When a whole sector drops for reasons unrelated to the businesses, I want to know which names deserve a closer look. I covered Enbridge and TC Energy in my free pipelines report. Today I am looking south of the border at two companies a Canadian can hold the same way they hold Enbridge.

*Disclosure: I don’t own Williams (WMB) or ONEOK (OKE). This is education, not advice. Do your own due diligence.*

Why Williams and ONEOK?

Williams and ONEOK are ordinary corporations. That matters more than it sounds. They pay dividends, not partnership distributions. The Canada-U.S. tax treaty caps the withholding tax at 15%, and it is waived inside an RRSP.

The highest yields in U.S. midstream come from master limited partnerships. Canadians keep the least of those. Williams and ONEOK are in the other group, the one a Canadian investor can own the same way they own Enbridge.

Both companies move natural gas and natural gas liquids. Both generate strong cash flow. They take very different roads to dividend growth.

Williams (WMB): One Pipe Carries the Thesis

Williams owns Transco, the largest interstate natural gas pipeline in the U.S. It runs from South Texas to New York City and now flows both ways. It links the cheapest gas in North America to the fastest-growing demand on the East Coast. Nobody can build a second one beside it. Morningstar rates Transco as a wide-moat asset inside a narrow-moat company.

The newer piece is power. Williams built a 200-megawatt gas plant for a data center in Ohio in under 18 months. It now has six of these deals, worth US$9.6 billion, on 10 to 12.5-year contracts. In August 2026, it closed the Momentum Midstream acquisition, which connects more Haynesville gas to Gulf Coast LNG plants.

The Williams Dividend Triangle

Management targets EBITDA growth of 11% or more over the long term. The dividend grew about 5% a year over the past five years, and 2026 brought another 5% increase. In 2025, cash flow covered the dividend 2.4 times. That leaves room to keep raising it while funding growth.

The yield sits at 3.0%, below its five-year average of 4.7%. A yield above its five-year average can flag a buying opportunity. Here it is the opposite. Even after the drop, the market prices Williams above its own history. It already pays for the growth story.

What Could Go Wrong at Williams?

Gathering and processing is a large part of Williams, and that business moves with drilling. The Momentum deal pushes debt above the 4 times EBITDA ceiling management prefers, for now. Haynesville wells need firm gas prices to keep drilling. In September 2026, a court reversed a water permit for the Northeast Supply Enhancement project.

Williams is also a pure natural gas company. If the power and LNG demand wave stalls, there is no other business to lean on.

ONEOK (OKE): Built by Acquisitions

ONEOK started as a natural gas liquids specialist. It then spent about US$34 billion in three years buying Magellan, EnLink and Medallion. That added refined products pipelines, crude oil and Permian gas. More than 85% of earnings come from fee-based contracts.

In August 2026, ONEOK sold a $9 billion stake in its operating company to Apollo. It used $4.45 billion to buy Brazos Midstream in the Permian and $5 billion to pay down debt. Leverage is heading toward 3.25 times EBITDA. ONEOK carries a DSR PRO rating of 4, one notch above Williams.

The ONEOK Dividend Triangle

ONEOK yields 4.7%, against a five-year average of 5.7%. The dividend grew about 2% a year over the past five years, and the current streak of increases is three years.

The cash flow picture is tighter than at Williams. In 2025, free cash flow after growth spending fell short of the dividend. The acquisitions should lift cash flow, but they have to deliver first.

What Could Go Wrong at ONEOK?

The Apollo money is not free. It behaves like preferred equity with a 7% hurdle and takes 15% of operating cash flow. That caps what is left for shareholders until it is redeemed, and the earliest date is 2034.

ONEOK also has three large acquisitions to absorb at once. Its marketing pieces swing with commodity spreads. Its Sun Belt Connector pipeline to Phoenix may be canceled because a competing line was sanctioned first. Higher rates also hurt a company that refinances debt every year.

The Verdict

#1 Williams. For dividend growth, Williams wins. It is the closest thing to TC Energy south of the border, with a lower yield and a better growth story. Cash flow covers the dividend more than twice, and the growth comes from a pipe nobody can copy, plus power contracts.

