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Gator - we have been doing something similar for 18 years. We do also have fixed income. I always tried to invest in securities with yields that would cover our withdrawal rate. Doing this, our portfolio has more than doubled. Easily beat balanced funds like mawer. Portfolio does need to grow to cover inflation, if you dont want to spend your capital ( we dont).

I have a lot of the same stocks. FTS, is a good addition. May not grow if interest rates increase, but will keep paying dividends. NA and EIT did well for us. i bought a lot of preferred cheap last year. Capital gains and high yields! Not much of interest on offer now, but you can get some perpetuals at or below par yielding about 5%. I use them as pseudo fixed income. We also have a number of foreign ADRs. They pay divs in US$ - useful for trips South.
 

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For example, CCL.B = 1.2%, DOL = 0.35%, MRU = 1.7%, SAP = 1.77%, ATD.B = 0.84%, CNR = 1.65%, CP = 0.82%.
I own some of these myself, though I'm not a 'dividend investor'. Here are 15 year annualized returns

12.0% - SAP
12.6% - MRU
13.0% - CNR
14.8% - CP
16.2% - ATD.B
18.1% - CCL.B

Compare to XIC at 6.1%
 

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One of the ways I've tricked myself into accepting that "dividends don't matter - Total return matters" (hard to accept for a young saver, I image 10 times harder for a retiree) is just a simple logical statement (which doesn't actually solve the problem, hence the "trick myself")

"If I invest for total return now - then I can buy more dividend stocks later"

Just play out a few simple maths of your own and see how if you get 10% total return from one investment vs. 4% gains and 4% dividends from another, then later you can buy 25% more of the exact same dividend stock and sigh a big relief at that point.

I doesn't really solve the problem, but you can then tell yourself the same thing over and over, until you realize that it's true for all time periods. "If I invest for total return until I'm dead - My kids can buy more dividend stocks later!!"

It's unfortunate that the problem of "mild yield chasing" gets overshadowed by the arguments that companies need a sensible and robust cash distributing corporate policy (True) and focusing of extreme yield chasing being a problem (True).

The main problem that continues to fly under the radar is people actively comparing 2 investments, and putting HUGE consideration on this bank yielding 4% vs. this bank yielding 3%, or this index ETF yielding 3.1% and that one 2.9%, and that becomes the final deciding factor.

It's like:

<2% - No friggen way, man! Might as well put my money in a savings account.
2-3% - Hmm well I guess I'll consider it, but probably not - Maybe I'll just buy one of these stocks so I can say I'm not a yield chaser. "Index ETFs don't pay enough dividends" is in this range.
3-4% - I need enough of these bread and butter dividend stocks so that I don't feel like an "aggressive" dividend investor.
4-5% - What I really wish that all my 3-4% stocks were yielding (and what I prefer to buy).
5-6% - Ohh baby I sure am scamming the system now! Is everyone blind to this amazing investment?
6%+ - Woah buddy, calm down. I'm not a "yield chaser". I'll still buy a couple of these, but won't tell anybody.
 

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One of the ways I've tricked myself into accepting that "dividends don't matter - Total return matters" (hard to accept for a young saver, I image 10 times harder for a retiree) is just a simple logical statement (which doesn't actually solve the problem, hence the "trick myself")

"If I invest for total return now - then I can buy more dividend stocks later"

Just play out a few simple maths of your own and see how if you get 10% total return from one investment vs. 4% gains and 4% dividends from another, then later you can buy 25% more of the exact same dividend stock and sigh a big relief at that point.
That's all well and good, except growth companies and dividend companies are different.
In your example, one company put 100% of profit into reinvestment and growth, the other pays out some, and reinvests some.
The companies employ different management and capital allocation strategies.
Also they tend to be in different industries.
There is a reason that regulated utilities and Banks tend to pay dividends.

That being said, total risk adjusted return matters, not total return.
I think your example, the 4% growth & 4% dividend likely has a lower risk profile than the 10% gainer
 

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@james4beach When I first started to DIY, I read and understood that total return is what matters especially in accumulation. I still opted for higher yield(often unsustainable) at the expense of no capital appreciation or limited dividend growth (ie income stocks). Over time I have shifted my analysis, to put greater emphasis on dividend growth and payout ratio.

The 15 yr return of the companies listed above is impressive. Sadly, I do not own a single one. Although the low yield on each was a deterrent in establishing a position, every time I looked at these names my evaluation determined they were two pricey or missed the opportunity to get these names when they want on sale because I had set my order limit to low. the reality is these names rarely go on sale and when they do it is ever so brief.

I find it interesting that you opted to use XIC as a comparison. Although a valuable comparison, I believe dividend investors are not indexers and more likely stock pickers or dividend ETF owners. A more interesting comparison would be the total return of the 6 names to 6 mid yielding names (perhaps a couple banks and utilities) to high yielders (6%+ with no growth but didn't cut the dividend)

A quick search has (I am too lazy to do the calculations) provided the following links

High Dividend Growth vs High Yield - Which Are the Better Dividend Paying Stocks? (great-option-trading-strategies.com)
Dividend Growth Vs High Yield Investing – Dividend Power Week In Review - Dividend Power
Dividend Yield vs. Dividend Growth (maplemoney.com)

I think the returns of low yield high growth show that they should be included in every dividend investors portfolio. How much weighting they have in portfolio composition is subjective to the needs of the investor.
 

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That's all well and good, except growth companies and dividend companies are different.
In your example, one company put 100% of profit into reinvestment and growth, the other pays out some, and reinvests some.
The companies employ different management and capital allocation strategies.
Also they tend to be in different industries.
There is a reason that regulated utilities and Banks tend to pay dividends.

