Data centers run hot, and the AI buildout is adding cooling load nobody planned for five years ago. At the same time, older homes and offices keep replacing aging furnaces and air conditioners, and that spending does not wait for a good economy. A furnace that dies in January gets replaced in January.

So I followed that chain this month. Two names came back and went onto my buy list. One builds the systems. The other moves the gas that fuels a large share of the heat.

I think there is a play in each of them. Both have pulled back since July while the businesses kept moving forward, which is the setup I go looking for. They are priced nothing alike, and each one asks you to accept a different risk.

*Disclosure: I do not own Trane Technologies (TT) or AltaGas (ALA.TO). This is education, not advice. Do your own due diligence.*

How to Read My Buy Ideas

One rule before we go any further. Do not read a stock name here and then buy it.

I am not joking. When I go write about a company, it can read like every name is an amazing pick. Each one made the list for a reason. I think there is a play here. Will I be right most of the time? Who knows. What I can promise is the work and a big push for your own research. I want you to see how I read a business model, where I find the growth vectors, and where I find the flaws.

The screen does the first job. A PRO rating of 4 or better says the business quality is there. A Dividend Safety score of 4 or better says the payment is not at risk. Then comes the question I answer for myself every single time. Can I live with this type of risk?

We do not all answer that one the same way. I happily live with the risk of overpaying for a stock. Some investors would lose sleep over my portfolio’s average P/E ratio. Trane and AltaGas both carry a 4 on each score, and each one asks for a different kind of tolerance.

You can read about my previous picks below.

2 Stocks on My Buy List: Northrop Grumman and CCL Industries

Trane Technologies (TT): Paying Up for the Cooling Super Cycle

Investment thesis: Trane is a global climate company. Through the Trane and Thermo King brands, it sells commercial and residential heating, cooling and ventilation systems, building controls and transport refrigeration. It reports in three regions: the Americas, Europe with the Middle East and Africa, and Asia Pacific. The Americas segment is the engine. Trane also builds turnkey data center cooling solutions and liquid cooling technology, which puts it in the middle of the AI power story.

The dividend triangle is strong. Revenue has grown 9.8% a year over five years, earnings per share 18.75%, and the dividend 12.2%. Q2 2026, reported July 30, pushed it further. Revenue rose 11% and adjusted earnings per share 11%, bookings jumped 39% to $7.8B, and the backlog hit a record $12.1B, up 70%. Americas commercial HVAC bookings set an all-time high, up 50%, and applied bookings rose 130%, a fourth straight quarter above 100%. Management raised full-year guidance to roughly 11.5% reported revenue growth with adjusted earnings per share of $15.20 to $15.30.

The moat sits in the installed base. Once a building runs on Trane equipment and controls, the parts, upgrades and service contracts can run for years, and that revenue arrives whether the economy cooperates or not. Switching away means ripping out a system that works. Carrier, Johnson Controls, Daikin and Lennox all compete here, and none of them dislodges an installed base overnight.

Read the dividend as a growth signal, not an income one. The forward yield is 0.85%, below the five-year average of 1.20%, because the share price has climbed faster than the payout. The payout ratio is 28% on earnings and 27% on cash, and the raises have averaged 12.2% a year. You buy Trane for the rising dividend and the earnings compounding behind it.

Now the risk you sign up for. The stock trades near 36.7 times trailing earnings against a five-year average of 30.3; the forward multiple sits near 31. The market already knows this is a great company. That leaves no room for a miss, and any quarter that falls short of the bar could trigger a pullback. The soft spot is Europe, the Middle East and Africa, where revenue fell 1% in the second quarter and adjusted operating margin dropped 420 basis points. If the AI capital cycle cools, the data center tailwind fades faster than the market expects.

So where is the play? Part of it is the price. Trane set an all-time high of $505.87 on June 25 and traded around $479 in mid-August 2026, so you are buying around 5% below the peak instead of into it. The rest is in the backlog. A record $12.1B, up 70%, with bookings up 39% and guidance moving up instead of down, means earnings are chasing the price rather than the other way around. Buying Trane still means paying ahead of that catch-up. That is the overpaying risk, and it is one I can live with. But that choice is yours.

What to watch: backlog and bookings, since that is the stock’s swing factor. Data center cooling orders and any commentary on liquid cooling demand. Americas commercial HVAC volumes and the pace of the European recovery.

AltaGas (ALA.TO): A Rare Moat Carrying a Heavy Load

Investment thesis: AltaGas runs two platforms. The first is a regulated US natural gas utility, principally Washington Gas, serving over 1.6 million customers across DC, Maryland, Virginia, and Michigan. The second is a western Canada midstream business built on extracting, processing and exporting liquefied petroleum gas. AltaGas owns RIPET and Ferndale, the only two large-scale LPG export terminals on the North American West Coast.

