Welcome to this week’s MP Market Review, where we put our dividend growth investing (DGI) process into practice with real money, real positions, and real results.

This week, we turn to Royal Bank and TD Bank, two of the largest holdings in our Canadian model portfolio. Following another strong earnings report, we revisit two valuation measures: dividend growth versus price growth and historical dividend yields.

The results reinforce our confidence in these businesses. But as shareholders, we also need to ask:

How much of that success is already reflected in today’s share prices?

IN THIS ISSUE: DGI Clipboard • DGI Scorecard • DGI News • DGI Updates • Earnings Releases

DGI Clipboard

Great Companies. But at What Price?

Strong earnings reinforce our confidence in the businesses. Valuation helps us decide how much to own.

Most of the time, we use our dividend growth valuation metrics to identify opportunities to buy quality companies at sensible prices.

Our intended holding period? Forever, provided the dividend continues to grow and the underlying business remains sound.

But a long-term mindset does not mean ignoring valuation. Even a great company can become expensive, and a successful investment can grow into a larger position than we intended.

Quality determines what we want to own. Valuation and position sizing help us decide when to buy, hold, or trim.

Following another positive earnings report from our Canadian bank holdings, we are revisiting two valuation measures for Royal Bank and TD Bank: dividend growth versus price growth and historical dividend yields.

Dividends Lead. Prices Follow.

Over time, we expect a growing dividend to be supported by growing earnings. Share prices tend to reflect that progress, although they rarely move in a straight line.

Comparing dividend growth with price growth helps us identify periods when the share price may have moved ahead of, or fallen behind, the company’s dividend growth.

Historical Dividend Growth vs. Price Growth

Both banks have shown a historical relationship between dividend growth and price growth. Periods when those paths diverged offered reasons to look more closely at valuation.

TD experienced the more pronounced swings, particularly in 2020 and 2024. Royal Bank showed a similar pattern, although its deviations were less dramatic.

These gaps are signals to investigate, rather than automatic instructions to buy or sell. A lower price can represent an opportunity, but it can also reflect a deterioration in the business.

It was no coincidence that we initiated positions and added to them during periods of weakness. Our process helped us recognize attractive valuations when uncertainty weighed on prices.

A Second Lens: Dividend Yield Theory

Historical dividend yields offer another way to assess valuation.

Dividend Yield Theory compares a company’s current yield with its historical range. When the yield rises above its usual level, shares may be attractively priced, provided the dividend remains sustainable and the business outlook supports it. When the yield falls below that range, shares may be becoming expensive.

Historical Dividend Yields

The yield charts tell a story similar to that of the dividend growth versus price growth charts.

In 2020 and 2024, yields climbed as share prices came under pressure. As prices recovered, yields moved back toward their historical averages and subsequently lower.

That pattern supported our buying decisions. However, historical averages are reference points, not guarantees. Changes in growth prospects, interest rates, or business risk can justify a different valuation.

More Income. More Capital.

Buying at lower prices allowed us to capture higher starting yields and participate in the subsequent share-price recovery.

We benefited in two ways: higher dividend income per dollar invested and capital appreciation as valuations recovered.

Both banks have continued to grow their dividends, with their recent increases broadly consistent with their longer-term growth rates.

That is the combination we are looking for: a quality business, purchased at a sensible price, that pays us more over time.

Takeaway

When a Winner Becomes a Bigger Position

The question now is how much of that progress is already reflected in the share price.

Record earnings are encouraging, but they do not automatically make a stock attractively valued. Further gains are possible. So is a period when earnings and dividends need time to catch up with the price.

We do not need to predict the next move to manage that risk.

Instead, we assess valuation alongside position size. If a holding becomes expensive and grows beyond our portfolio guidelines, trimming may be appropriate, even when we remain confident in the company.

We can remain committed to a business while reducing the amount of capital we have exposed to it.

For Royal Bank and TD Bank, strong earnings results reinforce our confidence in the businesses. Our valuation measures help us assess whether today’s prices justify adding, holding, or trimming.

The goal is to keep a successful investment from becoming an outsized risk to the portfolio, while allowing our dividend income to continue growing.

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DGI Scorecard

This Week’s Highlights

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.19% since inception (May 1, 2022)

• Total Return (includes dividends): +14.46 % year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +5.2% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: Two

• Earnings Reports This Week: One

Top Performers Last Week:

• TD Bank (TD-T), up +4.57%.

• Stantec Inc. (STN-T), up +2.16%.

• Manulife Financial (MFC-T), up +1.62%.

Worst Performer Last Week:

• Magna (MGA-N), down -9.84%.

Watchlists

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks, and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

• Dividend growth streak: 10 years or more.

• Market cap: Minimum one billion dollars.

• Diversification: Limit of five companies per sector, preferably two per industry.

• Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from The List annually on January 1. Prices and dividends are updated weekly.

The watchlists are not a portfolio but a coaching tool that helps us think about ideas and manage risk in our model portfolio. We own some, but not all, of the companies on these watchlists. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

New to Magic Pants?

Magic Pants Dividend Growth Investing is a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved using real money, real positions, and real results.

Our objective is to grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the broader market over a full investing cycle.

The name comes from a simple idea: when a quality company pays a dividend, cash moves from the company’s pocket to yours while your ownership stake remains intact. As earnings and dividends grow, the compounding cycle can accelerate. That’s the magic.

Build Your Own Growing Income Machine

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing receive exclusive ideas and guidance designed to help navigate changing market conditions.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a paid subscriber and see exactly how we put the process into practice. You’ll also receive full access to this post and exclusive subscriber-only content.

We do the work. You stay in control.

Read more

The portfolio delivered another strong quarter, but the more important developments occurred beneath the headline return. We exited TELUS before its dividend cut, added selectively to three existing positions, and continued holding BCE and goeasy after their original investment theses changed.

Quarterly dividend income declined 5.0%, largely because of the goeasy dividend suspension and our TELUS sale. We expect income growth to resume as our remaining companies raise their dividends and we redeploy available capital into quality businesses at sensible valuations.

The Quarter At A Glance

*Annualized total return since inception

Portfolio Progress

Portfolio value and annualized dividend income since inception.

Performance Versus Benchmarks

All returns include dividends. The 17.19% figure is the portfolio’s annualized return calculation since inception. Returns are calculated using Excel’s XIRR function and represent the portfolio’s annualized money-weighted return, reflecting the timing and amount of all contributions and withdrawals. Benchmark returns are time-weighted and are shown for general context rather than as a precise like-for-like comparison.

How We Invest

This real-money portfolio is both an investment account and a coaching tool. Every purchase, dividend, gain, loss and mistake is recorded in real time so subscribers can see how a disciplined process works when outcomes are uncertain.

My Wealth-Building Machine is built to do two jobs in retirement: generate a reliable, growing stream of dividends to pay the bills, and allow capital appreciation to expand the portfolio's value and create opportunities to recycle capital into higher-income investments.

This is not merely an income portfolio or a collection of stocks chosen for capital gains. It is designed to deliver both. Dividends provide the cash flow. Growth builds wealth. Together, they create a portfolio capable of producing attractive long-term total returns.

For Paid Subscribers

The remainder of this letter contains the complete quarterly playbook:

• Trades and position-sizing decisions

• Dividend-income details and portfolio holdings

• The rationale behind the TELUS sale

• Our current thinking on goeasy and BCE

• Progress against the original business plan

Subscribe now

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Welcome to this week’s MP Market Review, where we demonstrate the real-world application of our dividend growth investing (DGI) process using real money, real positions, and real results.

This week, we look at two investors approaching retirement from very different starting points. One has less capital but more time to compound, while the other has more capital but less time before retirement. We show how both can use the same disciplined dividend growth strategy to build a reliable and growing retirement income.

IN THIS ISSUE DGI Clipboard • DGI Scorecard • DGI News • DGI Updates • Earnings Releases

DGI Clipboard

Two Investors, One Retirement Goal

Time and Capital Can Both Build Retirement Income

Not every investor begins the journey to retirement from the same starting point.

One investor may have relatively little capital but 20 or 30 years to invest. Another may have accumulated substantial savings but plans to retire within the next five years.

Their circumstances differ, but both can use dividend growth investing to build a reliable, growing retirement income.

Less Capital, More Time

For the younger investor, time is the most valuable asset.

Imagine someone with $100,000 to invest and 30 years until retirement. Their portfolio may not generate substantial income today, but that is not the immediate objective.

The priority is to own high-quality companies that consistently grow their earnings, cash flow, and dividends. New contributions are added regularly, while dividends are reinvested into the most attractively valued companies.

Over time, three powerful forces work together:

• New savings increase the capital invested

• Growing dividends increase the portfolio’s income

• Reinvested dividends purchase additional shares that generate even more income

With enough time, compounding can turn a modest beginning into a meaningful retirement-income machine.

Using the same assumptions applied to our MP Wealth-Builder (CDN) model portfolio, the table below illustrates how the younger investor’s dividend income could grow and compound over time. Increasing their annual contributions could accelerate that progress and bring their retirement goal within reach even sooner.

More Capital, Less Time

Now consider an investor with $2,000,000 and only five years until retirement.

This investor has less time for compounding, but more capital to put to work. The portfolio can generate significant dividend income almost immediately.

By deploying the capital strategically, reinvesting the dividends, and achieving 7% annual dividend growth, our projection estimates that annual income could reach approximately $82,686 after five years.

