In 2016, I made a life-changing decision: I took a sabbatical, put my family in a small RV, and we drove all the way to Costa Rica.

Upon my return in 2017, I officially quit my job as a private banker at National Bank and started working full-time on my baby: Dividend Stocks Rock. I also decided to manage my pension account held at the National Bank. I’ve built and managed this portfolio publicly since 2017 to create and track a real-life case study.

In August 2017, I received $108,760.02 in a locked retirement account. Locked means I can’t add capital to the account, and growth is only generated through capital gains and dividends. I don’t report this portfolio’s results to brag about my returns or to suggest you follow my lead. My purpose has been solely to share with our members how I manage my portfolio with all the good and the bad that inevitably takes place each month. I hope you have learned and will continue to learn from my experiences managing this portfolio.

My Lira 9 Years Later

9 years ago, I made two big decisions:

• I quit my private banker job without a safety net to work full-time on DSR.
• I took the value of my pension plan and invested it all in an all-time high market.

Looking back, both were exceptionally great financial decisions.

But first, the results!

Performance in Review

Let’s start with the numbers as of September 4th, 2026 (before the bell):

Original amount invested in September 2017 (no additional capital added): $108,760.02.

• Current portfolio value: $339,595
• Dividends paid: $5,442.55 (TTM)
• Average yield: 1.60%
• 2025 performance: +7.34%
• VFV.TO= +12.18%, XIU.TO = +28.88%
• Dividend growth: +1.5%

Total return since inception (Sep 2017- Sep 2026): +212.24%

Annualized return (107 months): 13.62%      

Benchmark: 15.12%

Out(under)performance: -1.50%

Vanguard S&P 500 Index ETF (VFV.TO) annualized return (since Sept 2017): 16.51% (total return 290.70%)

iShares S&P/TSX 60 ETF (XIU.TO) annualized return (since Sept 2017): 13.74% (total return 215.20%)

I remember the Bank offered me such a small pension that keeping my pension plan with them was a no-brainer, so transferring the money into a LIRA was the right move.

You must always run the calculations to compare the pension vs. the LIRA option.

In my case, I had to generate about a 3% return annually to reach the pension they secured at 65. In only 9 years, I could leave my LIRA in a money market fund for the next 20 years and I would still be ahead of that pension!

This highlights how important it is to stick to a strategy and forget about “where are we in the market cycle”. Technically, 2017 was close to the end of a bull market. All indicators pointed to a bear market.

And the bear market happened in 2018

I only had my money invested a few months before the 2018 bear market hit in July of 2018. The strange thing about a bear market is that you don’t know you are in it right away. At first, you have a bad month. It’s summer, volumes are low, it’s probably just a small dip. Then the bad month turns into a bad quarter and eventually, the bear market materializes after reaching a drop of 20% from the top of that market cycle.

Even if 2017 was the end of the bull market, even if I invested at an all-time high, even if 2018 was a bear market, at no point did my LIRA go under its original amount.

Therefore, the best time to invest my money was… “today”.

Here is a video on 4 factors that could lead us to a bear market:

Fast forward to today

For over 7 years, I beat my benchmark (50% US and 50% Canadian market). But it’s been about a year that I’m underperforming.

See Mike, your strategy is not bulletproof!

Wait… underperforming doesn’t mean poor returns. In fact, chasing returns and trying to beat the market every year is a fool’s game. It may lead to taking unnecessary risks that you may regret.

But Mike, you would have been better off investing in indexes

Ah! Good old hindsight, right? As I mentioned, if I had paused my investment strategy each year to determine what works best. I would have kept dividend growth investing 8 of the past 9 years.

But I would have doubted each year to know which strategy is best.

The reason why I pick stocks is not to beat the market. It’s to increase my level of conviction.

1. I know exactly what I have in my portfolio.
2. I know why it goes up, why it goes down.
3. I’m the only one deciding when to buy and when to sell.
4. At retirement, I can create the income I need, not the income a firm wants to pay me.