The two platforms split EBITDA roughly evenly across a full year, and they do different jobs. Utilities earn approved returns on rate base investment, which is about as predictable as cash flow gets. Midstream captures the spread between West Coast Canadian supply and Asian demand, a netback Gulf Coast exporters cannot match. Q2 2026, reported July 30, was another record. Normalized EBITDA rose 14% to CA$391M and normalized earnings per share rose 15% to CA$0.31, with Midstream up 33% on record LPG exports of 144,420 barrels a day to Asia. Management raised 2026 guidance to CA$2.0B to CA$2.1B of normalized EBITDA and CA$2.35 to CA$2.60 of normalized earnings per share.

Owning both West Coast terminals is close to irreplaceable. A new one takes years of permitting, heavy capital, and the rail and port relationships AltaGas spent years building. On the utility side, regulated monopoly status across four US jurisdictions produces rate-supported earnings that do not move with the commodity cycle. Pembina, Keyera and Enbridge compete for NGL handling, and none of them owns that export footprint.

The dividend comes with an asterisk, and I would rather say it than skip it. AltaGas cut its payment in 2019 after saying it would not. Management then rebuilt the balance sheet and has delivered six straight annual increases since, including a 6% raise in 2026 that took the dividend to CA$1.336 a year. DSR upgraded the Dividend Safety Score to 4 in March 2026. The forward yield is 2.45% and the payout ratio is a comfortable 51% on earnings. Ignore the five-year dividend growth rate of 31.25%. It is a rebound from the cut, not a forecast. Plan on 5% to 7% a year, in line with EBITDA.

Now the risk you sign up for here. This business borrows to build. Financial debt sits at 6.13 times EBITDA, down from 6.75 but still heavy, and that keeps the shares sensitive to long-term rates, which lift refinancing costs and the discount investors apply to the stock at the same time. Rate recovery has to land across four US jurisdictions at once, midstream cash flow depends on RIPET uptime and rail performance, and management raised the 2026 capital budget from CA$1.7B to CA$1.8B, so the building is not slowing down. Shares are up 41.5% over the past year, though they have given back some of that since late July.

The play here looks nothing like Trane’s, and the price reflects that. AltaGas peaked at CA$57.52 on July 24 and traded around CA$52 in mid-August 2026, roughly 9% off that high, after an equity issue took the wind out of a record quarter. Here is the part worth sitting with. That same equity, plus a bigger EBITDA base, is what brought financial debt to EBITDA down from 6.75 times to 6.13. The move that knocked the stock down is the move that made the balance sheet safer. You are not waiting on earnings to catch up to a multiple. You are being paid 2.45% to hold a regulated utility bolted to the only West Coast LPG export terminals in North America, with a payout ratio at 51% and management raising both guidance and the dividend. Rates are still the swing factor. If they ease, the shares have room. If they spike, the debt becomes the story.

What to watch: RIPET export throughput and the FEI to Mont Belvieu spread, which drive the midstream upside. On-time delivery at REEF, MVP Boost and Southgate. Utility rate case outcomes across the four US jurisdictions. And long-term interest rates, given the debt load.

Can You Live With This Kind of Risk?

Both names are on my list because I see a play in each, and price is part of that play. Let me be clear about the size of it. Neither one is a big bargain. These are small entry points for the investor who wants good quality at a good price, not a fire sale. Both are cheaper than they were four weeks ago while the businesses behind them kept getting better. So the useful question is not which one is the better deal. It is which risk you can hold through a bad year without selling at the bottom.

Trane asks you to accept overpaying. You are buying an excellent business the whole market can see is excellent, and betting the data center and electrification runway is long enough to grow into that multiple. I can live with that one. Plenty of good investors cannot, and that is a legitimate answer, not a failure of nerve.

AltaGas asks you to accept leverage. Financial debt at 6.13 times EBITDA buys a 2.45% yield, mid-single-digit dividend growth, and infrastructure that would take years and a fortune to replicate. The bet is that rates behave while the utility earns its approved return and RIPET keeps shipping.

One risk lives in the multiple. The other lives on the balance sheet. Answer that question honestly before you go near a buy button, because it decides which of these two, if either, belongs in your portfolio.

The Hard Part Is Knowing When to Buy

Finding Trane and AltaGas took one screen and an afternoon. Deciding what to pay for them is the part that trips up most investors. A stock trades at 36.7 times earnings. Is that quality worth paying for, or a trap? A stock has pulled back 9%. Do you wait for more, or do you start?

That is what I teach in Dividend Simplified. It is a short, practical course that walks through my buy process, my sell process, and how to read a quarterly earnings report without a finance degree. Bite-sized videos, PDF guides, and the same checklists I use. The whole thing costs $15.

If you have ever stared at a stock like Trane and frozen, this course was built for you.