For this investor, the balance between current yield, dividend safety, and future dividend growth is especially important. With less time to recover from a poor investment decision, quality, valuation, diversification, and disciplined position sizing must remain at the centre of the process.

Different Starting Points, Same Strategy

The younger investor uses time to compensate for having less capital. The older investor uses accumulated capital to compensate for having less time.

Both benefit from the same disciplined process:

1. Buy quality dividend growth companies

2. Purchase them at sensible valuations

3. Monitor dividend safety and business performance

4. Reinvest and add new capital intelligently

5. Allow income to grow and compound

Markets will always be unpredictable, but the investor can control how much they save, what they own, the price they pay, and how consistently they follow the process. That makes their retirement plan less dependent on market timing and more firmly within their control.

Takeaway

Dividend growth investing does not require everyone to follow the same path. It allows each investor to use the resources they have, whether that is more time or more capital, to pursue the same objective.

A reliable, growing income stream that can help fund retirement without constantly selling the assets that produce it.

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DGI Scorecard

This Week’s Highlights

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.19% since inception (May 1, 2022)

• Total Return (includes dividends): +14.85 % year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +6.8% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: None

• Earnings Reports This Week: Two

Top Performers Last Week:

• Franco Nevada (FNV-N), up +13.46%.

• Canadian Natural Resources (CNQ-T), up +6.63%.

• Magna (MGA-N), up +4.0%.

Worst Performer Last Week:

• Alimentation Couche-Tard Inc. (ATD-T), down -6.85%.

Watchlists

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

• Dividend growth streak: 10 years or more.

• Market cap: Minimum one billion dollars.

• Diversification: Limit of five companies per sector, preferably two per industry.

• Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from The List annually on January 1. Prices and dividends are updated weekly.

The watchlists are not a portfolio but a coaching tool that helps us think about ideas and manage risk in our model portfolio. We own some, but not all, of the companies on these watchlists. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

New to Magic Pants?

Magic Pants Dividend Growth Investing is a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved using real money, real positions, and real results.

Our objective is to grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the broader market over a full investing cycle.

The name comes from a simple idea: when a quality company pays a dividend, cash moves from the company’s pocket to yours while your ownership stake remains intact. As earnings and dividends grow, the compounding cycle can accelerate. That’s the magic.

Build Your Own Growing Income Machine

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing receive exclusive ideas and guidance designed to help navigate changing market conditions.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a paid subscriber and see exactly how we put the process into practice. You’ll also receive full access to this post and exclusive subscriber-only content.

We do the work. You stay in control.

DGI News

The 4% withdrawal rule for retirees is dead. Long live the 4.7% rule (Globe & Mail)

https://www.theglobeandmail.com/investing/personal-finance/retirement/article-4-withdrawal-rule-retirees-dead-fire/

Withdrawal rates and inflation are two of the biggest concerns facing retirees. I found a way to address both when I discovered dividend growth investing twenty years ago.

By building a portfolio of quality dividend growth companies well before retirement, ideally ten years or more, I was able to create a dependable and growing income stream. Those rising dividends allowed me to ease into retirement without worrying about how much to withdraw from my portfolio each year or whether inflation would gradually erode my purchasing power.

DGI Updates

Dividend Scorecard

No companies on The List had a dividend announcement last week.

Earnings Releases

Benjamin Graham once remarked that earnings are the principal factor driving stock prices.

Earnings and dividend growth often go hand in hand, providing insights into future dividend growth for quality companies. Regularly monitoring our dividend growers, starting with quarterly earnings releases, is a key part of the process. ‘The List’ is sorted by reporting date and includes the market’s consensus estimates and actual reported results. Red numbers show earnings below the previous year for the same period.

The Q2 2026 earnings calendar can be found here.

Two companies from The List are due to report their off-cycle Q3 earnings this week.

Royal Bank of Canada (RY-T) will release its third-quarter fiscal 2026 results on Thursday, August 27, 2026, before markets open.

TD Bank (TD-T) will release its third-quarter fiscal 2026 results on Thursday, August 27, 2026, before markets open.

Last week, no companies from The List reported earnings.

I wanted to let you know that I have just initiated a new position in another high-quality dividend growth company within the MP Wealth-Builder Model Portfolio (USA).

The company’s share price is down ~50% in 2026, despite strong earnings and an increase in full-year revenue guidance.

It is also a Dividend Achiever, having increased its dividend for 15 consecutive years and achieving an impressive 13% average annual dividend growth rate over the past decade.

Despite these strong fundamentals, recent weakness in the share price has created an opportunity to acquire additional shares at a valuation we believe is both sensible and attractive for long-term dividend growth investors.

If you’ve been considering upgrading your subscription, remember that some of the best opportunities are identified before they become obvious to the broader market. Paid subscribers receive every buy, sell, trim, and portfolio update in real time, allowing them to follow our process as it unfolds rather than reading about it after the fact.

Read more

Summary

This is not a stock-picking newsletter!

It’s a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved over time.

Welcome to this week’s MP Market Review.

Before we begin, a quick explanation of the name.

Many years ago, when I first discovered dividend growth investing, I came across a quote that stopped me in my tracks:

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put it in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

That is dividend growth investing in its simplest form.

When a quality company pays a dividend, cash moves from the company’s pocket to yours, yet your ownership stake remains intact. As earnings grow, dividends tend to grow. As dividends grow, share prices often follow. Reinvest those dividends into additional shares, and the cycle accelerates: more shares generate more dividends, which buy even more shares.

That’s the magic.

It’s why we call this newsletter Magic Pants Dividend Growth Investing.

Every week, we track the companies on The List, our curated watchlist of Canadian dividend growth businesses selected for their ability to produce rising income over time. While we also publish a U.S. edition each month, Canada remains our primary hunting ground.

Our objective is straightforward:

Grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 in the United States.

What follows is not theory.

It is the real-world application of a dividend growth strategy using real money, real positions, and real results.

Markets create an endless stream of noise. We ignore most of it.

Instead, we focus on a handful of metrics that tell us whether our process is working. No predictions. No forecasts. No crystal ball.

Just results.

The magic is in the dividend. Dividends lead. Prices follow.

This Week’s Scorecard

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.11% since inception

• Total Return (includes dividends): +16.49% year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +8.2% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: Five

• Earnings Reports This Week: None

DGI Clipboard

“Current yield, using its own historic yield as a guide, is, in my view, a fine valuation measure.”

— Tom Connolly

Timely Ten: Subtle Moves, Important Signals

Timely Ten Update

There was little movement in either the Canadian or American Timely Ten this month, with only one new company joining each list. However, several subtle changes caught our attention and reinforced the value of monitoring quality companies when short-term concerns place pressure on their share prices.

Canadian Timely Ten

Intact Financial joined the Canadian Timely Ten after climbing four positions from last month. A weaker-than-expected second-quarter earnings report, driven largely by elevated catastrophe and large-loss claims, appears to be the primary reason for the recent share-price pressure. Despite this short-term setback, Intact remains a high-quality business and an attractive long-term investment at current levels.

Metro Inc. and Waste Connections remain the two highest-quality companies moving up the list. Both are now trading at sensible valuations and deserve a closer look. I will be conducting a deeper review of each company to determine whether the recent weakness has created an opportunity to add to our positions.

The biggest surprise was Thomson Reuters. After stumbling for several months amid concerns about potential AI disruption, the share price appears to be regaining momentum. Fortunately, we added to our position during the weakness. If the stock eventually returns to its historical average valuation, our decision to buy when sentiment was negative should prove worthwhile.

American Timely Ten

WEC Energy Group was the only new addition to the American Timely Ten this month. Its recent share-price weakness does not appear to signal a problem with the dividend or its core regulated utility operations.

Instead, the market appears to be reassessing a previously elevated valuation while factoring in higher interest rates and uncertainty surrounding future data-centre development in Wisconsin. The long-term investment thesis remains intact, but these risks deserve continued monitoring.

The other notable development was the timely signal the list provided on CME Group and Intercontinental Exchange last month. Both companies ranked attractively, giving us the confidence to add to our positions.

The market has since responded favourably, with ICE rising 14.4% and CME gaining 12.3% over the past month.

The Timely Ten is published monthly and ranks the most undervalued dividend growth companies in Canada and the United States. The rankings are based on Dividend Yield Theory, a valuation framework that I explain in greater detail later in this article.

Note: goeasy Ltd.’s dividend has been suspended, so we have moved it to the bottom of the list.

Background

The third step in our investment process is monitoring. Once we’ve identified high-quality dividend growth companies and purchased them at sensible prices, we continuously monitor them for changes in valuation and business fundamentals.

Tracking dozens of companies can quickly become overwhelming. Fortunately, our focus is limited to the businesses on our watchlists rather than the thousands of stocks that make up the broader market. Even so, we are always looking for ways to improve the efficiency and consistency of our process. One of the most valuable tools we have found is Dividend Yield Theory.

What Is Dividend Yield Theory?

Dividend Yield Theory is a straightforward valuation method based on a simple observation: the dividend yields of mature, high-quality dividend growth companies tend to fluctuate around a historical average over time, provided the underlying business remains fundamentally intact.

Because a stock’s price and dividend yield move in opposite directions, a higher-than-normal dividend yield often signals that the shares are trading below their historical valuation. Conversely, an unusually low dividend yield may indicate that the shares have become expensive.

Dividend Yield Theory doesn’t tell us what to buy. Our quality screening process does that. Instead, it helps us determine when to buy.

Building the Watchlist

Before applying Dividend Yield Theory, every company must first qualify for our watchlist by meeting our quality standards.

