MP Market Review-November 03, 2023
Posted by BM on November 06. 2023
Summary
This is a weekly instalment of our MP Market Review series, which provides updates on the financial markets and Canadian dividend growth companies we monitor on 'The List'.
Last week, 'The List' was up significantly over last week with a YTD price return of +0.8% (capital). Dividend growth is now at +8.8% YTD, highlighting growth in income over the past year.
Last week, one dividend announcement from companies on 'The List'.
Last week, six earnings reports from companies on 'The List'.
Nine companies on 'The List' are due to report earnings this week.
DGI Clipboard
Think of stocks as being chickens, and dividends as being the eggs that those stocks provide. -Jim Garland, 2013, P.4, ‘Memo to the Darcy Family: To Thine Own Self Be True’
Egg Farming in a Chicken Farming World
One of my greatest joys as a father was sharing Aesop’s fables with my kids when they were younger. The simple yet timeless moral lessons from these stories served as a foundation for conveying important values to my children in an enjoyable and educational manner.
From time to time, I come across stories that, like Aesop's fables, convey essential investment principles. These principles have stood the test of time but are often overshadowed by the next ‘bright shiny object’ out there.
The story of the two farmers told by Jim Garland in his 2013 paper, ‘Memo to the Darcy Family: To Thine Own Self Be True’, is one such story.
"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 being chickens, and dividends as being the eggs that those stocks provide. Total return investors are chicken farmer investors, because total return investors 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" – of their dividends."
The moral of the story: As dividend growth investors who purchase quality companies, we share a resemblance with egg farmers in that our primary concern is the present and future quantities of our growing dividends, not the volatility in the price.
In this week’s issue, I’ll go over all the latest earnings reports and dividend increases from the companies we follow on ‘The List’. But first, let’s take a closer look at some of the breaking news that is affecting the share prices of a couple of our quality dividend growers...