Dividend Growth Investing works long-term, but fails to impress

I’ve been investing for 23 years now. One thing I notice is that my first years of investing were a lot more impressive and even got me two interviews (in the Globe & Mail and in Canadian Business).

However, I sleep better and show more consistent results since I switched to dividend growth investing in 2010. 16 years in the same strategy, I’ve gone through all kind of markets without having to be worried one bit about my stocks. That’s priceless!

I’ve made mistakes, but my good moves more than made up for them. That’s the beauty of investing: you don’t need to play for 1,000. If you have a good average, your portfolio will do well.

The biggest mistake is to switch strategy every 4-5 years based on what works now.

WARNING: HIGHER BOND RATES

There are lots of dark clouds over our heads right now. As the tariff war has more plot twists than a crime and heist book, I’ll let this one sit on the bench for this issue.

Anyway, there is a bigger storm forming in the bond market!

The year is not over yet, and I can already tell you that higher bond rates have a pretty good chance of being at the top of my investment themes for 2027.

Bonds are going higher for many reasons these days: wars, tariffs, government deficits, higher inflation and uncertainty in general. In other words: investors want to be compensated for a long list of current risks.

Long-term bond yields have moved higher creating a more normal upward-sloping curve. But “normal” doesn’t necessarily mean harmless.

The bigger issue today is that long-term borrowing costs are rising even while central banks may be considering, or already delivering, lower short-term rates.

That matters for investors.

Long-term bond yields are influenced by several forces: expectations for future central bank rates, inflation, economic growth, government borrowing, and what is called the “term premium.” The term premium is simply the extra return investors demand for locking up their money for 10, 20, or 30 years.

If investors become worried about inflation, government deficits, or massive amounts of new debt being issued, they may demand higher yields. Bond prices then fall, and yields rise.

Government bonds are the foundation of asset valuation

If a 10-year government bond yields 2%, investors are more willing to accept a 4% dividend yield from a utility, telecom, or REIT. But if government bonds suddenly yield 4% or 5%, those same stocks need to offer more attractive returns to compensate investors for taking additional risk.

That often means lower stock valuations

REITs, utilities, telecoms, and highly leveraged companies are particularly sensitive because they are hit twice. First, investors demand higher yields from their shares. Second, their own borrowing costs increase as debt matures and must be refinanced.

High-growth stocks are also vulnerable. Their valuations depend heavily on profits expected many years into the future. Higher discount rates reduce the present value of those future earnings, which can compress P/E ratios even when the underlying business continues to grow.

Banks are more complicated.

A steeper yield curve can help bank net interest margins because banks generally borrow at shorter maturities and lend at longer ones. However, if long-term rates rise too quickly, mortgage demand slows, corporate borrowing weakens, and credit losses can eventually increase.

Canada may be particularly sensitive because mortgages typically renew every few years. Even if the Bank of Canada lowers its overnight rate, fixed mortgage rates can remain elevated if Government of Canada bond yields stay high. So, the mortgage crisis might have been postponed from 2026 to the next few years.

The most important question isn’t simply whether bond yields are rising; it’s why

If yields rise because economic growth and productivity are strong, markets can usually handle it.

If yields rise because investors worry about persistent inflation, government deficits, excessive debt issuance, or fiscal credibility, that is a much tougher environment.

For dividend investors, the message is not to panic over every movement in the bond market. Instead, pay closer attention to debt levels, refinancing schedules, interest coverage, free cash flow, and valuation.

Higher long-term yields will put pressure on the cost of capital.

Higher government bond yields –> higher mortgage/corporate borrowing costs –> lower asset valuations –> slower investment/consumption –> eventually slower economic growth.

Your best shield

If one industry could benefit from higher bond rates, it’s life insurance companies. However, it’s not that simple since most of them now participate in wealth management. So, while their insurance portfolio will do well, their assets under management may take a hit if the market goes into bear mode.