• Dividend growth: Minimum 10 consecutive years of dividend increases.

• Market capitalization: At least $1 billion.

• Diversification: Maximum of five companies per sector, with a preference for no more than two per industry.

• Business quality: We generally exclude REITs and pure-play energy companies because their earnings and dividends tend to be more cyclical.

This quality-first approach dramatically reduces the investment universe and allows us to focus only on exceptional businesses.

How We Rank the Timely Ten

Each month, we rank every company on our Canadian and U.S. watchlists by the discount between its current market price and its estimated fair value, based on Dividend Yield Theory.

Fair value is calculated using a simple formula:

Fair Value = Current Annual Dividend ÷ Historical High Dividend Yield

The larger the discount to fair value, the higher the company ranks.

The ten companies above the thick black line are trading below their estimated fair values and currently offer dividend yields higher than their historical highs. These companies have historically provided the best combination of quality, valuation, and upside potential.

These are our Timely Ten.

While no valuation method is perfect, Dividend Yield Theory has proven to be an exceptionally effective way to identify attractive entry points for high-quality dividend growth companies. Used alongside our quality-first investment process, it helps us deploy capital with greater discipline while removing much of the emotion from investment decisions.

Takeaway

This month’s Canadian and American Timely Ten lists reinforce the importance of combining quality with valuation.

Intact Financial, Metro, Waste Connections and WEC Energy are becoming more attractively priced, while Thomson Reuters, CME and ICE demonstrate how quickly the market can recognize value once sentiment improves.

The Timely Ten is not designed to predict market bottoms or short-term price movements. Its purpose is to identify high-quality dividend growth companies trading at sensible prices so we are prepared to act when opportunity appears.

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing get exclusive ideas and guidance to navigate any climate.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a PAID subscriber, and I’ll show you exactly how I do it. In addition, gain full access to this post and exclusive, subscriber-only content. We do the work; you stay in control!

Subscribe now

DGI Scorecard

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks, and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

1. Dividend growth streak: 10 years or more.

2. Market cap: Minimum one billion dollars.

3. Diversification: Limit of five companies per sector, preferably two per industry.

4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.

‘The List’ is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on ‘The List’. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

Note: In the last week of every month, I will show the updated watchlist for our American dividend growers, The List-USA. It will be shown after the Canadian watchlist below.

Performance of 'The List'

The dividend growth for The List remained unchanged last week, with an average YTD increase of 6.6% (income).

The price of The List was up last week and now stands at +8.2% YTD (capital).

Top Performers Last Week:

• CCL Industries Inc. (CCL-B-T), up +4.82%.

• Canadian Natural Resources (CNQ-T), up +4.67%.

• TFI International (TFII-N), up +4.40%.

Worst Performer Last Week:

• goeasy Ltd. (GSY-T), down -8.22%.

From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.

Read more

Summary

This is not a stock-picking newsletter!

It’s a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved over time.

Welcome to this week’s MP Market Review.

Before we begin, a quick explanation of the name.

Many years ago, when I first discovered dividend growth investing, I came across a quote that stopped me in my tracks:

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put it in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

That is dividend growth investing in its simplest form.

When a quality company pays a dividend, cash moves from the company’s pocket to yours, yet your ownership stake remains intact. As earnings grow, dividends tend to grow. As dividends grow, share prices often follow. Reinvest those dividends into additional shares, and the cycle accelerates: more shares generate more dividends, which buy even more shares.

That’s the magic.

It’s why we call this newsletter Magic Pants Dividend Growth Investing.

Every week, we track the companies on The List, our curated watchlist of Canadian dividend growth businesses selected for their ability to produce rising income over time. While we also publish a U.S. edition each month, Canada remains our primary hunting ground.

Our objective is straightforward:

Grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 in the United States.

What follows is not theory.

It is the real-world application of a dividend growth strategy using real money, real positions, and real results.

Markets create an endless stream of noise. We ignore most of it.

Instead, we focus on a handful of metrics that tell us whether our process is working. No predictions. No forecasts. No crystal ball.

Just results.

The magic is in the dividend. Dividends lead. Prices follow.

This Week’s Scorecard

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.11% since inception

• Total Return (includes dividends): +17.95 % year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +8.1% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: Six

• Earnings Reports This Week: Five

DGI Clipboard

“The best protection against a dividend cut begins before you buy the stock.”

— Magic Pants Dividend Growth Investing

Dividend Cuts Happen. Your Process Matters More.

When the Dividend Gets Cut

A dividend cut changes the investment thesis. Here’s how we deal with it.

In light of TELUS’s recent dividend cut, we thought this would be a timely opportunity to revisit how we handle dividend cuts within our dividend growth strategy.

Dividend growth investing is built around a simple idea: own high-quality businesses that generate growing cash flow and share that growth with shareholders through rising dividends.

But even quality companies can stumble.

When a dividend is cut, suspended, or frozen, we don’t panic. We also don’t ignore it.

We go back to the investment thesis.

The Warning Signs Often Come First

At Magic Pants, we believe dividends lead and prices follow.

A steadily growing dividend is usually evidence of a healthy business: rising earnings, strong cash flow, prudent capital allocation, and management confidence.

But there are often warning signs before a dividend cut occurs.

One of the most obvious is an excessively high dividend yield.

TELUS was a good example. As its share price declined, its dividend yield climbed to increasingly attractive levels. But a rising yield isn’t always an opportunity. Sometimes the market is telling you something is wrong.

When a company’s yield becomes unusually high relative to its history and peers, we dig deeper.

Is the stock genuinely undervalued, or is the market anticipating weaker cash flow, excessive debt, or an unsustainable dividend?

We never chase yield. An excessively high yield is often a warning, not an opportunity.

A Dividend Cut Changes the Conversation

When a company cuts its dividend, our first question isn’t:

“Will the stock price recover?”

It’s:

“Is this still the quality dividend growth company we originally purchased?”

We don’t necessarily sell the morning a dividend is cut. We first determine why it happened.

Is management temporarily conserving capital to strengthen the balance sheet? Or have the economics of the business fundamentally deteriorated?

If earnings power remains intact and there is a credible path toward renewed dividend growth, patience may be warranted.

But if the cut reflects excessive debt, deteriorating fundamentals, poor capital allocation, or a permanently impaired business model, the investment thesis may be broken.

And when the thesis is broken, we’re prepared to move on.

Quality First. Always.

This is precisely why our process begins with quality.

We favour companies with strong balance sheets, sustainable payout ratios, durable businesses, and long histories of growing their dividends.

Our objective isn’t to eliminate dividend cuts. That’s impossible.

Our objective is to make them rare.

Diversification and disciplined position sizing also ensure that one dividend cut doesn’t materially damage our overall income stream.

The Portfolio Matters More Than the Stock

We aren’t emotionally attached to individual companies.

Our goal is to build a portfolio capable of growing its dividend income by approximately 7–10% annually over the long term.

Sometimes that means holding through temporary adversity. Sometimes it means admitting the thesis has changed and reallocating our capital to a better opportunity.

The key is having a process before the bad news arrives.

A dividend cut isn’t automatically a sell signal. It’s a signal to reassess.

Quality first. Valuation second. Monitor always.

Because we’re not simply collecting stocks. We’re building a growing income machine.

Takeaway

Dividend cuts are an unfortunate reality of dividend growth investing, but they don’t have to derail a well-built dividend growth portfolio. Focus on quality, watch for warning signs such as an unusually high yield, and reassess the investment thesis when circumstances change. Our goal isn’t to avoid every mistake; it’s to ensure that no single mistake compromises our long-term objective: a reliable and growing stream of dividend income.

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing get exclusive ideas and guidance to navigate any climate.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a PAID subscriber, and I’ll show you exactly how I do it. In addition, gain full access to this post and exclusive, subscriber-only content. We do the work; you stay in control!

Subscribe now

DGI Scorecard

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks, and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

1. Dividend growth streak: 10 years or more.

2. Market cap: Minimum one billion dollars.

3. Diversification: Limit of five companies per sector, preferably two per industry.

4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.

‘The List’ is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on ‘The List’. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

Note: In the last week of every month, I will show the updated watchlist for our American dividend growers, The List-USA. It will be shown after the Canadian watchlist below.

Performance of 'The List'

The dividend growth for The List remained unchanged last week, with an average YTD increase of 6.6% (income).

The price of The List was down slightly last week and now stands at +8.1% YTD (capital).

Top Performers Last Week:

• Franco Nevada (FNV-N), up +12.08%.

• goeasy Ltd. (GSY-T), up +4.79%.

• Toromont Industries (TIH-T), up +4.48%.

Worst Performer Last Week:

• TC Energy Corp. (TRP-T), down -6.58%.

From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.

Read more

Summary

This is not a stock-picking newsletter!

It’s a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved over time.

Welcome to this week’s MP Market Review.

Before we begin, a quick explanation of the name.

Many years ago, when I first discovered dividend growth investing, I came across a quote that stopped me in my tracks:

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put it in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

That is dividend growth investing in its simplest form.

When a quality company pays a dividend, cash moves from the company’s pocket to yours, yet your ownership stake remains intact. As earnings grow, dividends tend to grow. As dividends grow, share prices often follow. Reinvest those dividends into additional shares, and the cycle accelerates: more shares generate more dividends, which buy even more shares.

That’s the magic.

It’s why we call this newsletter Magic Pants Dividend Growth Investing.

Every week, we track the companies on The List, our curated watchlist of Canadian dividend growth businesses selected for their ability to produce rising income over time. While we also publish a U.S. edition each month, Canada remains our primary hunting ground.