Get Dividend Simplified here

The post Two Quality Stocks Showing an Entry Point: Trane Technologies and AltaGas appeared first on The Dividend Guy Blog.

I know how to compare two stocks. I know how to look at metrics. But how do I pick the right company when the two companies I am looking at are both amazing?

That is a better question than it sounds. Most investing content teaches you to tell a good company from a bad one. Almost nobody tells you what to do when both pass every test you know how to run.

So I picked the hardest example in my own portfolio. Royal Bank and National Bank. Two Canadian banks I own, both with a strong dividend triangle, both very hard to fault.

I pulled them up side by side and tried to answer honestly.

I could not pick.

That is not a cop-out. It is the most useful thing I can tell you about comparing two great businesses. Sometimes the numbers will not break the tie, and you need a second method ready for when that happens.

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

Royal Bank vs National Bank: Which One Should You Buy?

On today’s numbers, both. Royal Bank and National Bank are nearly identical on yield, payout ratio and valuation, so the decision comes down to which investment thesis you prefer, not which metric reads higher.

My process never changes. Numbers first, story second. I do not want to read the investment thesis early, because I do not want to fall in love with a company before I have looked at the hard facts. Numbers are hard facts. A story is a story.

Here is where the two banks sit today, in Canadian dollars, with market data as of August 7, 2026.

Now look at that table and try to pick a winner.

• Yield: five basis points apart, 2.33% against 2.38%. 
• Payout ratio: 45.77% against 42.79%, both right where a healthy Canadian bank should sit.
• Trailing P/E favours Royal Bank, 19.22 against 20.05. 
• Forward P/E reverses it, 16.32 for National Bank against 17.12. 
• The two valuation metrics point in opposite directions and cancel each other out.
• The earnings leg is just as tight. Royal Bank has compounded earnings per share at 7.72% a year over five years, National Bank at 6.80%. Less than a point separates them.

Two differences are real. National Bank is the more volatile of the two, with a beta of 1.19 against 0.93. And National Bank has grown its dividend much faster, 11.89% a year against 8.78%, which is what lifts its Chowder score to 14.22 against 11.16.

Calmer ride, or faster-growing income. That is a preference. It is not a decision.

One note on revenue. I skip it for banks. Revenue moves with rates, trading activity and acquisitions, and it tells you very little about the health of the business. Earnings and dividends carry the weight here.

What Do You Do When Two Stocks Tie on the Numbers?

Stop looking for a metric to break the tie. Go to the investment thesis instead.

The mistake I watch investors make at exactly this moment is to keep digging for a number that will decide it for them. Chowder score. PEG ratio. Something obscure they have never used before. They are not analyzing anymore. They are looking for permission.

When two companies are this close, the differentiators live outside the spreadsheet. Here is where I actually look.

Who is the leader? If scale and market leadership matter to you, this is a clear Royal Bank win. It is the largest company on the TSX at $412 billion, nearly five times National Bank’s size.

Where is the growth coming from? Royal Bank is far more present in the United States, and diversified through capital markets and wealth management. National Bank is heavy on capital markets and wealth too, but far more concentrated in Canada, with a small US presence and a growing operation in Cambodia through ABA Bank.

Does the company grow by acquisition? Both do, so this one does not help. Royal Bank bought HSBC Canada. National Bank bought Canadian Western Bank, and Laurentian Bank assets before that.

What are those acquisitions actually buying? This is the most interesting one. National Bank’s strategy is to buy client books that feed wealth management. Canadian Western came with roughly $37 billion in loans and a large book of commercial clients who had no private banking relationship. When those business owners eventually sell, they will be looking for advice, and National Bank intends to be there. Royal Bank, being much larger, plays hardball everywhere at once.

What risk are you actually taking? National Bank is more exposed to Quebec’s economy. Royal Bank carries a large mortgage portfolio across all of Canada, and in a genuine mortgage crisis it likely takes the bigger hit. Neither of those is a flaw. They are different bets, and you should know which one you are making.

None of that appears on a screener. All of it is a legitimate basis for a decision.

Should You Just Buy Both?

Often, yes. When two companies both show a strong dividend triangle, owning both is a perfectly good answer, and it is the one I chose.

There are three honest ways out of this, in the order they usually apply.

Buy both. There is no rule that says you must choose. Two strong businesses, two strong triangles, two positions.

Pick one characteristic and let it decide. If you already hold a bank and do not want a third, choose the trait you genuinely prefer and stop. Lower volatility and market leadership point to Royal Bank. Faster dividend growth and more room to compound from a smaller base point to National Bank. Both are defensible. Neither is wrong.

Watch for the duplicate trap. The lazy version of buy both is how portfolios end up holding Visa and Mastercard, Royal and National, Fortis and Hydro One, and forty positions that all do the same job. Expanding your portfolio is not the same as making a decision. If you are buying both because you cannot choose, at least be honest that that is what is happening.

