MP Market Review - November 24, 2023
Posted by BM on November 27, 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 down slightly with a YTD price return of +2.5% (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, no earnings reports from companies on 'The List'.
Three 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 down slightly with a YTD price return of +2.5% (capital). Dividends have increased by +8.8% YTD, highlighting the growth in the dividend (income).
The best performers last week on 'The List' were TFI International (TFII-N), up +3.76%; Enghouse Systems Limited (ENGH-T), up +2.53%; and Intact Financial (IFC-T), up +1.48%.
Canadian Tire (CTC-A-T) was the worst performer last week, down -5.86%.
DGI Clipboard
"Time in the market is more important than timing the market."
We likely all know someone who entered an investment right before it surged and exited just before a decline. However, finding individuals claiming consistent success in this practice is exceptionally challenging, if not impossible.
As the image above depicts, attempting to time the market is statistically unfavorable. On the contrary, an investor employing a buy-and-hold strategy, even with the most unfortunate timing in history, would still surpass the average investor by a substantial margin.
Consider a hypothetical investor who invested $50,000 in the S&P 500 at the market peak just before each of the four worst bear markets in the last 50 years:
Investment 1: $50,000 in December 1972 (before a 48% crash)
Investment 2: $50,000 in August 1987 (before a 34% crash)
Investment 3: $50,000 in December 1999 (before a 49% crash)
Investment 4: $50,000 in October 2007 (before a 52% crash)
Despite the dismal timing of these purchases, the investor refrained from panic selling and automatically reinvested dividends. By May 2019, their initial $200,000 investment had grown to $3,894,503. A commendable nest egg, considering the unfavorable timing of the investments.
Source: https://www.moneycrashers.com/reasons-shouldnt-time-market/
We tend to get similar results with our dividend growth investing strategy. Below is a chart we do each year with the companies on ‘The List’ to help us stay disciplined when it comes to market timing. Regardless of valuation or current market trends, purchasing an equal amount of every company on ‘The List’ on January 1, 2013, would have produced annualized returns of 12.4%.
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...