Our objective is straightforward:

Grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 in the United States.

What follows is not theory.

It is the real-world application of a dividend growth strategy using real money, real positions, and real results.

Markets create an endless stream of noise. We ignore most of it.

Instead, we focus on a handful of metrics that tell us whether our process is working. No predictions. No forecasts. No crystal ball.

Just results.

The magic is in the dividend. Dividends lead. Prices follow.

This Week’s Scorecard

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.04% since inception

• Total Return (includes dividends): +15.51 % year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +8.5% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: Nine

• Earnings Reports This Week: Six

DGI Clipboard

“Building wealth is about ownership. When you own strong businesses, you do not chase money. Money comes to you.”

John D. Rockefeller understood this principle better than most.

Start a Business That Pays You

Build an income-producing business without employees, inventory, customers, or premises

Starting a small business can be an effective way to build wealth, but it often requires substantial capital, long hours, specialized knowledge, and a willingness to accept considerable risk.

A franchise may require a six-figure investment before opening its doors. A rental property brings financing, maintenance, tenants, and ongoing expenses. Even an online business requires product development, marketing, customer service, and constant attention.

There is another way to think about business ownership.

You can build a portfolio of high-quality Canadian dividend growth companies and treat it like your own income-producing business.

Your Portfolio Is the Business

The All-Canadian DGI Portfolio provides a practical place to begin.

Instead of starting from scratch, you can establish initial positions in a diversified group of quality Canadian companies with long records of paying and growing their dividends.

These companies already have experienced management teams, established customers, valuable assets, and proven business models.

As a shareholder, you participate in their profits without managing employees, leasing office space, purchasing inventory, or dealing with customers.

Your primary responsibility is capital allocation.

Start With a Foundation. Add When Opportunities Arise.

Rather than investing all your available capital immediately, you can begin by establishing positions using the All-Canadian DGI Portfolio while keeping some cash available.

DGI Alerts can then help you deploy the remaining capital as opportunities arise, directing new investments toward quality companies trading at more sensible valuations.

This allows you to get started without relying on your ability to perfectly time the market.

A Different Kind of Small Business

Compared with many traditional small-business opportunities, a dividend growth portfolio offers several practical advantages:

• It can be started with relatively little capital and expanded gradually.

• It requires no employees, inventory, premises, or customer acquisition.

• It can generate income without demanding your full-time attention.

• Its dividend income has the potential to grow over time.

• Its ownership interests are liquid and can generally be bought or sold easily.

• It provides diversification across several established businesses rather than dependence on one venture.

The Owner’s Responsibility

There are still risks. Dividends are not guaranteed, share prices fluctuate, and successful investing requires patience, discipline, and ongoing monitoring.

But unlike many small businesses, your portfolio does not need you to open the doors every morning.

The companies do the work. Your job is to own quality, pay sensible prices, reinvest intelligently, and give compounding time to work.

That may be one of the simplest businesses you will ever own.

Takeaway

You do not need employees, inventory, or customers to own a successful business. Build your portfolio like a business: start with quality companies, add at sensible valuations, and let growing dividends and compounding do the work.

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing get exclusive ideas and guidance to navigate any climate.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a PAID subscriber, and I’ll show you exactly how I do it. In addition, gain full access to this post and exclusive, subscriber-only content. We do the work; you stay in control!

Subscribe now

DGI Scorecard

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks, and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

1. Dividend growth streak: 10 years or more.

2. Market cap: Minimum one billion dollars.

3. Diversification: Limit of five companies per sector, preferably two per industry.

4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.

‘The List’ is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on ‘The List’. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

Note: In the last week of every month, I will show the updated watchlist for our American dividend growers, The List-USA. It will be shown after the Canadian watchlist below.

Performance of 'The List'

The dividend growth for The List remained unchanged last week, with an average YTD increase of 6.6% (income).

The price of The List was down slightly last week and now stands at +8.5% YTD (capital).

Top Performers Last Week:

• Thomson Reuters (TRI-Q), up +8.85%.

• Magna (MGA-N), up +4.48%.

• Stantec Inc. (STN-T), up +3.99%.

Worst Performer Last Week:

• TFI International (TFII-N), down -10.24%.

From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.

Read more

Summary

This is not a stock-picking newsletter!

It’s a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved over time.

Welcome to this week’s MP Market Review.

Before we begin, a quick explanation of the name.

Many years ago, when I first discovered dividend growth investing, I came across a quote that stopped me in my tracks:

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put it in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

That is dividend growth investing in its simplest form.

When a quality company pays a dividend, cash moves from the company’s pocket to yours, yet your ownership stake remains intact. As earnings grow, dividends tend to grow. As dividends grow, share prices often follow. Reinvest those dividends into additional shares, and the cycle accelerates: more shares generate more dividends, which buy even more shares.

That’s the magic.

It’s why we call this newsletter Magic Pants Dividend Growth Investing.

Every week, we track the companies on The List, our curated watchlist of Canadian dividend growth businesses selected for their ability to produce rising income over time. While we also publish a U.S. edition each month, Canada remains our primary hunting ground.

Our objective is straightforward:

Grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 in the United States.

What follows is not theory.

It is the real-world application of a dividend growth strategy using real money, real positions, and real results.

Markets create an endless stream of noise. We ignore most of it.

Instead, we focus on a handful of metrics that tell us whether our process is working. No predictions. No forecasts. No crystal ball.

Just results.

The magic is in the dividend. Dividends lead. Prices follow.

This Week’s Scorecard

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.64% since inception

• Total Return (includes dividends): +17.71 % year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +9.3% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: Two

• Earnings Reports This Week: Nine

DGI Clipboard

“Forget timing the market. Build a portfolio that gives you a raise every year.”

The All-Canadian DGI Portfolio: You Weren’t Too Late. Here’s the Proof.

How good are you at timing the market? With a disciplined dividend growth investing strategy, you don’t have to be.

Last December 19, I published an article titled “You’re Not Late to the Party. Dividend Growth Is Still Delivering Gifts.”

At the time, one question kept coming up from new subscribers who were considering investing alongside our paid model portfolios:

“Did I miss my chance?”

My answer was simple.

No.

Markets will always fluctuate, but waiting for the “perfect” entry point often means never getting started.

Instead, I recommended a disciplined strategy that balanced immediate investment with dry powder available for future opportunities.

The Strategy

For an investor with $100,000 ready to invest, the concept was straightforward.

Invest approximately 50% of your capital immediately using our All-Canadian Dividend Growth Portfolio, which is available free to all subscribers.

Then, gradually deploy the remaining capital by following our DGI Alerts (paid subscribers), adding to existing positions or initiating new ones only when high-quality dividend growth companies became sensibly priced.

This approach removes the pressure of trying to time the market while allowing valuation to guide future purchases.

Six Months Later...

More than six months have now passed.

The obvious question is:

Did the strategy work?

Let’s look at the results.

Where We Started

On December 19, 2025, we invested $52,000, representing 52% of the available capital, based on our recommended position sizes at the time.

Since then, our DGI Alerts have guided investors to:

• Add to existing holdings.

• Initiate three new positions:

  • Canadian Natural Resources (CNQ)

  • Stantec (STN)

  • Brookfield Infrastructure Partners (BIP.UN)

Each purchase was made only when valuation justified allocating fresh capital.

The Results

Today, approximately 60% of the original capital has been deployed.

Here’s what that disciplined approach has accomplished:

✅ Built a portfolio of 16 high-quality dividend growth companies

✅ Created a growing stream of dividend income that continues to compound

✅ Preserved approximately 40% of the original capital for future opportunities

✅ Generated total returns that closely mirror the approximately 18% annualized performance of our MP Wealth-Builder Model Portfolio (CDN)

Takeaway

The biggest mistake many investors make isn’t buying at the wrong time.

It’s waiting for a perfect opportunity that rarely arrives.

A disciplined, phased investment strategy allows you to begin compounding immediately while maintaining the flexibility to take advantage of future market weakness.

Six months later, the results suggest that investors who followed this approach weren’t late to the party at all.

They simply chose a disciplined way to join it.

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing get exclusive ideas and guidance to navigate any climate.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a PAID subscriber, and I’ll show you exactly how I do it. In addition, gain full access to this post and exclusive, subscriber-only content. We do the work; you stay in control!

Subscribe now

DGI Scorecard

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks, and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

1. Dividend growth streak: 10 years or more.

2. Market cap: Minimum one billion dollars.

3. Diversification: Limit of five companies per sector, preferably two per industry.

4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.

‘The List’ is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on ‘The List’. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

Note: In the last week of every month, I will show the updated watchlist for our American dividend growers, The List-USA. It will be shown after the Canadian watchlist below.

Performance of 'The List'

The dividend growth for The List remained unchanged last week, with an average YTD increase of 6.6% (income).

The price of The List was down slightly last week and now stands at +9.3% YTD (capital).

Top Performers Last Week:

• Franco Nevada (FNV-N), up +6.93%.

• Canadian Natural Resources (CNQ-T), up +6.61%.

• Brookfield Infrastructure Partners (BIP-N), up +4.13%.

Worst Performer Last Week:

• Thomson Reuters (TRI-Q), down -6.29%.

From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.

Read more

Summary

This is not a stock-picking newsletter!

It’s a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved over time.

Welcome to this week’s MP Market Review.

Before we begin, a quick explanation of the name.