That being said, total risk adjusted return matters, not total return.
I think your example, the 4% growth & 4% dividend likely has a lower risk profile than the 10% gainer
Good points but I guess that's the rub aint it? You never know where the risk adjusted return is going to come from. All predictions of that kind are just as valid or invalid as predicting the next market crash or currency fluctuations.

The notion that dividend stocks are "stable" and in a class that are generally not "growth" just reinforces investors ill-conceived thoughts that they don't want growth stocks, and exclude them with prejudice.

Lower dividends and exposure to "risky" growth stocks are 2 main factors that might lead a retiree or dividend investing fan away from total market ETFs, and towards industry-focused mid to high yielding stocks only. Which by all accounts is the wrong decision for pursuing "risk adjusted total return".
 

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A lot of theory here. How about real life comparisons from those actually in retirement?

I posted a real life comparison (in another thread) of our own (mainly Canadian dividend & high yield FI) portfolio with MAW104 which is so often promoted here as a top performer. Over 18 years, I made a lot of mistakes but still beat the MAW balanced/diversified fund hands down using exactly same withdrawals. It's easy to pick a few growth stocks that have done well, but lets see a complete retirement portfolio. I certainly wouldn't do much different if starting over.

Total return is great, but how do you determine Total Return looking forward? Is there a formula for that? :) I am sure many would have predicted great future Total Returns for companies like Nortel or even Loblaws. Go back and make a list of the ones that didn't do well, when cherry picking a few that did. You are taking a big risk building a retirement portfolio using that type of stock (or fund) in retirement.

For those who suggest owning low yield growth stocks or funds in retirement. Does it make any sense for an 80-something to have to manage selling off bits and pieces of stocks or funds to provide income? Sometimes at the worst possible time? Life is supposed to become more simple as we age. Dividends just show up in our accounts with no effort on our part. Later we may have to have someone manage the portfolio that produces those dividends. It doesn't change much.

OK - Back to your usual programming ;)

PS: I recently bought $5k each of MAW104 and XBAL in our RRIFs. I find I learn more by actually owning rather than doing theoretical studies :)
 

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@agent99 totally agree with your post above. theory is theory and practice is practice. Most of us are aware (or should be) of this in our discussions. I would welcome others here to post real examples of their success and failures as you and many others do from time to time. I have learned a lot in my time on this forum because of the varying and intelligent commentary and debate that goes on. I am content with my results and hope that past mistakes are not repeated but are learning opportunities for me. I have said it here many times that there are many roads to wealth. Someone who has managed to plan, save, invest and maintain a comfortable retirement to the age of 80 does not need advice from anyone on this board.

Investing is one tiny component to financial planning. Perhaps even less important than saving and investing in one's self. James did provide real examples from his own portfolio with the stocks listed as well as XIC. I have the majority of my retirement covered with an employer pension and my DIY is more for legacy, charity or moving up my retirement. I am hopeful that in retirement I do not have to sell any of my portfolio at an inopportune moment. Not sure if I have stated it in this thread but have elsewhere that my son's RESP is in VEQT and have instructed my wife to convert my portfolio to the same or similar (MAW104 would be suitable as well) should I go well before retirement age. After that its VBAL or equivalent. If I lose interest in investing I would likely set it and forget it. MAW 104 is a great product but can be beaten. That doesn't mean it will be beaten all the time by the same person. At the end of the day, for me it's about accumulating and managing enough to meet my goals.

As for your PS I 100% agree. I had a practice account for quite sometime before I took the plunge into DIY. Although it was useful and helpful in many ways, That knowledge was much different from real investing. That being said I think one will not succeed with out the other. Psychology is a huge part of investing and playing to our strengths while working on our weaknesses helps bring success. My thanks goes out to the OP for starting a thread that has stimulated all kinds of interesting conversation. I look forward to seeing what opportunities will arise from it. Cheers!
 

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I don't think there's such a wealth of stocks in Canada that I can be picky about whether the yield meets my criteria. I try and just pick the best stocks that meet the sector requirement that I have in place, and I don't fuss with the yield too much.

I have 24 stocks representing 8 sectors with three Canadian stocks per sector. I have all the stocks I mentioned in my first post on page 1 and a bunch of others to make up the 24 total. If you want to represent the sectors, it's tough to find high yield in quite a few of the sectors. I try for large cap if possible. 21 are large cap, 2 mid cap (8.8B, 9.2B) and 1 small cap (fairly close to mid cap at 1.7B).

My overall yield on market is 3.49%.

ltr
 

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Discussion Starter · #31 ·
We started a position in FTS yesterday. I've updated where we're at.

Also adding to cash reserves.

Taxable Acct
Started positions in CU & GWO in late February.
Added to PPL in early March.
Added to TRP in early April.
Started a position in FTS in late April

TFSA
Started position in Dream Industrial REIT in late February.

Holdings Summary
In addition to US and Global ETF's, small holding in MAW 104 and RBF 1350, our current holdings are: AQN, BNS, BCE, BMO, CPX, CNQ, CM, CU, EMA, ENB, FTS, GWO, MFC, PPL, RUS, SLF, TRP, T, TD, RY and ZUT.

TFSA's are INO, ZRE, CRT.UN and DIR.UN
 

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TFSA (x2) and RRSP (x2) maxed.
Own a few of the "usual suspects" in Canada in both:

Looking to add the following this year: more AQN, REI.UN, BLK, CNR and some ATD.B. Not ruling our owning more WCN as well - the latter is recession proof.
 

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Discussion Starter · #34 ·
I want to start another new position in the next week or two. Can't decide whether to go with ALA or POW.
 
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