Patience Paid: Timely Ten Winners and New Entrants
MP Market Review - February 17, 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. Each week, we track the Canadian dividend growth companies on The List, our curated watchlist of businesses designed to produce rising income. While we also publish a U.S. edition monthly, Canada remains our training ground.
Our objective is simple: grow dividend income by 7–10%+ annually while delivering capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 for our U.S. investors over a full market cycle.
What you’re about to read isn’t theory. It’s the real-time application of a dividend growth strategy using real money, with a clear objective: growing income first and letting capital growth follow.
Markets generate a lot of noise. We ignore most of it.
Instead, we track a small set of metrics that tell us whether our dividend growth strategy is working in real time. No forecasts. No opinions. Just results.
Here they are:
Dividend income from The List: +4.6% year-to-date
Capital value: +4.2% year-to-date
Dividend announcements last week: Five
Earnings reports last week: Eight
Earnings reports this week: Two
DGI Clipboard
“Current yield, using its own historic yield as a guide, is, in my view, a fine valuation measure.”
— Tom Connolly
Patience Paid: Timely Ten Winners and New Entrants
Intro
Our Timely Ten lists remain the fastest way to spot potential value opportunities, which explains why they continue to be the most-read articles every month.
Timely Ten – Canada
Typically, movement up and down the Timely Ten is gradual. Candidates often sit on the list for months before valuation becomes the catalyst and the stock finally moves. Not last month. Two names repriced dramatically in under 30 days.
Magna is the clearest example. It spent nearly two years in the top ten with little movement. Then a strong earnings report hit and the stock surged 27%, falling from #6 last month to #12 today. Moves like this are rare, but they remind us of a core truth: quality companies cannot stay undervalued forever. Magna’s cyclical business introduces timing risk, which is why we built positions in 2023 and again in 2025. When the market finally caught up last week, we were already there collecting a rising dividend. We never know when valuation will normalize, but patience and dividend growth make the wait worthwhile.
At the opposite extreme was Thomson Reuters. The business remains strong, with recurring revenue, robust free cash flow, and durable dividend growth. What changed was sentiment. The market has pulled software and information services into the AI disruption narrative, and TRI’s valuation compressed faster than expected. The stock’s jump up the Timely Ten from #21 to #9 in one month got our full attention and triggered our second DGI Alert. Unlike Magna’s surge, this was a valuation reset moving in our favour.
Timely Ten – United States
Union Pacific appears to be following Magna’s path. After a long stretch of undervaluation, it has moved out of the Timely Ten and now sits at #12 on our U.S. list. Railroads remain core infrastructure businesses with durable dividend and price growth over full cycles. We have waited patiently for this repricing, and it now looks close.
Automatic Data Processing and Intuit are now firmly embedded in the U.S. Timely Ten after price weakness last month. Intuit’s jump from #20 to #6 mirrors Thomson Reuters in Canada. The market is broadly derating software right now, and high-quality companies are being marked down with the rest.
One more notable move: Microsoft. The stock climbed from #24 to #17 on the Timely Ten after its recent pullback. It is rare for one of the world’s highest-quality companies to even approach our undervalued range. We used the opportunity to initiate a position in the U.S. model portfolio. When elite businesses briefly go on sale, we act.
As always, the Timely Ten is not a call to action in itself, but a disciplined starting point for deeper research and patient capital deployment.
Here’s a recap on how we select our Timely Ten:
Step three in our process involves monitoring our quality dividend growers regularly, which can become quite challenging depending on the number of companies we track. Fortunately, we rely on ‘The List’ instead of the vast array of stocks in the index, which streamlines our task. Nevertheless, we continually seek methods to enhance our efficiency. Through dividend yield theory, we’ve discovered an approach that has proven remarkably effective in aiding us with our efforts over the years.
Dividend yield theory is a simple and intuitive approach to valuing dividend growth stocks. It suggests that the dividend yield of quality dividend growth stocks tends to revert to the mean over time, assuming that the underlying business model remains stable. In practical terms, if a stock pays a dividend yield above its ten-year average annual yield, its price will likely increase to return the yield to its historical average. Knowing that price and yield go in opposite directions, this theory helps us find stocks poised for a favourable price correction.
We have pre-screened our candidates using the criteria we initially laid out in building our watchlists. This helps us considerably narrow the universe of investable stocks.
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.
Next, we rank our Canadian and American watchlists based on how far each stock’s price is below its fair value (Low Price), as determined by dividend yield theory. To find fair value, divide the current dividend (Dividend) by the stock’s historical high yield (High Yield).
Since price and yield move in opposite directions, a lower price results in a higher yield, and vice versa. The ten companies above the thick black line have a current price (Price) below fair value (Low Price). Put simply, these stocks have a current dividend yield higher than their historically high yield. According to dividend yield theory, these companies are sensibly priced and have the highest probability of a price increase in the short term. These are our Timely Ten.
Takeaway
History shows the Timely Ten is fertile ground for finding attractive entry points into high-quality dividend growers. Whether or not you act on the names, the list serves its purpose: to surface opportunities when quality meets value.
When making investment decisions, always prioritize a company’s ‘quality’ over a ‘sensible price’. For more details on our quality indicators, download our Free Guide to Finding Quality Dividend Growth Stocks here.
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'
Dividend growth of The List continued to climb with an average increase YTD of +4.6% (income). These are dividends announced late last year and early in 2026.
The price of The List went up last week and now stands at +4.4% YTD (capital).
Top Performers Last Week:
Magna (MGA-N), up +27.23%.
Toromont Industries (TIH-T), up +10.95%.
Franco Nevada (FNV-N), up +8.66%.
Worst Performer Last Week:
Stantec Inc. (STN-T), down -14.44%.
From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.