How I Compare Two Stocks, Step by Step

Numbers first, thesis second, always in that order.

I start with the stock comparison tool and let the numbers speak. The dividend triangle, the payout ratio, the valuation. At that stage I do not care about the story, because I do not want to fall in love with one company before the facts are in.

Only then do I read the investment thesis, the risk potential and the dividend growth perspective. That is where I learn what the business actually is, and that is where a tie gets broken.

If the numbers disqualify a company, I am done, and no story rescues it. If the numbers say both are strong, I have already won. At that point I am not choosing between a good company and a bad one. I am choosing between two good ones, and the cost of picking wrong is small.

That is the answer to the member’s question. You do not need conviction that one is better. You need conviction that both clear the bar, and then permission to stop optimizing.

Want a Shortlist of Companies That Clear the Bar?

Finding businesses with a strong dividend triangle is the hard part. Screening 1,100 stocks by hand is not how I want to spend a Sunday, and I doubt you do either.

The Dividend Rock Star List narrows the field for you. It is updated every month and shows 250+ dividend growers with solid metrics and robust business models. Treat it as a starting point for your research, not a shopping list.

Enter your name and email below, and I will send it straight to your mailbox.

The post Royal Bank vs National Bank: How to Pick When Both Stocks Are Great appeared first on The Dividend Guy Blog.

Alphabet, Costco, Visa and Microsoft all sit inside my top 10 holdings. None of them earned that spot with a hot quarter. Each one earned it because something protects its profits from the rest of the world.

Morningstar calls that protection an economic moat. I call it the reason I can hold a stock through two bad years and still sleep at night.

There are seven moats worth knowing. Here they are, and here is how four of my largest holdings use them.

*Disclosure: I own Alphabet, Costco, Visa and Microsoft. This is education, not advice. Do your own due diligence.

What Is an Economic Moat?

An economic moat is a durable competitive advantage that protects a company’s profits from competitors. Morningstar identifies seven types.

A moat does not make a business invincible. It buys time. Time to hold prices, protect margins, and keep earning while a competitor spends years and billions trying to catch up. Here are the seven.

1. Network effects. The more people use the product, the better it gets, and the more people use it. Facebook is the textbook case. More users create more content, more content pulls more reactions, more reactions bring more advertisers, and the flywheel spins on its own. At some point everyone is already there, and nobody wants to start from zero somewhere else.
2. Low-cost producer. Scale pushes the cost of operation down. That lets a company charge less and still earn a better margin than the competition. Jeff Bezos said it best. Your margin is my opportunity.
3. Capital intensity. Some businesses cost billions to build. Canadian National Railway is one of my holdings outside the top 10, and building a second CN today is close to impossible. Buy the land, lay the track, maintain the network. Nobody starts that from scratch. If you want more rail, you buy a railroad. Utilities share the same trait.
4. Switching costs. The cost is not only in dollars. It shows up in time and energy. Change your payroll system and you pay for the software once, then you pay again in training, migration, and mistakes. If the current system works, you stay. Automatic Data Processing lives on this moat.
5. Brand power. If you want to watch Star Wars, it has to be Star Wars. No substitute exists. Coca-Cola works the same way. Someone hands you a Pepsi and you notice.
6. Intellectual property and trade secrets. Big pharma is the clearest example. A blockbuster drug arrives with patents, and those patents buy years of protected profit before the copies show up. Strong moat, with an expiry date attached.
7. Regulatory protection. Canadian banks sit here. Try starting one. Regulated utilities too. They get a territory, and nobody else can sell power inside it. You answer to a regulator, and in exchange you get a wall around your market.

I went deeper on all seven in two earlier articles, one on switching costs and the network effect, and one on intangibles, cost advantages and scale.

The best businesses stack several of these at once. That is what the next four companies have in common.

Does an Economic Moat Guarantee Better Returns?

No. A moat protects the business, not the share price. A company can hold a wide moat and still deliver flat returns for years.

CNR has an advantage few competitors can attack. It was also dead money for about three years. Microsoft has several moats. It has had a rough 12 to 18 months.

Neither company lost its advantage. The market decided to pay less for it.

That is the part investors get wrong. A moat is not a performance promise. It is a reason to stay patient when the price says otherwise. When the thesis holds, and the dividend triangle holds, a slow stretch is a waiting period, not a sell signal.

Alphabet (GOOGL): Network Effects That Feed Themselves

Alphabet is my tenth largest holding, and it might carry the deepest moat stack of the four.

Start with the network effect. Every search feeds Google more data. More data makes the results better. Better results bring more searches. The loop funds itself, and the advertising layer sits on top of it all.

YouTube adds switching cost and brand power at the same time. If you stop publishing on YouTube, where do you go for the same reach? There is no answer. Creators are held there by the audience, and advertisers follow the audience.