#2 ONEOK. For income in a registered account, ONEOK has the highest yield and the best DSR rating, now that Apollo’s money has reduced leverage. The tradeoff is the slice of cash flow that goes to Apollo before shareholders, and a dividend that has grown slowly.

One more thing from the report. Owning four pipelines does not diversify you. They share the same debt and the same sensitivity to interest rates. You don’t want to put different salts in your soup.

Get the Free Pipelines Report

Williams and ONEOK are two of the names I studied for my North American Pipelines report. The free version gives you the homework I would do before putting any cash to work in this sector.

It explains why pipelines trade like bonds, why GAAP earnings lie here and which cash flow numbers to read instead, and which debt levels call for a closer look. You also get a map of who owns which corridor, scorecards for the Canadian and U.S. names, and full profiles of Enbridge and TC Energy.

Get the free pipelines report here

The post Williams vs ONEOK: Two U.S. Pipelines, One Dividend Growth Winner appeared first on The Dividend Guy Blog.

Stella-Jones went from about $100 to under $70 in the same year. A listener asked me what in the wood is going on. Yes, pun intended. I have three kids, so dad jokes come with the job.

I have owned Stella-Jones for a while, so I am biased. I like the company. I like it less when it drops 30% in a year.

Two things drive a stock price: the numbers and the narrative. Let’s look at both.

*Disclosure: I own Stella-Jones (SJ.TO). This is education, not advice. Do your own due diligence.

Why Is Stella-Jones Stock Down?

Flat sales, a margin squeeze and a guidance cut. The adjusted EPS fell 17% in the second quarter while revenue barely moved.

Flat sales alone do not explain losing $30 on a $100 stock. The margin does, and so does what management said about it.

Is the Stella-Jones Story Still Intact?

Yes. Most of the money comes from utility poles and railway ties, two products that need regular replacement whatever the economy does.

Stella-Jones is an industrial company in the lumber business. What sets it apart is where the sales come from. Utility poles bring in about half of revenue, railway ties 23%, residential lumber 22%, and industrial products 4%.

Residential lumber is the volatile piece. It moves with lumber prices and the housing market, and it is more exposed to tariffs.

The rest works a lot like recurring revenue. Railroads have to maintain their ties. Utilities have to maintain their poles. And in a world that needs more power, grid investment means more pole orders.

The company has also built its moat over decades. It runs treating plants across Canada and the US, close to its customers, and it has long-standing relationships with the utilities and railroads it supplies.

What Happened to the Margin?

Costs rose faster than prices. Fuel, environmental and maintenance costs went up, a plant upgrade slowed the steel structures business, and Stella-Jones could not pass all of it to its customers.

Second quarter sales went from $1.034 billion to $1.042 billion. No growth, but not a reason to lose a third of the stock price either.

The adjusted EBITDA margin is where it went wrong. It fell from 18.3% to 16%, a drop of 230 basis points, and earnings per share fell with it.

When sales are flat and earnings drop that hard, something inside the business changed. Here is what did.

Fuel costs went up. With the war in Iran not likely to end tomorrow morning, fuel will keep putting inflationary pressure on everything for the rest of the year.

Environmental management and maintenance costs increased at some sites.

The steel structures business ran into temporary inefficiencies while Stella-Jones upgraded its capacity. Upgrading a plant is the right move for the long term. In the short term, it hurts the margin.

Then Stella-Jones could not pass all those costs to its customers. It ate them, and the margin paid for it.

Why the Guidance Cut Hurt More Than the Quarter

The market liked the quarter even less once management spoke about the margin outlook.

Stella-Jones had set a target for 2026 to 2028: a margin between 17.5% and 18.5%. Management now says this year will come in below 17.5%.

Analysts built their assumptions on a margin above 17%. The quarter came in at 16%, and management confirmed it will stay under the original range. When guidance goes down, the stock price follows.

Management still expects the second half to improve as some of those costs ease.

One Segment Is Still Growing

The segments tell the same story.

Railway tie sales slipped from $240 million to $235 million. Volumes were lower and competition picked up.