Many years ago, when I first discovered dividend growth investing, I came across a quote that stopped me in my tracks:

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put it in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

That is dividend growth investing in its simplest form.

When a quality company pays a dividend, cash moves from the company’s pocket to yours, yet your ownership stake remains intact. As earnings grow, dividends tend to grow. As dividends grow, share prices often follow. Reinvest those dividends into additional shares, and the cycle accelerates: more shares generate more dividends, which buy even more shares.

That’s the magic.

It’s why we call this newsletter Magic Pants Dividend Growth Investing.

Every week, we track the companies on The List, our curated watchlist of Canadian dividend growth businesses selected for their ability to produce rising income over time. While we also publish a U.S. edition each month, Canada remains our primary hunting ground.

Our objective is straightforward:

Grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 in the United States.

What follows is not theory.

It is the real-world application of a dividend growth strategy using real money, real positions, and real results.

Markets create an endless stream of noise. We ignore most of it.

Instead, we focus on a handful of metrics that tell us whether our process is working. No predictions. No forecasts. No crystal ball.

Just results.

The magic is in the dividend. Dividends lead. Prices follow.

This Week’s Scorecard

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.87% since inception

• Total Return (includes dividends): +17.36 % year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +9.7% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: None

• Earnings Reports This Week: Two

DGI Clipboard

“Cash is not a safe investment, is not a safe place because it will be taxed by inflation.”

- Ray Dalio

Inflation Never Retires. Your Income Shouldn’t Either.

The greatest threat to your retirement may not be the next bear market. It may be the rising cost of living.

The Silent Retirement Killer

Inflation is one of the greatest risks retirees face.

While market volatility dominates the headlines, inflation quietly chips away at your purchasing power every single year. A retirement that feels comfortable today can become increasingly difficult to sustain if your income fails to keep pace with rising prices.

The challenge isn’t simply generating income.

It’s generating income that grows.

The Problem With Fixed Income

Many retirement strategies rely on fixed income sources such as bonds, GICs, annuities, or systematic withdrawals from investment portfolios.

These approaches can provide stability, but they share one significant weakness.

The income often remains relatively flat while the cost of groceries, utilities, insurance, travel, and healthcare continues to climb.

Each year, your dollars buy a little less.

Over a retirement lasting 25 or 30 years, that loss of purchasing power can have a profound impact on your lifestyle.

Dividend Growth Investing Takes A Different Approach

Dividend growth investing begins with a different objective.

Rather than chasing the highest yield available today, investors focus on owning exceptional businesses that consistently increase their dividends year after year.

Companies with durable competitive advantages, growing earnings, and strong balance sheets often reward shareholders with annual dividend raises.

Those raises become your retirement pay raises.

Your Retirement Paycheck Can Grow

Imagine a portfolio yielding 3.5% today while increasing its dividends by approximately 7% annually.

If inflation averages 2% to 3% over the long term, your income has the potential to grow substantially faster than your cost of living.

Instead of watching purchasing power disappear, your retirement paycheck continues to expand.

Without adding another dollar of capital.

That’s the magic of dividend growth investing.

Businesses Can Fight Inflation Too

Many high-quality dividend growth companies possess something incredibly valuable during inflationary periods:

Pricing power.

They can raise prices without significantly reducing customer demand.

Higher revenues often translate into higher earnings, allowing management to continue increasing dividends.

As a shareholder, you participate directly in that growth.

Your income rises because the businesses you own continue creating more value.

Focus On Income, Not Market Noise

Stock prices will fluctuate.

Sometimes dramatically.

But price volatility does not reduce the dividend paid by a healthy business.

In fact, lower prices allow dividend reinvestment to purchase more shares, creating even greater future income when markets recover.

The focus should remain where it belongs:

Growing ownership in exceptional businesses that continue increasing their dividends.

Takeaway

Retirement is not about reaching a particular age.

It is about creating an income stream that supports your lifestyle for decades.

Inflation will never stop working against you.

Your investments should never stop working for you.

Own businesses that regularly increase their dividends, and your retirement income has the opportunity not only to keep pace with inflation, but to outgrow it.

The magic is in the dividend. As the dividend grows, so does your retirement paycheck.

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing get exclusive ideas and guidance to navigate any climate.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a PAID subscriber, and I’ll show you exactly how I do it. In addition, gain full access to this post and exclusive, subscriber-only content. We do the work; you stay in control!

Subscribe now

DGI Scorecard

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks, and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

1. Dividend growth streak: 10 years or more.

2. Market cap: Minimum one billion dollars.

3. Diversification: Limit of five companies per sector, preferably two per industry.

4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.

‘The List’ is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on ‘The List’. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

Note: In the last week of every month, I will show the updated watchlist for our American dividend growers, The List-USA. It will be shown after the Canadian watchlist below.

Performance of 'The List'

The dividend growth for The List remained unchanged last week, with an average YTD increase of 6.6% (income).

The price of The List was up again last week and now stands at +9.7% YTD (capital).

Top Performers Last Week:

• goeasy Ltd. (GSY-T), up +7.83%.

• Thomson Reuters (TRI-Q), up +7.31%.

• TFI International (TFII-N), up +5.55%.

Worst Performer Last Week:

• Manulife Financial (MFC-T), down -3.79%.

From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.

Read more

Follow our weekly newsletter for concise analysis and key investor takeaways from every earnings report.

In addition to the weekly earnings summaries in our newsletter, we will update the Earnings Calendar in the Premium Content section of the site each week through quarter-end.

Some companies on The List do not follow a calendar-year reporting cycle. Their most recent off-cycle results are included in the Earnings Calendar at the top of the page above the solid line.

Summary

Benjamin Graham once remarked that earnings are the principal factor driving stock prices.

Earnings and dividend growth often go hand in hand, providing insights into future dividend growth for quality companies. Regularly monitoring our dividend growers, starting with quarterly earnings releases, is a key part of the process. The List is sorted by reporting date, complete with the market’s consensus estimates and actual reported results. Red numbers indicate earnings below those of the previous year for the same period.

Read more

Summary

This is not a stock-picking newsletter!

It’s a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved over time.

Welcome to this week’s MP Market Review.

Before we begin, a quick explanation of the name.

Many years ago, when I first discovered dividend growth investing, I came across a quote that stopped me in my tracks:

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put it in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

That is dividend growth investing in its simplest form.

When a quality company pays a dividend, cash moves from the company’s pocket to yours, yet your ownership stake remains intact. As earnings grow, dividends tend to grow. As dividends grow, share prices often follow. Reinvest those dividends into additional shares, and the cycle accelerates: more shares generate more dividends, which buy even more shares.

That’s the magic.

It’s why we call this newsletter Magic Pants Dividend Growth Investing.

Every week, we track the companies on The List, our curated watchlist of Canadian dividend growth businesses selected for their ability to produce rising income over time. While we also publish a U.S. edition each month, Canada remains our primary hunting ground.

Our objective is straightforward:

Grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 in the United States.

What follows is not theory.

It is the real-world application of a dividend growth strategy using real money, real positions, and real results.

Markets create an endless stream of noise. We ignore most of it.

Instead, we focus on a handful of metrics that tell us whether our process is working. No predictions. No forecasts. No crystal ball.

Just results.

The magic is in the dividend. Dividends lead. Prices follow.

This Week’s Scorecard

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.25% since inception

• Total Return (includes dividends): +15.80% year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +7.4% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: None

• Earnings Reports This Week: None

DGI Clipboard

“Current yield, using its own historic yield as a guide, is, in my view, a fine valuation measure.”

— Tom Connolly

Timely Ten: Where the Best Dividend Bargains Are Hiding This Month

Timely Ten Update

There was no change to the Canadian Timely Ten this month. The same ten companies continue to rank as the most undervalued names on our Canadian watchlist.

Similar to last month, seven of the Timely Ten increased in price over the past thirty days, highlighting just how quickly quality businesses can become less attractive from a valuation perspective. Only Alimentation Couche-Tard Inc. remains undervalued by double digits based on our valuation methodology. Overall, it is becoming increasingly difficult to find compelling value in the Canadian market.

That isn’t necessarily a reason to stop investing. Rather, it reinforces the importance of patience and discipline. When valuations become stretched, we continue to build positions incrementally, allowing market volatility to dictate the pace of our purchases rather than emotions. History has shown that attractive buying opportunities eventually return, and maintaining a watchlist of high-quality businesses ensures we are ready when they do.

More Opportunity South of the Border

The American Timely Ten continues to offer more opportunity, with noticeably greater movement throughout the rankings. The top four companies remain unchanged and are largely trading sideways, but there has been meaningful movement in the middle of the list.

UnitedHealth Group, Automatic Data Processing, and Visa all moved lower on the list this month on improving share prices, and we are hopeful that they may soon graduate from the Timely Ten. We own all three in our MP Wealth-Builder Model Portfolio (USA), and our disciplined approach of adding to these positions during periods of weakness is beginning to pay off.

CME Group: Short-Term Weakness, Long-Term Opportunity

The biggest mover this month was CME Group (CME-Q), which climbed from twelfth to eighth on the list following recent share price weakness.

The decline was largely driven by UBS lowering its earnings estimates and price target after second-quarter average daily trading volume came in below expectations. Trading activity was softer in interest rate and energy futures, two of CME’s largest product categories, leading to concerns about near-term transaction revenue.

While these issues may create short-term headwinds, they have done little to alter our long-term investment thesis for this exceptional business.

Air Products: Capital Discipline Rewarded

Air Products & Chemicals (APD-N) moved in the opposite direction, falling from ninth to thirteenth after a strong rally in its share price.

