If you have been following our advice your portfolio is boring. The Investment industry does not like investors like us because we stay clear of most of their products like mutual funds and ETF’s so less commissions are generated. We also rarely trade. Specifically, there is no need to trade shares on a regular basis if your holdings have a history of dividend increases. This is one of the reasons we are willing to hold for years.  Plus, Canada has the most potential in the world. All we need is a federal government that cares for all provinces. 

Today you can earn around 2% from the money market via a Guaranteed Investment Certificate for no risk. Depending on the share price, for not much more risk, one can invest in dividend paying shares to earn a much higher return.  Based on today’s share prices our recommendations are yielding between three and six percent versus around two for a money market investment.  Based on our purchase price the yield is substantially higher. For example, Suncor recently increased their dividend 5% to $2.40 annually, creating a 8% dividend yield on initial capital. We expect all other holdings will increase their payouts over the next seven months. 

There is a long list of Canadian companies that have an excellent record of growing dividends every year.  Canadian Utilities has the best record on the TSX at 54 consecutive years of dividend increases.  We expect a small increase in the new year of only a penny quarterly.  The second-best performer is Enbridge at 53 of the past 54 years. Two Canadian banks have one of the world’s best dividend records.  The BMO has paid a dividend every year since 1828 and the Bank of Nova Scotia annually since 1833. The remaining Canadian banks have increased their payouts 49 of the past 54 years,  Atco Industries is 32 years, and Pembina Pipeline is 15 years.  National Bank has had seven dividend increases over the past three years  This is probably the best record on the TSX.  The Bank has the biggest spread between it’s per share profit and the dividend it pays out. I expect another increase over the next 6 months.

The world’s most successful stock market investor is Warren Buffet.  His company Berkshire Hathaway also prefers companies that have am excellent record of increased dividends.  He uses the income to build up the cash reserves until deals are found. Today Berkshire Hathaway’s holds  $382 billion in cash equivalents, the highest in its history.  This is bigger than the entire market cap of Procter & Gamble or Home Depot and should be alarming for most investors.

Our recommendation remains the same. Continue to build up your cash.  Depending on one’s age, place 60% of your portfolio in a GIC with terms no longer than a year.  A good rule of thumb is a percentage of your age.  If you’re in your thirties, strive for 30% cash and 60% at the age of sixty. The returns are not the greatest when rates are low, but the principal is safe and at this stage in the game, future returns will be from waiting for the market to come to you.   

A reminder that when  you trigger a capital gain, prepay CRA 25% of the gain.  The interest rate to be paid on non-corporate taxpayer overpayments is 5% (corporate rate is 3%) and will be reset March 31, 2026.  To keep track of their interest rates, follow Prescribed Interest Rates on the CRA website.