Residential lumber had a rough quarter. Softer lumber prices, softer volume and poor weather all hurt.

Utility products were the bright spot. Volumes were up about 7%, and sales rose from $476 million to $510 million.

What Do the Five-Year Numbers Say?

A slow and steady business with a fast-growing dividend. Over five years, revenue and earnings per share grew about 5% a year, and the dividend grew 13.5%.

Stella-Jones carries a PRO rating of 4 and a Dividend Safety score of 4. All three legs of the dividend triangle point up.

The dividend has almost doubled over the past five years, and Stella-Jones has raised it for more than 20 years in a row. The latest increase was 10%, to $0.34 per quarter.

A dividend growing more than twice as fast as earnings cannot keep that pace forever. It does not have to slow down in a hurry either. The payout ratio sits around 20% of earnings and 15% of cash flow.

Cash generation stayed strong through the bad quarter, at $192 million. Stella-Jones cut its net debt by more than $100 million in the first half.

On valuation, the forward PE is under 12 and the yield is close to 2%, against a five-year average of 1.4%.

Is This Kind of Volatility Normal for Stella-Jones?

Yes. The stock traded around $34 in 2022, near $95 in 2024, around $65 after Liberation Day, back near $100, and now sits around $70.

It goes up, it goes down, it goes up, it goes down.

Over the past few years, Stella-Jones has moved by high single digits, sometimes double digits, in a single day. That is part of owning it. I do not go crazy over the price. The margin is what concerns me.

I explained why I like this company when I picked my top Canadian dividend stocks for 2026.

Top 3 Canadian Dividend Stocks for 2026—And What 2025 Teaches Us

What Will I Watch in the Next Earnings Reports?

Three things: the margin and management’s path back to 17.5%, railway tie volumes, and utility pole sales.

1. The Margin

I want to hear management talk about the margin and how they get it back to 17.5%. That means running more efficiently, getting costs under control, and passing more of the inflation to customers.

This is the key piece. The moment Stella-Jones shows it can improve its profitability, I expect the market to notice.

2. Railway Tie Volumes

Railway ties are still an important segment. If volumes stay weak, it will be very hard for Stella-Jones to come back with strong numbers.

3. Utility Pole Sales

Utility poles are growing, and right now they hold up the rest of the business.

There is one risk here. Interest rates, inflation and a squeezed consumer could push a lot of companies to cut their spending budgets. Railroads and utilities could do the same, and hold off on new projects.

Stella-Jones would keep its baseline. There is a limit to how long you can delay maintenance, and nobody wants railway ties falling apart. The recurring orders will still come. Growth is going to be a tough ride.

I covered those rate and inflation pressures in more detail here.

4 Signs of a Bear Market, and Why I Am Still Fully Invested

The Verdict

The problem is the margin. Revenue growth is weak, and in a cyclical business like this one, that is normal.

The business model has not changed. Poles and ties still need replacing, and the grid still needs more poles. What changed is how much of each sale Stella-Jones keeps.

I still like the company. What you do with Stella-Jones is your call.

Learn to Read a Quarterly Report Yourself

Most of this article came from one quarterly report. Sales, margin, segments and guidance. Knowing which lines to read is what tells you a 30% drop is a margin problem and not a broken business.

Simplified Quarterly Earnings walks you through a report the way I read one. It is one of the three courses in Dividend Simplified, $15 for the set.

Get Dividend Simplified here

The post Why Does Stella-Jones Stock Keep Going Down? appeared first on The Dividend Guy Blog.

That is also where the opportunities are.

Today I am on the positive side. Here are the sectors that shield you, the sectors taking the hit, and three companies that could do well down the road.

*Disclosure: I own Stantec (STN.TO), CGI (GIB.A.TO), Canadian Natural Resources (CNQ.TO), National Bank (NA.TO) and Royal Bank (RY.TO). I do not own Adentra (ADEN.TO). This is education, not advice. Do your own due diligence.

What Should You Do About the Trade War?

Stay invested. Waiting through tariff headlines is what cost investors in 2025, when the market fell about 10% in days and then went back into bull mode.