Investor sentiment improved after management cancelled several large capital-intensive clean energy projects, a move widely viewed as evidence of greater capital discipline rather than weakening prospects. Management also reaffirmed progress on its flagship NEOM Green Hydrogen Project in Saudi Arabia, further supporting investor confidence.

Volatility Creates Opportunity

These shifts once again demonstrate why we focus on valuation rather than headlines. Quality companies frequently move in and out of favour, creating opportunities for patient long-term investors.

We recently added to both CME Group(CME-Q) and Intercontinental Exchange (ICE-N) within our MP Wealth-Builder Model Portfolio (USA), reinforcing our view that the Timely Ten remains one of the most productive hunting grounds for identifying high-quality dividend growth companies trading at sensible prices.

The Timely Ten is published monthly and ranks the most undervalued dividend growth companies in Canada and the United States. The rankings are based on Dividend Yield Theory, a valuation framework that I explain in greater detail later in this article.

Note: goeasy Ltd.’s dividend has been suspended, so we have moved it to the bottom of the list.

Background

The third step in our investment process is monitoring. Once we’ve identified high-quality dividend growth companies and purchased them at sensible prices, we continuously monitor them for changes in valuation and business fundamentals.

Tracking dozens of companies can quickly become overwhelming. Fortunately, our focus is limited to the businesses on our watchlists rather than the thousands of stocks that make up the broader market. Even so, we are always looking for ways to improve the efficiency and consistency of our process. One of the most valuable tools we have found is Dividend Yield Theory.

What Is Dividend Yield Theory?

Dividend Yield Theory is a straightforward valuation method based on a simple observation: the dividend yields of mature, high-quality dividend growth companies tend to fluctuate around a historical average over time, provided the underlying business remains fundamentally intact.

Because a stock’s price and dividend yield move in opposite directions, a higher-than-normal dividend yield often signals that the shares are trading below their historical valuation. Conversely, an unusually low dividend yield may indicate that the shares have become expensive.

Dividend Yield Theory doesn’t tell us what to buy. Our quality screening process does that. Instead, it helps us determine when to buy.

Building the Watchlist

Before applying Dividend Yield Theory, every company must first qualify for our watchlist by meeting our quality standards.

• Dividend growth: Minimum 10 consecutive years of dividend increases.

• Market capitalization: At least $1 billion.

• Diversification: Maximum of five companies per sector, with a preference for no more than two per industry.

• Business quality: We generally exclude REITs and pure-play energy companies because their earnings and dividends tend to be more cyclical.

This quality-first approach dramatically reduces the investment universe and allows us to focus only on exceptional businesses.

How We Rank the Timely Ten

Each month, we rank every company on our Canadian and U.S. watchlists by the discount between its current market price and its estimated fair value, based on Dividend Yield Theory.

Fair value is calculated using a simple formula:

Fair Value = Current Annual Dividend ÷ Historical High Dividend Yield

The larger the discount to fair value, the higher the company ranks.

The ten companies above the thick black line are trading below their estimated fair values and currently offer dividend yields higher than their historical highs. These companies have historically provided the best combination of quality, valuation, and upside potential.

These are our Timely Ten.

While no valuation method is perfect, Dividend Yield Theory has proven to be an exceptionally effective way to identify attractive entry points for high-quality dividend growth companies. Used alongside our quality-first investment process, it helps us deploy capital with greater discipline while removing much of the emotion from investment decisions.

Takeaway

The Timely Ten is not about chasing performance. It is about patiently allocating new capital to outstanding businesses when the odds are tilted in our favour. Over a full market cycle, buying great companies at sensible prices has proven to be one of the simplest and most effective ways to build both a growing stream of dividend income and long-term capital appreciation.

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing get exclusive ideas and guidance to navigate any climate.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a PAID subscriber, and I’ll show you exactly how I do it. In addition, gain full access to this post and exclusive, subscriber-only content. We do the work; you stay in control!

Subscribe now

DGI Scorecard

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks, and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

1. Dividend growth streak: 10 years or more.

2. Market cap: Minimum one billion dollars.

3. Diversification: Limit of five companies per sector, preferably two per industry.

4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.

‘The List’ is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on ‘The List’. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

Note: In the last week of every month, I will show the updated watchlist for our American dividend growers, The List-USA. It will be shown after the Canadian watchlist below.

Performance of 'The List'

The dividend growth for The List remained unchanged last week, with an average YTD increase of 6.6% (income).

The price of The List was up last week and now stands at +7.4% YTD (capital).

Top Performers Last Week:

• TFI International (TFII-N), up +6.11%.

• Canadian Natural Resources (CNQ-T), up +4.27%.

• Metro Inc. (MRU-T), up +3.92%.

Worst Performer Last Week:

• Franco Nevada (FNV-N), down -5.54%.

From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.

Read more

I wanted to let you know that I have just added to our position in another high-quality dividend growth company within the MP Wealth-Builder Model Portfolio (CDN).

It offers an attractive starting dividend yield of more than 4% while growing its dividend at approximately 6% annually. Combined with inflation-linked features embedded throughout its business model, the company is well positioned to provide investors with a growing, inflation-protected income stream over the long term.

If you’ve been considering upgrading your subscription, remember that some of the best opportunities are identified before they become obvious to the broader market. Paid subscribers receive every buy, sell, trim, and portfolio update in real time, allowing them to follow our process as it unfolds rather than reading about it after the fact.

Read more

I wanted to let you know that I have just added to our position in another high-quality dividend growth company within the MP Wealth-Builder Model Portfolio (CDN).

It is a dividend achiever with a 15-year track record of annual dividend increases. Over the past decade, it has managed to grow dividends at an annualized rate of 7.2%.

Despite these strong fundamentals, recent weakness in the share price has created an opportunity to acquire additional shares at a valuation we believe is both sensible and attractive for long-term dividend growth investors.

If you’ve been considering upgrading your subscription, remember that some of the best opportunities are identified before they become obvious to the broader market. Paid subscribers receive every buy, sell, trim, and portfolio update in real time, allowing them to follow our process as it unfolds rather than reading about it after the fact.

Read more

I wanted to let you know that I have just added to our position in another high-quality dividend growth company within the MP Wealth-Builder Model Portfolio (CDN). It is a dividend aristocrat with a 25-year track record of annual dividend increases. Over the past decade, it has managed to grow dividends at an annualized rate of 17.0%. The shares look sensibly priced based on our valuation metrics.

As a long-term investor, I look for quality companies that grow earnings and dividends, and try to acquire them at a good price. Afterwards, the goal is to sit back and let the power of compounding do the heavy lifting for me.

If you’ve been considering upgrading your subscription, remember that some of the best opportunities are identified before they become obvious to the broader market. Paid subscribers receive every buy, sell, trim, and portfolio update in real time, allowing them to follow our process as it unfolds rather than reading about it after the fact.

Read more

I wanted to let you know that I have just added to our position in another high-quality dividend growth company within the MP Wealth-Builder Model Portfolio (USA).

The company is off to an exceptional start in 2026, reporting record revenue, operating income, and earnings in its most recent quarter. It is also a Dividend Achiever, having increased its dividend for 12 consecutive years and achieving an impressive 10% average annual dividend growth rate over the past decade.

Despite these strong fundamentals, recent weakness in the share price has created an opportunity to acquire additional shares at a valuation we believe is both sensible and attractive for long-term dividend growth investors.

If you’ve been considering upgrading your subscription, remember that some of the best opportunities are identified before they become obvious to the broader market. Paid subscribers receive every buy, sell, trim, and portfolio update in real time, allowing them to follow our process as it unfolds rather than reading about it after the fact.

Read more

I wanted to let you know that I added to an existing holding in our U.S. model portfolio earlier today. This company is a dividend achiever with a 15-year track record of annual dividend increases. Over the past decade, it has grown its dividend at an annualized rate of 8.7%, and based on our valuation metrics, the shares are currently trading at a sensible price.

The stock is now trading about 20% below its historical average P/E and currently yields 2.15%. What makes this company especially attractive is its annual special dividend each January, which matches its regular dividend. The actual yield is close to 5%.

Read more

Summary

This is not a stock-picking newsletter!

It’s a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved over time.

Welcome to this week’s MP Market Review.

Before we begin, a quick explanation of the name.

Many years ago, when I first discovered dividend growth investing, I came across a quote that stopped me in my tracks:

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put it in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

That is dividend growth investing in its simplest form.

When a quality company pays a dividend, cash moves from the company’s pocket to yours, yet your ownership stake remains intact. As earnings grow, dividends tend to grow. As dividends grow, share prices often follow. Reinvest those dividends into additional shares, and the cycle accelerates: more shares generate more dividends, which buy even more shares.

That’s the magic.

It’s why we call this newsletter Magic Pants Dividend Growth Investing.

Every week, we track the companies on The List, our curated watchlist of Canadian dividend growth businesses selected for their ability to produce rising income over time. While we also publish a U.S. edition each month, Canada remains our primary hunting ground.

Our objective is straightforward:

Grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 in the United States.

What follows is not theory.

It is the real-world application of a dividend growth strategy using real money, real positions, and real results.

Markets create an endless stream of noise. We ignore most of it.

Instead, we focus on a handful of metrics that tell us whether our process is working. No predictions. No forecasts. No crystal ball.

Just results.

The magic is in the dividend. Dividends lead. Prices follow.

