MP Market Review November 17, 2023
Posted by BM on November 20, 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 with a YTD price return of +3.2% (capital). Dividends have increased by +8.8% YTD, highlighting the growth in the dividend (income).
Last week, no dividend announcements from companies on 'The List'.
Last week, two earnings reports from companies on 'The List'.
No companies on 'The List' are due to report earnings this week.
The List (2023)
The Magic Pants List includes 27 Canadian dividend growth stocks. Each have raised their dividend annually for the last ten years (or longer) and have a market cap of over a billion dollars. Based on these criteria, companies on ‘The List’ are added or removed annually, on January 1. Prices and dividends are updated weekly.
While 'The List' does not function as a portfolio on its own, it serves as an excellent initial reference for individuals looking to diversify their investments and achieve higher returns in the Canadian stock market. Through our newsletter, readers gain a deeper understanding of how to implement and benefit from our Canadian dividend growth investing strategy.
If you're interested in creating your own dividend growth income portfolio, consider subscribing to our premium service. Subscribers gain access to buy/sell alerts and exclusive content available only to subscribers.
Performance of 'The List'
Last week, 'The List' was up with a YTD price return of +3.2% (capital). Dividends have increased by +8.8% YTD, highlighting the growth in the dividend (income).
The best performers last week on 'The List' were CCL Industries (CCL-B-T), up +8.01%; Brookfield Infrastructure Partners (BIP-N), up +7.17%; and Magna (MGA-N), up +6.48%.
Metro (MRU-T) was the worst performer last week, down -5.86%.
DGI Clipboard
“Compare the compound annual growth rate (CAGR) of a firm’s dividend with its price after a few years. They should be similar: if not, do not buy, or if you own it, winnow it.”
– Tom Connolly (the founder of dividendgrowth.ca)
Dividend Growth and Price Growth Alignment
Many of our good dividend growers on ‘The List’ follow this pattern.
Similar to real estate investing, stocks that generate long-term income for their owners tend to become more valuable. The primary source of income for stock investors is often through dividend payments. Beyond short-term market cycles, the value of dividend growth investing (DGI) stocks is closely tied to the income they generate for their owners.
As dividends increase, so does the stock price. Don't be overly concerned about price volatility if the dividend is growing. Hold onto the investment for the increasing income and the potential for future price gains. Recognize that the capital is growing in tandem with income, eventually.
This is where portfolio control comes into play. Many investors view the stock market as an enigmatic force, feeling subject to the whims of market returns. However, by linking the value of your stocks to the income they produce and focusing on building that income, you're likely to witness price appreciation as well.
Building a portfolio consisting of stocks that have historically followed this pattern—consistently growing their dividends at a predetermined rate—enables dividend growth investors to predict future returns more reliably.
As a bonus, a growing yield not only provides added income but also enhances the security of our underlying investment.
For subscribers of our premium service, I’ll go over all the latest earnings reports and any dividend announcements from the companies we follow on ‘The List’. But first, let’s take a closer look at some of the news stories we found relevant last week...