Once again, your best bet is not to move all your money into one direction, but rather to double-check all your holdings to ensure you have robust companies with healthy balance sheets.

The DSR stock cards and ratings should help you focus on weaker positions in your portfolio.

At the end of this year, I will conduct a thorough portfolio review to make sure I’m still on the right path. You should do so too.

Smith Manoeuvre Update

The portfolio shows 13 companies spread across 7 sectors. My goal is to build a portfolio of thriving companies with a solid dividend triangle (e.g. with positive revenue, EPS and dividend growth trends). The current portfolio yield is at 1.76% with a 5-year CAGR dividend growth rate of 11.74%.

• The portfolio value is now at $42,282.17
• The portfolio debt is at $31,000.
• Interest paid since April 2022: $2,765.13
• Monthly contribution is set at $1,000/month.
• The annual income is $742.75, and the projected income is $829.95.
• To report my Smith Manoeuvre, I export the Excel data from my DSR PRO dashboard.

The portfolio is on its way towards generating an extra $1,000 per year in dividends. I’m not there yet, but it will happen in the first months of 2027! By then, my portfolio will be close to $50,000! That will be exciting to see a 13^th influx of $1,000 to boost the portfolio further!

Smith Manoeuvre Portfolio Summary

Here’s my SM portfolio summary as of September 4^th, 2026 (before the bell):

Bought more Stantec

As Stantec is going down, I will keep adding shares until I reach a full position. Ironically, it’s hard to reach a 3% weight when a stock is continuously losing steam! (But better watch it once it recovers)

Therefore, I’m filling up the truck with all the liquidity I have. STN’s dividend triangle remains incredibly strong for a stock losing a third of its value in the past 12 months!

Again, it’s all about focusing on the long-term!

Pension Portfolio Summary

Here’s my pension plan portfolio summary as of September 4^th, 2026 (before the bell):

Total value: $339,595.12 (-$12,424.88, -3.5% from July).

Automatic Data Processing

Automatic Data Processing reported Q4 FY2026 adjusted EPS of $2.64, up 17%, on revenue of $5.47B, up 7%. For the full fiscal year, revenue reached $21.95B (+7%) and adjusted EPS hit $11.12 (+11%), both at the high end of guidance. New business bookings set a record at $2.2B, led by AI-powered HR and payroll tools. Employer Services grew 7% while PEO held steady. Management guided FY2027 for 5-6% revenue growth and 9-11% adjusted EPS growth. AI tools including ADP Lyric and ADP Assist are compressing client workflows and supporting margin expansion

Alimentation Couche-Tard

Couche-Tard reported a good quarter with revenue up 25% and adjusted EPS up 15%. Unfortunately, most of the revenue growth came from higher fuel sales (we know why!). Fuel revenue jumped 33% (volume was down, but prices were up!), while merchandise was only up by 4.1%. Same-store merchandise sales were up modestly (U.S. +1.7%, Europe +1.2% and flat in Canada). Couche-Tard reduced its merchandise margin (promotions) to stimulate sales. A big part of EPS growth is also coming from “monster” fuel margins (+19.6% in the U.S., +18.2% in Canada). Earnings were also supported by a modest increase in expenses (2.7%, below inflation) and share buybacks (about 3% vs. last year).

Here is more on Couche Tard ATD quarterly earnings:

Broadcom

Broadcom reported a record quarter with revenue up 86% and adjusted EPS up 96%. Results were driven by custom AI accelerators and AI networking. Semiconductor solutions revenue was $20.8B (+127%) as AI semiconductor revenue surged 221% to $16.7B, now 56% of total, while non-AI chips grew 5% to $4.2B. Infrastructure software was $8.8B (+29%). Gross margin slipped to 75% on the AI mix, but operating margin hit a record 67.9%. Management guided Q4 revenue to $34.8B (+93%) with AI revenue of $21.7B and expects AI revenue of $58B in fiscal 2026, $115B in fiscal 2027 and $230B in fiscal 2028. The stock fell 6% as Q4 guidance landed a touch below what the market wanted to hear.

