Quality first. Valuation second. Position sizing brings it all together.
Picking great stocks is important. Knowing how much to invest in each one can make all the difference.
Two investors can own the same companies and still get very different results. Why? Because what they paid, how much capital they committed, and when they added to their positions can significantly affect long-term returns.
At Magic Pants, we believe position sizing is one of the most overlooked advantages available to individual investors. Identifying a great dividend growth company isn't enough. We need to know how much of it deserves a place in our portfolio and whether today’s valuation justifies putting more capital to work.
That’s why every investment begins with a disciplined framework. Companies must first qualify for The List, our carefully researched universe of dividend growers. We then assign each candidate a quality rating, classify it as Core or Non-Core, and set minimum and maximum position-sizing guidelines.
Quality determines what we own. Valuation influences when we buy. Position sizing determines how much we invest.
These guidelines form the foundation of our portfolio construction strategy. We review them quarterly and adjust them as business fundamentals, valuations, and market conditions evolve. Always refer to the “Last Updated” date beneath the title for the most current recommendations.
Quality Determines How Much We Own
We believe in owning fewer, better businesses rather than spreading capital across dozens of companies.
Our portfolios typically hold 20 to 25 high-quality dividend growers, allowing us to concentrate capital in our strongest ideas while maintaining meaningful diversification.
Every candidate falls into one of two categories:
Core Holdings: Established businesses with durable competitive advantages, predictable earnings and cash flows, and shareholder-friendly dividend policies. These companies form the foundation of our portfolio.
Non-Core Holdings: Businesses that may offer greater growth potential but carry additional risks, including economic sensitivity, earnings volatility, or less predictable business models. They complement our Core holdings but warrant smaller allocations.
Quality determines our conviction. Position sizing determines our exposure.
Position Sizing: Where Discipline Meets Opportunity
Our framework establishes clear limits:
Core Holdings: Maximum allocation of 8%.
Non-Core Holdings: Maximum allocation of 5%, with lower limits for certain companies.
Minimum Positions: Generally 1% to 4%, depending on the company’s classification and risk profile.
Maximum position sizes help manage concentration risk. Minimum allocations give us a starting point when we want exposure to a quality business but believe its valuation or near-term outlook doesn’t yet justify a larger commitment.
This is where valuation matters most.
A great company isn’t necessarily a great investment at any price.
When valuations are stretched, we may maintain only a minimum position. When prices become more attractive, and the investment thesis remains intact, we can increase our allocation toward its recommended maximum.
This allows us to build positions deliberately, rather than committing all our capital at once.
Our objective is straightforward: Own more of our highest-quality businesses when valuations are attractive, while limiting exposure when risks or valuations warrant caution.
From Research to Real Portfolio Decisions
Position sizing isn’t simply a theoretical exercise. It’s how we put our dividend growth investing strategy into practice.
Our MP Wealth-Builder Model Portfolio (CDN) demonstrates how we apply these guidelines using real capital.
Paid subscribers receive DGI Alerts whenever we buy, add to, trim, or sell a holding. Each alert explains the investment rationale, execution price, and position-sizing decision, giving a transparent view of how we manage the portfolio.
Instead of simply telling subscribers which companies we like, we show how we allocate capital, manage risk, and take advantage of valuation opportunities.
Want to Know What We’re Buying, When, and How Much?
Finding quality dividend growers is only half the equation. Knowing when to buy and how much to invest is where our process comes to life.
As a Magic Pants paid subscriber, you get more than a watchlist. You get access to the research, valuation insights, position-sizing guidelines, and the portfolio decisions behind our dividend growth investing strategy.
When we put capital to work, you’ll know what we’re buying, the price we’re paying, how much we’re investing, and why.
Don’t just follow the stocks. Follow the process.
The List: Our 2026 Quality and Position Sizing Framework
Below is our updated 2026 Canadian DGI Candidate List, including quality classifications, Core and Non-Core categories, and recommended minimum and maximum position sizes.
Think of it as our portfolio construction blueprint: a disciplined approach to owning quality businesses, managing risk, and building a growing stream of dividend income.
Quality first. Valuation second. Position sizing brings it all together.
We do the work. You stay in control.