This Week’s Scorecard

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.06% since inception

• Total Return (includes dividends): +17.02 % year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +6.7% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: None

• Earnings Reports This Week: None

DGI Clipboard

“Remember when the crash arrives, it will be a P/E one, (a valuation decline). Those who bought expensive stocks will get their comeuppance.”

- Tom Connolly

The Business Hasn’t Collapsed. But The Valuation Has.

One of the least understood forces in investing is valuation compression, yet it can have a significant impact on long-term returns.

John Bogle, founder of Vanguard, explained this with a remarkably simple equation:

Total Return = Investment Return + Speculative Return

Investment return comes from the things that truly create shareholder wealth: earnings growth and dividends. Speculative return comes from changes in valuation, or how much investors are willing to pay for those earnings.

That distinction is critical because valuation can change even when a business continues to perform exceptionally well.

Investment Return vs. Speculative Return

Imagine a company that grows earnings by 7% annually while paying a 3% dividend. On paper, investors should expect an investment return of roughly 10% per year before any change in valuation.

Now suppose that the same company once traded at 25 times earnings, but over the next decade, investors decide that 18 times earnings is a more reasonable valuation. The business continues to execute flawlessly. Earnings keep growing. The dividend continues to rise. Yet shareholders may experience years of mediocre price appreciation because the declining P/E multiple offsets part, or even all, of the investment return.

That is valuation compression.

It’s Happening Today

You don’t have to look very far to find examples. Several companies on our watchlists have delivered impressive operational performance while their valuation multiples have begun to normalize.

Stantec and Thomson Reuters in Canada, along with Zoetis, Accenture, and Intuit in the United States, are all exceptional businesses that have experienced some degree of valuation compression after years of premium pricing.

This is why investors should be cautious when markets become expensive. Elevated valuations don’t necessarily mean stock prices are about to fall. They simply lower the probability of earning outsized future returns because much of tomorrow’s optimism has already been reflected in today’s price.

Why Dividend Growth Investors Have an Edge

Fortunately, dividend growth investors have an advantage.

Our objective has never been to profit from expanding valuation multiples. We invest in exceptional businesses that consistently grow earnings and increase their dividends. Those two characteristics are the true engines of long-term wealth creation.

Even when valuations compress, the dividend continues to arrive. Better yet, reinvested dividends buy more shares while prices are lower, increasing future dividend income and positioning the portfolio to benefit when valuations eventually stabilize.

Patience Is Part of the Process

This is why patience is such an important part of dividend growth investing. Markets can spend years correcting excessive valuations while the underlying businesses continue to grow.

Investors focused only on share prices often become discouraged. Investors focused on a growing stream of dividend income recognize these periods as opportunities rather than setbacks.

John Bogle’s formula reminds us that we cannot control investor sentiment. We can, however, control the quality of the businesses we own and the prices we are willing to pay.

Takeaway

Over time, earnings growth and dividends do the heavy lifting. Valuation may enhance returns for a while, but it eventually reverts toward normal. When it does, investment return is what remains, and that is where lasting wealth is created.

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing get exclusive ideas and guidance to navigate any climate.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a PAID subscriber, and I’ll show you exactly how I do it. In addition, gain full access to this post and exclusive, subscriber-only content. We do the work; you stay in control!

Subscribe now

DGI Scorecard

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks, and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

1. Dividend growth streak: 10 years or more.

2. Market cap: Minimum one billion dollars.

3. Diversification: Limit of five companies per sector, preferably two per industry.

4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.

‘The List’ is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on ‘The List’. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

Note: In the last week of every month, I will show the updated watchlist for our American dividend growers, The List-USA. It will be shown after the Canadian watchlist below.

Performance of 'The List'

The dividend growth for The List remained unchanged last week, with an average YTD increase of 6.6% (income).

The price of The List was down last week and now stands at +6.7% YTD (capital).

Top Performers Last Week:

• goeasy Ltd. (GSY-T), up +18.54%.

• Thomson Reuters (TRI-Q), up +6.37%.

• Manulife Financial (MFC-T), up +2.87%.

Worst Performer Last Week:

• Loblaw Companies Limited (L-T), down -5.28%.

From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.

Read more

Each quarter, we share a full performance update so you can see exactly how a disciplined dividend growth strategy builds wealth over time. It is a clear, numbers-first look at how we construct durable, income-producing portfolios step by step, brick by brick.

For our free subscribers, we provide a summary that offers a small window into what you could be using every day to strengthen your own results.

If you are still on the free plan, consider what you are missing: our model portfolio performance business plan, our research framework, and the real-time decisions that drive long-term compounding.

Paid subscribers get the full experience:

• Real buy and sell alerts

• Exact position sizes for every trade

• Full access to our Premium Content library, where we break down the strategy we use to build growing income year after year

Join us and invest alongside a process designed to compound, protect, and grow your wealth. We do the work, you stay in control!

Subscribe now

📢 MP Wealth-Builder Model Portfolio (USA) Update – April 30, 2026 📢

Welcome to the latest update on our American real-money dividend growth portfolio! As we track our progress, I’m excited to share how we measure up against our long-term projections.

🚀 Portfolio Overview

Launched on May 1, 2023, (one year after our CDN portfolio) this portfolio was built with a clear vision: to create a reliable and growing income stream. Our investment approach includes:

✅ An initial capital commitment of $100,000 (deployed over four years)
✅ Annual contributions of $12,000 (beginning in year two)
✅ Full dividend reinvestment to maximize compounding

🎯 Our Objective
Our objective for our American portfolio is simple: grow dividend income by 7–10%+ annually while delivering capital appreciation that matches or exceeds the S&P 500 Index over a full market cycle.

We’re also on track to grow the value of our portfolio beyond $500,000 in less than a decade!

In an era of instant gratification, this approach reinforces the value of staying the course and letting time do the heavy lifting.

📊 How We Invest
We focus on America’s highest-quality dividend growth companies, using a disciplined selection process to deploy and monitor capital effectively.

💡 For Conservative DIY Investors This project is built for long-term, income-focused investors who believe in building wealth the traditional way by owning assets that produce reliable and growing income. Dividend growth is at the core of our strategy, and history shows that steadily rising income tends to pull capital appreciation along.

In this update, I’ve included:

✅ Total returns
✅ Current holdings & position sizes
✅ Sector weightings
✅ Illustrative charts tracking our journey

Portfolio Total Returns (USA)

Portfolio Holdings and Position Sizes (USA)

🚀 Where We Stand On Deploying Our Capital

We have fallen behind in deploying our initial capital as per the original business plan.

That includes:

• initial $90,000

• annual contributions

• reinvested dividends

• realized gains

Approximately $17,000 remains uninvested and will be carried forward into the next fiscal period.

This matters because deployment timing affects long-term compounding.

One lesson from this portfolio is clear:

Getting quality capital to work earlier matters. We need to do better.

Projections as per Business Plan (USA)

📈 Visualizing the Journey

At this stage, both income growth and capital appreciation remain below our projections in the original business plan for the MP Wealth-Builder Model Portfolio (USA) – Business Plan).

We have some work to do.

Share

On our journey to mastering dividend growth investing (DGI), we immersed ourselves in extensive research on endowment investing—a time-tested approach to sustainable wealth-building. After all, who better to learn from than those who have preserved and grown wealth for generations?

For much of history, true wealth wasn’t measured by net worth alone, but by the income an investor’s assets could reliably produce. This fundamental principle resonates deeply with us as dividend growth investors.

We often reference Jim Garland’s powerful opening quote from his 2013 paper, Memo to the Darcy Family: To Thine Own Self Be True, as a guiding insight into this philosophy.

“The hero of Jane Austen’s great novel, Pride and Prejudice, was a Mr. Darcy. Mr. Darcy was wealthy — but Austen expressed that fact in a way that today sounds odd. She wrote that Mr. Darcy was worth £10,000 a year. The income from his properties was far more important than the market value of those properties because he lived off that income.”

Mr. Garland illustrates this concept through the story of two farmers:

“Imagine two farms and two farmers. One farmer raises chickens and sells them to grocery stores. We’ll call him a chicken farmer. The other farmer keeps hens in a henhouse and feeds the eggs to his rather large family. The second one is an egg farmer.

The first person, the chicken farmer, is vitally interested in the market value of chickens. The second one, the egg farmer, is vitally interested in the number of eggs that his hens can lay, and in the health of the hens, but he doesn’t care at all about the market value of his hens.

For the chicken farmer, risk means the probability of a decline in the price of chickens. On the other hand, the egg farmer could care less about market values. His risks are foxes, viruses, and other such threats to the well-being of his hens.

Think of stocks as chickens, and dividends as the eggs those stocks provide. Total return investors are chicken farmer investors, because they worry about the market value of their “chickens” – of their stocks. On the other hand, endowment investors are egg farmer investors. All that endowment investors worry about is the current and future quantities of their “eggs” – their dividends.”

Like Garland, we see the clear parallel between endowment investors and egg farmers. But as dividend growth investors, we take it one step further. Instead of settling for any dividend-paying stock, we focus exclusively on dividend growth stocks—companies that consistently increase their payouts year after year. Our experience has shown that businesses with a strong track record of dividend growth tend to deliver capital appreciation at a similar pace. The combination of a rising dividend and a growing share price is a powerful wealth-building engine.

Armed with a strategy that pays us in both up and down markets, we remain patient, waiting for the right opportunities to buy quality dividend growers at sensible prices. After all, in today’s chicken-farming world, the key to building wealth is simple: buy more income at a lower price.