Then add the intangibles. Patents, research, and the know-how of running infrastructure at that scale. Put it together and you understand why this is one of the largest companies in the world.

One caveat. Alphabet is new to the dividend game. The first payment landed in 2024, so there is no five-year dividend record to lean on. What you get instead is a revenue line running above $446 billion on a trailing basis, earnings per share climbing without a pause since 2022, and a dividend that has already been raised twice in its short life. I own it for the business and the growth, not for the yield.

Costco (COST): The Low-Cost Producer That Locks the Door Behind You

Costco stacks low-cost producer economics, a membership that keeps customers in, and the Kirkland Signature brand into one of the widest moats in retail.

Costco is my ninth largest holding, and the business model is a clinic in stacking moats.

The low-cost engine comes first. Costco carries roughly 4,000 items where a typical superstore carries 30,000. That concentration makes Costco the largest buyer of a given product for many of its suppliers, and the largest buyer negotiates the best price. Members get the savings. Costco gets the traffic.

The switching cost is the membership itself. You paid to shop there, so you shop there. Renewal rates run above 92% worldwide. Costco raised its fees in 2024, to $65 for Gold Star and $130 for Executive, and members stayed.

Brand power arrives through Kirkland Signature. Building private label products that compete with national brands at a lower price was a smart move that keeps paying. It protects margin and gives members one more reason to come back.

The dividend triangle tells a mixed story. Revenue growth of 9.50% and earnings growth of 13.35% over five years both look healthy. The dividend line is where it gets confusing. You will see a spike on the chart in early 2024, and a five-year dividend growth rate that reads negative. That is the $15 special dividend distorting the math, not a dividend cut. The regular dividend has climbed for 20 straight years.

The moat is not the risk here. The valuation is. The market prices Costco for continued perfection, and discounts are rare.

Visa (V): A Tollbooth on Global Commerce

Visa’s moat is the network effect plus the capital and technology needed to move money across 200 countries without dropping a transaction.

Visa is my eighth largest holding, and it operates in something close to a duopoly. Yes, other cards exist. In practice, Visa and Mastercard are the two networks that can move money anywhere on earth.

The network effect runs both ways. Merchants accept Visa because cardholders carry it. Cardholders carry it because merchants accept it. Visa handles more than $15 trillion in annual volume across 200+ countries, with more than 14,500 financial institutions and over 50 million merchants on the network.

The capital intensity is the part people miss. Building the security and the infrastructure to clear 65,000 transactions per second, without losing a dollar in transit, is not a software project. It is decades of investment. Add the brand and you have a tollbooth that is hard to route around.

Now the honest part. Regulation is not a moat for Visa. It is a threat. The U.S. Department of Justice filed an antitrust suit focused on debit. The EU keeps interchange caps in place. European governments are working on payment systems built to reduce the dependence on both networks. Everyone wants a slice of that pie.

The dividend triangle is strong. Revenue growth of 14.15%, earnings growth of 17.90%, and dividend growth of 14.85% over five years. Here is the part I like most. Visa turns more than $15 trillion of payment volume into roughly $44 billion of revenue. It takes a thin slice of an enormous flow, and that slice compounds. The yield is small. The growth is not.

I bought Visa in 2017 at what was then an all-time high, at a valuation everyone called stretched. I still own it. The valuation was never the point. Nobody was going to rebuild that payment network, at any price.

Microsoft (MSFT): Switching Costs You Cannot Escape

Microsoft’s moat is switching costs, brand power, and the capital required to compete across software, cloud and AI at the same time.

Microsoft is my seventh largest holding. It used to sit in my top three. The last 12 to 18 months have been a tough ride, and that is the best proof I can offer that a moat does not guarantee outperformance.

The switching cost is the strongest of the three. Try removing Windows and Office 365 from a company, or from your own computer. I have thought about it. I am still using both. Office, Azure, Dynamics and SQL Server sit inside the plumbing of corporate systems everywhere, and pulling one out means rebuilding around it.

Brand power comes next, then capital intensity. Azure alone runs above $75 billion in annual revenue. Few companies can fund a fight on that many fronts at once.

I do not see a real network effect here. Selling a lot of software and hosting a lot of cloud workloads is scale, not a flywheel. Switching costs, brand, and capital intensity are the three that matter for Microsoft.

The dividend triangle holds up. Revenue growth of 13.60%, earnings growth of 15.80%, and dividend growth of 10.20% over five years. The market’s worry is the AI spending and whether the return shows up. That is a valuation debate, not a moat debate.

How Do You Find the Moat in Your Own Portfolio?

Name the advantage in one sentence, then ask what it would cost a competitor to copy it. If you cannot answer both, you do not own a moat.

Here is the exercise I run on every holding.

