Inflation Never Retires. Your Income Shouldn't Either.
MP Market Review - July 21, 2026
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!
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:
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 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.
