Timely Ten: A Market of Stocks, not a Stock Market
MP Market Review - March 14, 2025
Summary
Welcome to this week’s MP Market Review – your go-to source for insights and updates on the Canadian dividend growth companies we track on ‘The List’! While we’ve expanded our watchlists to include U.S. companies (The List-USA), our Canadian lineup remains the cornerstone of our coaching approach.
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Your journey to dividend growth mastery starts here – let’s dive in!
Last week, dividend growth was up, with an average return of +7.0% YTD (income).
Last week, the price of 'The List' was down from the previous week with an average return of -0.70% YTD (capital).
Last week, there was one dividend announcement made by companies on 'The List'.
Last week, there were two earnings reports from companies on 'The List'.
This week, one company on 'The List' is due to report earnings.
DGI Clipboard
"Current yield, using its own historic yield as a guide, is, in my view, a fine valuation measure."
— Tom Connolly
Timely Ten: A Market of Stocks, not a Stock Market
Intro
Q4 earnings season has wrapped up! Curious how The List performed compared to last year’s earnings and analyst expectations? Check out our earnings calendar for a full breakdown.
Last week we talked about ‘doing less badly’ than other strategies during periods of volatility. It might sound strange, but sometimes just losing less than others is what makes a good investor. When the market is booming, everyone looks smart—but the real test is how well you handle the tough times. Historically, dividend growth stocks have outperformed during periods of uncertainty.
When Chuck Carnevale said, "It’s a market of stocks, not a stock market," he was emphasizing that the stock market is not a single, uniform entity that moves in the same direction for all stocks. Instead, it is made up of individual stocks, each with its own fundamentals, valuations, and performance patterns.
Below are the ten most undervalued dividend growth companies from our Canadian and U.S. watchlists, based on last Friday's closing prices.
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 shorter term. These are our 'Timely Ten.'
Wrap Up
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.
If you're a new investor looking to build positions in the 'Timely Ten,' now is the perfect time to start your research and act.
Join as a paying subscriber to gain full access to this post and exclusive, subscriber-only content. Plus, get real-time DGI alerts from our model signaling service whenever we make trades in our portfolios. We do the work; you stay in control. Subscribe today and take your dividend growth investing to the next level!
DGI Scorecard
The List (2025)
The Magic Pants 2025 list includes 29 Canadian dividend growth stocks. Here are the criteria to be considered a candidate on ‘The List’:
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 manage risk in our model portfolio. We own some but not all the companies on The List.
Our newsletter provides readers with comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform actively managed dividend funds, passively managed indexes, and dividend ETFs over longer-term horizons.
Performance of 'The List'
Last week, dividend growth was up, with an average return of +7.0% YTD (income).
Last week, the price of 'The List' dipped into negative territory for the first time this year. It was down from the previous week, with an average YTD return of -0.70% (capital).
Even though prices may fluctuate, the dependable growth in our income does not. Stay the course. You will be happy you did.
Last week's best performers on 'The List' were Franco Nevada (FNV-N), up +7.03%; TC Energy Corp. (TRP-T), up +2.70%; and Enbridge Inc. (ENB-T), up +1.89%.
Alimentation Couche-Tard Inc. (ATD-T) was the worst performer last week, down -6.85%.
Q4 earnings season is officially in the books! In this week’s DGI Updates, we break down the latest earnings reports from Franco-Nevada and Enghouse Systems—one of which delivered a double-digit dividend increase.
Meanwhile, in the DGI News section, we take a critical look at yet another reckless take on market timing and explore how Americans really feel about Trump’s tariff strategy.
Check it out below!