Some investors are afraid and decide to wait. Waiting is the worst thing you can do.

Tariffs are not news. This has been going on since Liberation Day in April 2025. The market dropped about 10% over a few days and everyone went crazy. A couple of months later, it was back in bull mode and everything was fine.

The people who sat it out in February and March missed the recovery.

This time, we do not know what will happen. Maybe it will go the other way around. That is the point. You do not know. I do not know. Your guess is as good as mine.

Waiting every single year is the worst move you can make. But you do you, I do me, and we are all good.

Should Canadians Stop Buying American Stocks?

A boycott hurts your portfolio and nobody else. The same investors avoiding US companies are reading this on an iPhone and going home to a Windows desktop.

A lot of Canadians do not want to invest in American companies anymore. I get it.

Let me play devil’s advocate for a second. You are probably watching this on an Apple phone. You are probably on Facebook. If you have a desktop at home, it runs Windows. And if you drive a Ford or a Chevy, you are not selling it to buy a Toyota.

There are moves you can make to take a stance according to your values. On the investing side, I think you hurt yourself and no one else.

What matters to me is retiring comfortably and being financially secure. That is easier with a diversified portfolio. Those are plain facts. What you do with them is yours.

Which Sectors Are Protected From Tariffs?

Energy, gold, materials and utilities. Canada is not going to stop selling oil to its southern neighbour, and power stays domestic whatever happens at the border.

Energy comes first. I would be surprised if we stopped selling oil south. The war in Iran is fuelling it, and it also helps protect against inflation.

I am not a big fan of energy. I still have to say that Canadian Natural Resources is one of my favourite stocks in my portfolio these days, on short-term performance.

Gold should do well. Materials in general too, because tariffs land on them, but a lot of materials are a necessity rather than a choice.

Utilities are power. They stay stable.

Financial services are a bit overvalued right now. Would I add more? Probably not. I am comfortable with the banks I hold, so I am not moving.

Which Sectors Take the Hit?

Consumer cyclical, consumer staples and industrials. That is also where the opportunities sit, because good businesses get sold alongside the bad ones.

Consumers get hit on both ends, discretionary and defensive. Staples too, which is the ironic part, because tariffs reach them the same way.

Everything tied to the consumer takes a hit one way or another.

Industrials is the other one, and it is already happening. That is the whole point of a tariff. Unless you move your manufacturing into the other country, you get slapped, and doing business gets harder.

You cannot move a plant within the month. It takes a lot of capital, and adapting a supply chain takes time.

That is where the digging starts.

I wrote about two other names that reached an entry point this way.

Two Quality Stocks Showing an Entry Point: Trane Technologies and AltaGas

Stantec (STN): The Engineering Firm the Market Gave Up On

A PRO rating of 4, a Dividend Safety score of 4, and five-year growth of 13.75% on revenue and 19.25% on earnings. The business is not slowing. The stock price is.

Stantec is a big engineering firm. Its top clients have been with it for more than 25 years and use several of its services.

It is getting hit right, left and centre. It might not win contracts in the US because it is Canadian. AI could replace it, but I don’t believe it will.

So you get a lot of dark clouds and a pessimistic narrative around the name. Then you look at the facts and the financial metrics, and you see high single-digit to double-digit numbers on revenue, earnings, cash flow and the dividend.

The backlog is strong. There are plenty of orders to fill over the next 12 months, so the business is not slowing down right now.

On valuation, Stantec trades at 21.7 times earnings against a five-year average of 35.9. The forward PE drops to 14.4. The forward yield of 1.02% sits above the five-year average of 0.84%, suggesting the stock offers better income value than usual. The earnings payout ratio is under 20%.

Four metrics, all pointing the same way, on a business whose order book is full.

Long client relationships are a moat, and I have written about how that kind of moat works.

Economic Moats: The 7 Types and 4 Stocks I Own

CGI (GIB.A): A Turnaround With a One-Year-Old Dividend

A PRO rating of 4, a Dividend Safety score of 4, and 12 times earnings against a five-year average of 19. The dividend only started in 2025, so the third leg of the triangle has no history yet.