And what better way to demonstrate our approach than by building a dividend growth portfolio from the ground up?

Summary

“A goal without a plan is just a wish.”

Every investor’s portfolio is essentially a small business. Like any successful business, it requires a clear, well-defined plan to operate efficiently and achieve long-term success. Our plan also includes guardrails like allocation limits and diversification.

Our approach focuses on investing in American dividend growth companies and follows three basic rules:

✅ Quality – We prioritize large-cap companies with a proven track record of dividend growth, strong financials, and a stable, growing industry.

✅ Valuation – We aim to buy stocks at a sensible or undervalued price based on their historical track record. Buying at a discount introduces a margin of safety, increasing the likelihood of future price appreciation.

✅ Monitoring – We continuously track our dividend growers, paying close attention to yield fluctuations, as they can signal changes in valuation. Consistent dividend growth is the strongest indicator of management’s confidence in a company’s long-term prospects.

Portfolio Strategy

✔ Initial Investment: $100,000
✔ Ongoing Contributions: $12,000 per year (starting Year 2) to demonstrate the impact of regular investing
✔ Sector Diversification: No single position exceeding 6% of the total portfolio
✔ Dividend Reinvestment: All dividends will be reinvested, though not necessarily in the same stock that generated them

Execution & Transparency

We will buy and sell stocks based on our process, not on a fixed schedule. Each trade will be documented with timestamped Dividend Growth Investing (DGI) alerts, followed by an in-depth analysis article explaining the rationale behind the decision.

We will also provide:

✔ Quarterly portfolio updates for all subscribers
✔ Proof of each transaction to ensure full transparency

The MP Wealth-Builder Model Portfolio (USA) is actively managed, monitored, and reported on, so investors can see how disciplined dividend growth investing can build long-term wealth.

Inception Date

May 1, 2023

Goal And Income Objectives

Primary Objective

The primary objective of the MP Wealth-Builder Model Portfolio (USA) is to grow dividend income by 7–10%+ annually while also achieving capital appreciation in line with, or better than, the S&P 500 Index over a full market cycle.

Income growth is the engine of this strategy. Capital appreciation is expected to follow as earnings and dividends compound over time.

Capital Deployment Plan

We will deploy the initial $100,000 of capital gradually over the first four years, recognizing that market timing is unpredictable and that attractive valuation opportunities do not appear on a fixed schedule.

Rather than rushing all our capital into the market, we will remain patient and allow “Mr. Market” to present favourable entry points in high-quality dividend growth companies.

Beginning in Year 2, we will contribute an additional $12,000 annually, continuing each year thereafter. Our objective is to fully invest each annual contribution in the year it is made to maximize the compounding effect of reinvested dividends.

While the timing of investments may influence short-term results, this portfolio is designed with a long-term horizon. As such, we remain confident in our ten-year income objectives despite inevitable short-term variability.

Income Growth Target

Our numerical income goal is to generate approximately $1,000 in monthly dividend income within ten years of inception.

This income growth will be driven by two primary factors:

• Reinvesting dividends, allowing income to compound year after year

• Consistent annual contributions, which accelerate the growth of the income base

We deliberately chose a ten-year time horizon to emphasize the importance of patience and long-term thinking. Dividend Growth Investing is not a short-term strategy. Its true power emerges gradually as compounding works over many years, and often decades.

Return Assumptions and Framework

The table below illustrates how the MP Wealth-Builder Model Portfolio (USA) could potentially grow its dividend income over time under a set of reasonable and conservative assumptions:

• Starting dividend yield: 2.5% on invested capital

• Annual dividend growth: 9%

• Annual capital growth: 11.5% (derived from yield plus dividend growth)

For simplicity, we assume that capital is invested at the beginning of each year and that dividends are collected at the end of each year.

While income growth is our primary focus, we include capital appreciation for demonstration purposes using Jack Bogle’s long-term return framework:

Future Market Returns = Dividend Yield + Earnings Growth ± Change in P/E Ratio

In our projections, we assume an 11.5% annualized capital return, based on the following rationale:

• Earnings growth and dividend growth are aligned over time

• Investments are made in high-quality dividend growth companies at sensible valuations

This framework provides a realistic and conservative estimate of long-term portfolio outcomes, reinforcing the central premise of this strategy: disciplined dividend growth investing can produce both rising income and competitive long-term returns.

Read more

Summary

This is not a stock-picking newsletter!

It’s a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved over time.

Welcome to this week’s MP Market Review.

Before we begin, a quick explanation of the name.

Many years ago, when I first discovered dividend growth investing, I came across a quote that stopped me in my tracks:

“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put it in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

That is dividend growth investing in its simplest form.

When a quality company pays a dividend, cash moves from the company’s pocket to yours, yet your ownership stake remains intact. As earnings grow, dividends tend to grow. As dividends grow, share prices often follow. Reinvest those dividends into additional shares, and the cycle accelerates: more shares generate more dividends, which buy even more shares.

That’s the magic.

It’s why we call this newsletter Magic Pants Dividend Growth Investing.

Every week, we track the companies on The List, our curated watchlist of Canadian dividend growth businesses selected for their ability to produce rising income over time. While we also publish a U.S. edition each month, Canada remains our primary hunting ground.

Our objective is straightforward:

Grow dividend income by 7-10%+ annually while achieving long-term capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 in the United States.

What follows is not theory.

It is the real-world application of a dividend growth strategy using real money, real positions, and real results.

Markets create an endless stream of noise. We ignore most of it.

Instead, we focus on a handful of metrics that tell us whether our process is working. No predictions. No forecasts. No crystal ball.

Just results.

The magic is in the dividend. Dividends lead. Prices follow.

This Week’s Scorecard

MP Wealth-Builder Model Portfolio (Canada)

• Annualized Total Return: +17.34% since inception

• Total Return (includes dividends): +15.34 % year-to-date

• Current Yield: 3.2%

The List (Canada)

• Dividend Income Growth: +6.6% year-to-date

• Capital Appreciation: +7.3% year-to-date

• Dividend Announcements Last Week: None

• Earnings Reports Last Week: One

• Earnings Reports This Week: None

DGI Clipboard

“It was quite a while, though, before I realized dividend growth investing had the double double. Our income goes up and our capital rises too.

- Tom Connolly

Four Stocks. Four Years. Four Doubles.

When most people discover dividend growth investing, they focus on one thing: the growing income stream. That makes sense. Watching your dividend income rise year after year, regardless of what the stock market is doing, is both motivating and reassuring.

But something interesting often happens along the way.

The income gets all the attention, while the capital appreciation quietly steals the show.

One of the core principles behind Magic Pants is simple: the magic is in the dividend. As the dividend grows, so does the price. Companies that consistently increase their dividends are usually growing earnings, generating more cash, and creating greater value for shareholders. Over long periods, stock prices tend to follow that business performance.

When we launched our Canadian Model Portfolio just over four years ago, our primary objective wasn’t to double our money. Our goal was to build a dependable, inflation-fighting stream of dividend income that could one day fund retirement.

The capital gains have been a welcome by-product.

Today, four holdings in our portfolio (TD-T, RY-T, TRP-T and TIH-T) have already generated total returns exceeding 100%. Several others are well on their way.

What’s remarkable is that none of these companies were speculative technology stocks or turnaround stories. They were established, high-quality businesses purchased at sensible valuations and then given the time to do what great companies do: compound.

This illustrates one of the biggest misconceptions about dividend investing. Critics often assume that receiving dividends comes at the expense of capital appreciation. In reality, the opposite is frequently true. Businesses capable of raising their dividend year after year are often among the market’s strongest wealth creators.

Investors who focus only on yield miss the bigger picture. The real objective is to own companies that can grow both their earnings and their dividends for decades. The rising income provides confidence during market corrections, while the growing earnings eventually pull the share price higher.

That is why patience remains one of the most valuable investing skills.

Our original thesis on companies like Canadian National Railway and Alimentation Couche-Tard took time to unfold. There were long periods when it appeared little was happening. Yet beneath the surface, the businesses continued to grow, dividends continued to increase, and eventually the market recognized their value.

Takeaway

Dividend growth investing isn’t simply about collecting quarterly cheques.

It is about partnering with exceptional businesses that reward you twice. First, through a steadily growing income stream. Second, through capital appreciation that often exceeds expectations. If you remain patient and allow compounding to work, you may find that your biggest surprise isn’t how much your dividends grow. It may be how much your portfolio grows along with them.

Looking for a helping hand in the market? Members of Magic Pants Dividend Growth Investing get exclusive ideas and guidance to navigate any climate.

The Magic Pants model portfolios (Canadian and American) are real-money, dividend-growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

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DGI Scorecard

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks, and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

1. Dividend growth streak: 10 years or more.

2. Market cap: Minimum one billion dollars.

3. Diversification: Limit of five companies per sector, preferably two per industry.

4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.

‘The List’ is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on ‘The List’. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

Note: In the last week of every month, I will show the updated watchlist for our American dividend growers, The List-USA. It will be shown after the Canadian watchlist below.

Performance of 'The List'

The dividend growth for The List remained unchanged last week, with an average YTD increase of 6.6% (income).

The price of The List was up last week and now stands at +7.3% YTD (capital).

Top Performers Last Week:

• Alimentation Couche-Tard Inc. (ATD-T), up +13.43%.

• Waste Connections (WCN-N), up +9.05%.

• Franco Nevada (FNV-N), up +7.06%.

Worst Performer Last Week:

• Canadian Natural Resources (CNQ-T), down -4.5%.

From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.

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