Name the moat in one sentence. If it takes a paragraph, you are describing a story, not an advantage.

Price the copy job. What would a well-funded competitor need to spend, and how many years would it take? Billions and a decade is a moat. A better marketing campaign is not.

Check that the moat shows up in the numbers. A real advantage protects margins and shows up in the dividend triangle. Revenue growth, earnings growth, dividend growth. If a company claims a moat and the triangle is flat, the claim is thin.

Watch for erosion. Regulators, technology shifts and patent expiries end moats. Visa’s regulatory pressure is a live example. Keep an eye on it.

Do not expect the moat to move the stock this year. It protects the business. The market sets the price on its own schedule.

That last rule is how I hold Microsoft through a bad 18 months without touching the sell button. The wall is still standing. The market is in a mood.

Want More Companies Built Like These?

Finding businesses with a durable advantage is the hard part. Screening 1,100 stocks by hand is not how I want to spend a Sunday, and I doubt you do either.

The Dividend Rock Star List narrows the field for you. It is updated every month and shows 250+ dividend growers with solid metrics and robust business models. Treat it as a starting point for your research, not a shopping list.

Enter your name and email below, and I will send it straight to your mailbox.

The post Economic Moats: The 7 Types and 4 Stocks I Own appeared first on The Dividend Guy Blog.

Before you scrap half your holdings and chase a fresh list of winners, let me offer a different read. When someone tells me their portfolio needs a makeover, I do not hear a bad investor. I hear a missing strategy.

The last six months are close to irrelevant. You are investing for the next 30 to 50 years. The real question is not how to find hotter stocks. It is whether you are running a process you can trust through every kind of market.

*Disclosure: This is education, not advice. Do your own due diligence.

Should You Do a Portfolio Makeover After a Bad Year?

Usually not. A weak six- or twelve-month period is noise, not a verdict. The fix is a disciplined review of what you own, not a teardown of the whole portfolio.

A makeover driven by recent performance just swaps one set of bets for whatever is hot today. Do that on repeat and you sell low, buy high, and call it strategy. Sometimes a cleanup is warranted, because we all make mistakes. But a cleanup is a scalpel, not a wrecking ball.

The urge usually shows up in a bull market, when new funds and shiny products are printing big numbers. They look unbeatable right up until they meet their first recession. Give your own plan the same patience you are tempted to hand the latest winner.

Why Comparing Your Returns to Others Is a Trap

Short-term outperformance is easy, and often it is luck. The investor bragging about a 30% year rarely shows you the ten-year record beside it.

I hear it all the time. My strategy is up 30%, yours is not, so mine is better. My first question is simple. Since when? The answer is usually six months ago, maybe a year. Ask about the last ten or twenty years and you get crickets.

I have been that person. Right before the worst trade of my life, I was up 71% in under a year. Everything I touched turned to gold. It was not genius. It was a lineup of lucky factors stacked into a short window. Looking brilliant for a stretch proves nothing about the next thirty years.

Are You Behind, or Just Behind Someone Else?

You invest to reach a personal goal, and for most of us that goal is retirement. The only benchmark that matters is your own plan, not the market and not your neighbour.

So look at the plan. Are you on track? You might be ahead even if, in a year, you feel behind. Last year my portfolio rose maybe 5% or 6%, while plenty of people posted 15, 20, even 25 on the AI and gold run. Good for them. I did not lose a dollar because they were ahead of their own plan. Over ten, fifteen, and twenty years, the process has done its job.

Hindsight makes every winner look obvious. Of course you should have owned gold. It was on its way to $6,000 an ounce, then it settled near $4,000, and six months from now it will be another story. Short-term comparisons do not sharpen your decisions. They just manufacture doubt.

Build a Team, Not a Basket of Winners

Your portfolio is not a pile of hot stocks. It is a championship team you build one player at a time, and every team needs different roles filled.

You need offensive players for growth, defensive players for stability, a captain or two to anchor the whole thing, and role players who quietly do their job. Some will carry the season. Others will have a quiet year. That is the design, not a flaw.

Couche-Tard lagged my portfolio for two years. It stung last year. This year it is contributing again. A team built on conviction lets a good player work through a cold streak instead of benching everyone the moment the scoreboard turns.

How to Review a Portfolio the Right Way

Here is the part most investors skip. A real review never starts with the stock price. “Up equals good and down equals bad” is a lazy screen that hands your judgment over to the market. I run the review in three layers, in this order.

 Start with your strategy

Before touching a single holding, get clear on how you want to invest. How many stocks do you want to own? Which sectors fit you, and which do you avoid? What kind of business helps you sleep at night? The strategy comes first because every later decision hangs on it.