CGI is a very big IT consulting firm. Most of its business comes from recurring, long-term contracts, many of which are government contracts, including with the US government.

It got hurt during that quick DOGE moment. Projects went on hold and the company saw a slowdown. The concern now is that it may not win new contracts, or may lose some of the ones it has.

That is narrative again. Do you really think anyone replaces CGI forever? It might be a rough couple of years. After that, the odds of a turnaround are decent.

I hold a small position, about 1% of my portfolio or not even. It is the riskier of the two I own. I find it an interesting play and an entertaining story to follow.

Why the Dividend Line Looks Flat on the Chart

CGI paid its first dividend in 2025, at $0.15 a share. It raised that by 13% to $0.17 in November 2025, and it has stayed there since.

That is why the chart below reads the way it does. The five-year dividend growth rate shows 0.00% and the dividend line looks flat. That is not a frozen dividend. It is a dividend with one year of history behind it.

Revenue and earnings carry the triangle here, growing 6.28% and 8.29% over five years. The third leg is still being built. Judge it again in three years.

On valuation, the current PE of 12 sits well under the five-year average of 19, and the forward PE is 10. The earnings payout ratio is 8%, which leaves plenty of room for the dividend to grow once management commits to it.

Adentra (ADEN): The Small Cap Flying Under the Radar

A distributor of architectural building products worth $847 million, trading at 9 times earnings, with about 90% of its revenue earned in the US. It is also the riskiest of the three.

Start with the warning, because it belongs first. This is a small cap. The market capitalization is under $1 billion, at $847 million. That means volatility. Expect a 25% drop any day of the week.

Be clear with yourself before you look at it. You invest in that kind of stock; it drops 20%, and you smile, because you knew it would happen.

Adentra distributes architectural building products, including wood, to home builders and the construction market. It runs 81 facilities across the US and Canada.

More than 90% of its revenue comes from the US, and more than 90% of its manufacturers are in the US too. When the first tranche of tariffs came out about 18 months ago, the CEO said 90% of the business was already sheltered, because the company is based there.

That is what makes it interesting. The PE sits around 9 or 10, and it is rare to find this kind of business at that rate.

The stock price has not really moved since 2024. Two years of dead money. It dropped a lot after Liberation Day and has come back, but not by much.

Now the part that keeps it in third place. Adentra is the only one of the three that does not clear the usual bar. Its PRO rating is 3 rather than 4, and the dividend triangle has a negative leg. Earnings per share fell 5.26% over five years, while revenue grew 11.25% and the dividend grew 9.51%.

The Dividend Safety score is still 4 and the earnings payout ratio is under 16%, so the payment itself is not the worry. The earnings trend is. That is the risk I would want to be paid for here, and this price pays for a lot of it. Whether that is enough is your call.

The Verdict

A big engineering firm, a big IT consulting firm, and a small distributor of building products that does most of its business in the US.

Stantec is the quality name, priced as though its order book were empty.

CGI is the turnaround, cheap against its own history, with a dividend too young to judge.

Adentra is the cheap one, and the one where the earnings trend has to turn before the story does.

All three sit in the sectors the tariffs are hitting. That is not a coincidence. It is where the discounts are.

One last thing. You cannot buy a stock because you read a 5-minute article. Dig further, make sure you understand the business, and decide whether it fits your portfolio.

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The post 3 Stocks to Get the Best Out of the Trade War appeared first on The Dividend Guy Blog.

Right now, indicators suggest a bear market is brewing.

Four things bother me at the same time, and that has not happened in a while. Not one of them is making me sell a share.

*Disclosure: I own National Bank (NA.TO), Canadian Natural Resources (CNQ.TO), Apple (AAPL) and Microsoft (MSFT). This is education, not advice. Do your own due diligence.

Is a Bear Market Coming?

Four pressures are building at once: stretched valuations, the AI split, climbing long-term bond yields, and tariffs that are about to be felt.

Two of them are ordinary market noise. The other two are not, and one of them makes the first problem worse.

Sign 1: Valuation Has Stopped Making Sense

Canadian banks trade between 17 and 20 times earnings. They have never been priced there before.

