .33, .40, and in 2015 the dividend rose to 47¢ A share per year And, as the dividend grows (here at CAGR 16.1%), the price grows too (here at 17.7% CAGR).
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Denise Emanuel
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