Check your allocations

Then work through allocation on three levels. Asset allocation first. I want to be fully invested at all times rather than sitting on cash waiting for a perfect entry that never arrives. Sector allocation next, with firm limits so no single sector can sink the ship. Position sizing last. Every holding has to matter. A 2% position that doubles adds less than half a percent to your portfolio, so if a name cannot move the needle, it does not earn a spot.

Review each stock on thesis and numbers

Now, and only now, look at the individual holdings, still ignoring the price. Two things carry the weight.

First, the investment thesis. Write down why you own the company. If you cannot explain it to a 12-year-old in two sentences, you have not done the work yet. Second, the numbers, and by numbers I never mean the share price. I mean the dividend triangle. Is revenue growing over five years, and do you know why? Are earnings keeping pace, which tells you margins are holding, or falling behind? Where is the dividend headed, accelerating, slowing, or frozen? When the thesis and the triangle both hold, I do not care whether the stock is up or down this year.

When Does a Cleanup Actually Make Sense?

Sell when the thesis breaks or the dividend triangle rolls over, never because the price fell. That is a cleanup, and it is very different from a makeover.

I make mistakes too, and I trim a name or two from time to time. The trigger is always the same. The story I told myself no longer matches the numbers. It is never a red line on a chart. That discipline is exactly how I stayed patient with Couche-Tard. The thesis held, the numbers were fine, so I gave it time.

As Peter Lynch said, the worst thing you can do is forget what you own and why you own it. Keep reviewing your holdings, keep the ones that still earn their place, and let the process, not the scoreboard, run the team.

Invest for Income You Cannot Outlive

You are not investing to beat your neighbor. You are investing to fund a retirement you will not have to worry about. That is the goal every review should serve.

My Dividend Income for Life Guide lays out the full methodology I have used at Dividend Stocks Rock since 2013 to build income you can count on during your working years and long after your final paycheck. It is not a high-yield shopping list. It is a way to keep control of your portfolio and the income it generates.

Enter your name and email below, and I will send the guide straight to your mailbox.

The post Portfolio Makeover: What to Do When Your Returns Lag the Market appeared first on The Dividend Guy Blog.

If you still hold Telus (T.TO), you are probably nursing a hangover. Since the freeze, the stock is down about 11% including the dividend, while the broad Canadian market (XIU) is up 13.5%. That is a gap of more than 20 percentage points in seven months. So let me revisit the story, look under the hood, and answer the real question. Can Telus turn this around?

Disclosure: I sold my Telus shares on December 3rd, 2025. This is education, not advice. Do your own due diligence.

–> NEW!! Telus cut its quarterly dividend from $0.4184 to $0.1875 on July 31st. Management calls it a reset. A reset is what you do to your Wi-Fi router when there is a bug. When your income drops by 55%, it is a cut.

Free Special Report: https://dividendstocksrock.com/telus

What Happened to Telus’s Dividend?

On December 3rd, 2025, Telus paused its dividend growth policy, walking back the 3% to 8% annual growth it had promised through 2028.

That is what stings. About six months earlier, management reassured the market that it would continue raising the dividend by 3% to 8% each year through 2028. Then it changed its mind and hit pause. Some improvisation. I hate that. When I invest in a dividend grower, the growth is the whole point.

To be fair, revising a plan is not always a bad thing. Couche-Tard did it with a clear roadmap and came out fine. But Couche-Tard was not struggling. Telus is. That is a big difference. A revised plan is only worth the paper it is printed on if the company can execute it.

Why Did I Sell My Telus Shares?

I sold Telus after the freeze because I invest for dividend growth. When growth stops, my capital moves to a business that will continue to reward me.

That is the rule, and the rule is the reason the system works. About a month ago, during a private DSR webinar, a member asked me to set my rules aside and look at Telus one more time. Is there any chance this nightmare of a story turns around? I agreed, because the point was to talk about Telus, not my portfolio.

Here is the lesson before we go further. Stick to your investment rules. You put them in place for a reason. If your rules tell you to buy, sell, or hold, follow them. One of my rules is simple. I focus on dividend growth. No growth, no position. I would rather invest my money in a company that rewards me than one that is improvising with its dividend policy.

What Is Telus’s Turnaround Plan?

Telus wants to grow free cash flow, cut capital spending, pay down debt, sell assets, end its discounted DRIP by 2027, and pause dividend growth to fund these initiatives.

I liked most of this plan, right up until they took dividend growth off the table. The logic runs in six parts.

1. Grow free cash flow, led by Telus Health, Telus Digital, and the core telecom business.
2. Cut capex now that the heavy 5G and fibre buildout is behind them.
3. Use the extra cash flow to pay down the debt that ballooned over the past decade.
4. Monetize assets to accelerate debt payoff.
5. End the discounted DRIP by 2027 so the company stops issuing new shares.
6. Pause dividend growth to free up cash flow flexibility.