You know I do not like talking about valuation. National Bank was overvalued at $100. Greatly overvalued at $125. Crazy expensive at $150. What do you call it past $200?

Part of that is overvaluation. Part of it is a fair rerating, and that is where it gets interesting.

A bank that does mortgages, commercial loans and deposits should not cost more than 13 times earnings. Add asset management, insurance, wealth management and capital markets, and you have a different business with more growth attached. Paying up for that makes sense.

There are also companies trading at 30 times earnings that are not half as solid as a Canadian bank.

So the price makes sense and it makes me uncomfortable at the same time. Both things are true, and that is what bothers me.

I went deeper into this pricing problem earlier this year.

We have a Valuation Problem – May Dividend Income Report

Sign 2: AI Has Split the Market in Two

The market has gone K-shaped. AI winners get bid higher while quality businesses fall 20% to 50% on disruption fears.

On one side, hype. Everyone wants the same short list of names.

On the other side, companies that lost 20, 30, 40, even 50% of their value over one question: what does AI do to them?

In the US, look at Salesforce, Intuit, Oracle and Roper Technologies. In Canada, Stantec, CGI, OpenText and Constellation Software.

Is it true that engineering firms will not make much money from here? I do not believe that. The market is unsure, and that doubt is driving pricing.

This is also why your portfolio may feel broken. The S&P 500 and the TSX are both up double digits this year. Without AI chips or energy, you are not seeing any of it.

One of my best performers this year is Canadian Natural Resources. On a day like this one, part of me wishes I owned more energy. Most days I do not, and that is fine. It is my strategy and I am keeping it.

Sign 3: Long-Term Bond Yields Keep Climbing

Long-term yields are rising because governments keep running deficits. That raises borrowing costs and lowers what investors will pay for a stock.

This is the sign that matters most, and it is the one investors understand least.

What Is Driving Long-Term Bond Yields Up?

Two rates are worth following. The short-term rate is set by central banks, the Bank of Canada here and the Fed south of the border, through the overnight rate. It drives prime and variable rates.

The long-term rate is the 10-year, the 20-year, and the 30-year. It responds to more than the central bank.

Four things move it. Inflation. The expectation that central banks will raise short-term rates. The level of uncertainty in the market. And government deficits.

Deficits matter most on both sides of the border. Canada and the US are both poor at managing a budget. That is not politics. That is dollars for dollars.

Investors have not lost confidence in governments. They want a bigger payback for lending to them.

The bond market is larger than the stock market. That is where the big money sits, so when it moves, everything else feels it.

Why Higher Yields Push Stock Prices Down

Higher government yields raise mortgage rates and corporate borrowing costs. They also raise what investors demand from everything else they could buy.

An investor who can get more from a bond will not pay 30 times earnings for slow growth. He decides 22 times is his price now. Multiples compress.

That is what hit Rollins, Waste Connections and Dollarama. Good businesses. Investors told them to grow faster before paying those prices again.

Here is the part that confuses people. A company reports revenue growth, earnings growth and a dividend increase, and the stock does not move. That is the bond market talking, not the business.

We saw this in 2022. Microsoft was posting double-digit growth across the board and the stock fell anyway. Apple took a hard hit too. Nothing was wrong with either business. Investors wanted more return and would not pay those prices.

Consumers get squeezed from both directions at once. A mortgage renewal at 1% or 2% more, on top of inflation. Oil keeps climbing, so fuel costs more, transportation costs more, and everything else follows.

One piece of perspective, and it cuts both ways. The Canadian 10-year is still below its 2023 peak. The US 10-year is not. It set a new five-year high in mid-September, just above where it topped out in October 2023. It is still not the end of the world.

Sign 4: The Trade War Is About to Be Felt

Tariffs were noise for 18 months. The cost now reaches consumer products, cyclicals, defensives, materials and industrials on both sides of the border.

I thought we were done with this one. I avoid the topic because it has been noise, like a neighbour who keeps cranking his speaker for a year and a half.

We are going to feel this one. Consumer products get hurt on both sides of the border. Consumer cyclicals and defensives too. Materials, and probably industrials.

I am not going into politics. I will stay on the investing side.

Why Two of These Signs Pull Together

Stretched valuations and rising yields compound. The market is priced high while investors demand more return, so multiples have one way left to go.

Valuation and AI are ordinary noise. We see both often enough.

Bonds and tariffs are different, and the bond problem connects straight back to the first sign. The market looks expensive. At the same time, higher yields mean investors want more for their money. Two forces, same direction, and the direction is lower multiples.

That is worth understanding. Not so you can time it. So you are not surprised when a company you own reports a good quarter and the stock does nothing with it.

What Protects a Portfolio Through This?

A diversified portfolio of quality businesses. Companies you understand, that keep growing, and that will still be here in ten years.

Diversification and quality. That is the whole shield.

Quality means a business you understand, one that is not going anywhere, and one that keeps growing even while the share price sits still.

A few corners of the market do well out of rising yields. Life insurers hold large bond portfolios. Higher yields mean short-term pain, because the bonds they already hold lose value, and long-term gains, because the money rolls into better-yielding bonds.

If inflation sticks around, gold will likely play its store-of-value role again. It is odd to watch it fall right now.

Energy is the ironic one. Conflict in Iran has tightened oil supply, oil prices are rising, and that feeds inflation. One of the better protections against inflation is materials and natural resources, including oil and gas. That circle can feed itself.

Am I Making Any Moves?

No. I am 100% invested and 100% in stocks, and I sleep well at night.

This period asks for patience. The narrative is loud right now, so I am reading business models and numbers instead.

These things come and go. A problem in the bond market does not mean five years of suffering.

Volatility also lands differently depending on how close you are to retirement.

Market Volatility at 40 vs. 65: What Changes

I am not making any moves. Whether you make any is your call.

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The post 4 Signs of a Bear Market, and Why I Am Still Fully Invested appeared first on The Dividend Guy Blog.

That is $15,000 of income a year against $187,500. Written that way, nobody picks the $15,000.

I pick it. One of those two portfolios is still paying me in twenty years. The other one runs on a distribution nobody has proven can last.

*Disclosure: I own Apple (AAPL), National Bank (NA.TO) and Royal Bank (RY.TO). This is education, not advice. Do your own due diligence.

What Is the Point of a 2% Dividend Yield Portfolio?

A 2% yield from growing businesses beats a 25% distribution that gets cut. You are buying dividend growth and total return, not this year’s income.

Income is the easiest thing to sell a retiree and the hardest thing to deliver for thirty years. There are three places people go looking for it. One of them survives the trip.

Why Retirees Chase Income So Hard

You work for forty years. Every two weeks a paycheck lands in your account, and your whole financial life gets built around that rhythm. The mortgage, the groceries, the trip in February, all of it runs on the deposit schedule.

Then you stop working and the deposits stop.

Wanting that paycheck back is the most normal reaction. Investment firms understood this years ago, and the product shelf shows it. Income funds, covered call products, monthly distributions, big yield numbers printed on the front page.

The want is reasonable. The question is what you hand over to satisfy it.

Can a 25% Yield Survive a Full Market Cycle?

No product has proven it can. Most of them launched into a bull run and have never faced a real drawdown, and a 25% distribution needs a 25% total return behind it.

Start with the track record, because most of these products do not have one. Three years is not a track record. Five years is not one either. A strategy earns your retirement after it goes through a complete market cycle, with a proper drop in the middle, and comes out the other side still paying.

Look at when they arrived. These products flooded the market right before several years of 20% annual returns. Over a stretch like that, a monkey with a dartboard made money. That is not evidence of anything.

Even with that tailwind, plenty of them never raised their distribution. Some cut it.

Now the math, because this is where it breaks. A distribution has to be funded. If the product does not generate 25% in total return, year after year, part of what lands in your account is your own capital coming back to you. Holding a 25% distribution for the next 25 years would mean beating Peter Lynch and Warren Buffett working together, for a quarter of a century. Nobody clears that bar. We do not live in that world.

Before you write to me about the product that has worked for you since 2023, so did everything else.