The debt story matters most. Cheap debt was a gift when rates were near zero. It became a weight when rates rose. Paying it down is personal finance 101. Stop the extra spending, kill the interest charges, and free up cash for the future.

One part I respected. Telus sold 49% of its cell tower network to a pension plan and used the proceeds to pay off debt. Compare that to BCE, which sold its MLSE stake, said it would pay off debt, then bought Ziply Fiber instead. Telus said it would deleverage, and so far it has. Execution counts.

There is one catch worth naming. The DRIP is propping up the payout. Each quarter, more shareholders take stock instead of cash, so Telus pays out more dividend dollars on paper while sending less cash out the door. That is dividend growth on paper only. Real people are not getting more money unless they are enrolled in the DRIP.

Is Telus Executing the Plan?

The execution is uneven. Free cash flow jumped 19% last quarter, but capex rose 11% and cash from operations slipped 3%. Not a clean beat.

In the latest quarter, revenue came in at around $5 billion, down 1%. Weak revenue growth again. Adjusted earnings per share fell 12%, though for a capital-intensive business like this, cash flow tells you more than EPS. The 19% jump in free cash flow is the good news. It shows debt payoff starting to free up cash that used to go to interest.

The bad news is that cash from operations fell 3% and capex climbed 11%. That is not perfect execution, and the market has noticed. The 2026 guidance stayed intact after one quarter. Revenue growth of 2%-4%, capex of around 2.3 billion, and free cash flow of near 2.45 billion. Management is also leaning on an AI revenue story, targeting roughly 2 billion by 2028 from about 1 billion today. When you are struggling somewhere, you can always play the AI card. Telus reports again at the end of July, so we will get a fresh read soon.

Will Telus Cut Its Dividend?

–> NEW!! Telus cut its quarterly dividend from $0.4184 to $0.1875 on July 31st. Management calls it a reset. A reset is what you do to your Wi-Fi router when there is a bug. When your income drops by 55%, it is a cut.

Free Special Report: https://dividendstocksrock.com/telus

The market is pricing in a cut. An 11% yield is not a reward. It is investors telling you they doubt Telus can fund this payout from cash.

Here is where the DSR framework earns its keep. Our first filter is the dividend triangle.

Revenue growth, earnings growth, and dividend growth over five years, all pointing up together. Telus fails that filter. Over the past five years, revenue grew about 4.7%, but earnings per share shrank 8.6%. The dividend still climbed by nearly 6% a year, even as earnings fell. You cannot grow a payout on a shrinking bottom line forever.

The payout math confirms the strain. On a classic cash basis, the payout ratio sits above 100%. It only drops into the mid-70s once you fold in the DRIP, the financial engineering we just discussed. Telus has raised its dividend for 22 straight years, one of the longest streaks in Canada, and that streak is now living on borrowed time. A high yield alone is not a reason to run. Enbridge hit 8% recently and recovered nicely. But a high yield sitting on a broken dividend triangle is a different animal.

Is Telus Stock Cheap Right Now?

On paper, yes. Telus trades at a forward PE near 15, compared with a five-year average of around 30. But a low multiple on falling earnings is not a bargain.

The current PE sits around 25, the forward PE drops near 15, and the five-year average is close to 30. On yield, the forward 11% is well above the five-year average of about 7.3%. That gap indicates the price has fallen sharply relative to its own history. Read it as an entry-point signal, not an income pitch. A lower price only matters if the underlying thesis holds, and right now the thesis is a question mark.

Before you buy any low-multiple, run the business through a full process rather than buying the yield. Here is how I find and analyze stocks to buy before I put money to work. A cheap price on a broken thesis is a trap. A cheap price on a sound thesis is an opportunity. Telus has not yet proven which one it is.

My Take on Telus Right Now

Can Telus turn around? Right now we are in hope territory, not on solid ground. I am not saying it will not happen. I am saying that at an 11% yield, the market is bracing for a cut. The plan is still on paper. Some of the execution makes sense, some of it does not.

Seven months after the freeze, I am glad I sold. I followed my rules, moved on, and put my capital into names with clearer growth. That is the part I control. You do you. Decide what fits your portfolio and your conviction.

The Hard Part Is Knowing When to Let Go

Selling Telus took one rule and one honest look at the dividend triangle. Knowing when to sell is the part that trips up most investors. A stock yields 11%. Is that a bargain or a trap? The dividend growth stops. Do you hold and hope, or move on?

That is what I teach in Dividend Simplified. It is a short, practical course that walks through my buy process, my sell process, and how to read a quarterly earnings report without a finance degree. Bite-sized videos, PDF guides, and the same checklists I use. The whole thing costs $15.

If you have ever held a stock like Telus and frozen, this course was built for you.

Get Dividend Simplified here 

The post Telus Stock: Can an 11% Dividend Turn This Story Around? appeared first on The Dividend Guy Blog.