Paper Income Is Not Income

A reader tells me he earns $187,500 a year on a $755,000 account. Fine. How much of it did he withdraw and spend last year?

If the answer is none, it is not income. It is paper income.

We already accept this idea in the other direction. When a stock doubles and you have not sold, nobody calls that a profit. It is a paper profit. A distribution that never leaves the account deserves the same label.

What About Mature Companies Paying 5% or 6%?

That portfolio worked for decades. It does not work now, because most of the names left yielding 5% and up share one flaw: weak revenue growth and a dividend going nowhere.

This is dividend investing the classic way. Buy blue chips paying 4%, 5%, 6%, collect the checks, sleep well. It worked, and I am not going to pretend it did not.

The market has run so far that the list has thinned out. The high yielders still standing are, for the most part, the businesses that did not participate. There are exceptions. You do not build a retirement plan on a handful of exceptions.

Run the survivors through the dividend triangle and the same picture keeps showing up.

Revenue growth is struggling. The company is not winning new customers and not selling more to the ones it already has. When sales don’t grow, profit is even harder, because inflation keeps pushing expenses up. Flat revenue against rising costs is a margin story with one ending.

So the dividend gets maintained. Maintained until it gets cut, or maintained for a decade while inflation eats what it buys. That is how a retiree goes from filet mignon to Kraft Dinner. I tried serving Kraft Dinner to my kids. They were not impressed. I loved the stuff when I was their age. I prefer the filet now.

Would you fill a retirement portfolio with companies with no growth ahead, thin profits, and a dividend that hasn’t moved in three years? It pays you today, and it bites you later. The point of retiring is that going back to work becomes a choice, not a bill you have to cover.

Why Do Quality Dividend Stocks Yield So Little Now?

Because everybody wants to own them. A business growing its revenue, its profit and its dividend attracts buyers; the price climbs, and the yield falls. The low yield is the receipt.

Investors read that as a warning. I read it as confirmation.

Think about what happens to a thriving company. It grows sales. It grows profit. It raises the dividend every year. Investors notice and they buy it. The stock price goes up and the yield goes down. The yield went down because the business delivered.

Canadian banks are the clearest example I know. They anchored income portfolios in this country for two decades. Most of them now yield under 3%. National Bank and Royal Bank belong in the low-yield, high-dividend-growth category today, and shareholders who held them through that move did fine.

The yield fell. The dividend never did.

Does Yield on Cost Fix the Problem?

It does not. Yield on cost measures a purchase you made years ago. You retire on what the account is worth today, so the yield that counts is the one on today’s value.

This is the objection I get every time. Mike, the portfolio shows 2%, but my yield on cost is 8%.

I know. Mine is too.

I bought Apple in my RRSP back in 2013 or 2014. My average cost is around $13 a share. At that cost, Apple pays me close to 8% today. By that measure, I hold a high-yield stock called Apple.

Then look at the position itself. The $1,400 I put into it back then is worth about $32,000 now.

So which would I rather own? The $1,400 throwing off 8% on cost, or the $32,000 it became? I will take the $32,000. If you prefer the $1,400 and the bigger percentage, it is yours.

Yield on cost feels good. It tells you the purchase worked, and that matters. It does not pay for anything.

When you retire with $750,000, you retire with $750,000. Not with the $200,000 you invested fifteen or twenty years ago. The yield that funds your retirement is the one calculated on today’s account value.

What the Dividend Triangle Looks For

Revenue growth, earnings growth and dividend growth over five years, plus cash flow growth and debt under control. The screen works on a 0.7% yielder the same way it works on a 5% one.

A company that clears all of those is thriving. It sells more, keeps more, and shares more with its owners. Whatever yield it pays today tells me about its price, not its quality.

That is why the starting yield never enters the screen. Direction does. A business paying 1.8% and raising the dividend 12% a year is telling me more about the next decade than a business paying 7% with a frozen payment.

The triangle is not perfect. There are exceptions and I have owned a few of them. It still beats buying the biggest number on the screen and hoping the distribution holds.

You can read more about how I put this to work below.

Dividend Investing: Yield Agnostic Investors Will Win

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