Brookfield Renewable

Brookfield Renewable reported a strong quarter with record FFO of $421M and FFO per unit up 11%. Revenue came in at $1,710M, up from the prior year period driven by strong operating performance, asset recycling gains, and growth from new development. FFO per unit reached $0.62, reflecting the highest quarterly FFO in the company’s history. Management also announced a proposed corporate simplification plan to merge BEP and BEPC under a single corporate share class, alongside the acquisition of Aypa Power, the leading North American battery storage platform.

Brookfield Corporation

Brookfield Corp reported a strong quarter with distributable earnings per share of $0.61, up 15%. Revenue reached $19.41B. The company raised $98 billion in capital, deployed $100 billion into opportunities, and monetized $40 billion of assets. Asset recycling and capital deployment remain the core operating rhythm. The pending merger with Brookfield Asset Management will deepen the permanent capital base. BN repurchased shares at a meaningful discount to intrinsic value. The overall Brookfield platform continues to scale with strong fundraising momentum across real estate, infrastructure, and private equity.

CCL Industries

CCL Industries reported record Q2 2026 results despite ongoing geopolitical headwinds from the Middle East conflict. Revenue reached $2,110M USD, up 9% from the prior year, with organic growth of 5.0%, acquisition-related growth of 1.8% and a 2.3% positive impact from foreign currency translation. Results were supported by the strength in the CCL and Innovia segments only partially offset by a decline at Checkpoint. Adjusted EPS came in at $1.35 per Class B share, up 11% and a new quarterly record. Management attributed the performance to disciplined execution across most segments despite inflationary cost pressures.

Fortis Inc.

Fortis reported a solid quarter with revenue up modestly and adjusted EPS up 3%. The company posted earnings per share of $0.78, compared to $0.76 in Q2 2025, supported by steady performance across its regulated utilities as they execute the 2026 capital plan. Revenue came in at $2.93B, reflecting growth from its rate base expansion. Fortis remains on track with its $28.8B five-year capital plan, targeting a mid-year rate base of $57.9B by 2030. The Tilbury Phase 1B LNG expansion in British Columbia was approved during the quarter, adding incremental capital opportunity. Management reaffirmed 4-6% Annual dividend growth guidance through 2030.

Granite REIT

Granite REIT reported a strong quarter with revenue up 10.6% to $165.1M and FFO per unit up 12.2% to $1.56. Same-property NOI grew 8.3% on a constant-currency cash basis, with in-place occupancy of 98.0% across 139 properties in seven countries. Logistics and industrial demand across North America and Europe remained firm with committed occupancy at 98.1%. AFFO per unit rose 2.4% to $1.26. The trust reaffirmed its 2026 AFFO per unit guidance of $5.40 to $5.55 implying 4% to 7% growth over 2025. The monthly distribution of $0.2958 per unit reflects the 4.4% increase from late 2025. Granite’s low payout ratio and diversified tenant base keeps the distribution well covered.

The Home Depot

Home Depot reported a strong quarter with revenue up 5.7% and adjusted EPS up 5.1%. Results were driven by demand for smaller projects, SRS and GMS, and $685M of tariff refunds. Comparable sales rose 1.7% (U.S. up 1.3%), the best comp since fiscal Q3 2022, with average tickets up 2.8% and transactions down 0.8%. Comps improved each month, Pro outperformed DIY, SRS comped above the company average, and digital sales grew 11%. Gross margin rose to 33.7% while operating margin slipped to 14.3%. Management reaffirmed fiscal 2026 guidance (sales up 2.5% to 4.5%, adjusted EPS flat to up 4%) and said housing turnover sits at record lows with no inflection in sight.

LeMaitre Vascular

LeMaitre Vascular reported a strong quarter with revenue up 10% and adjusted EPS up 23%. Sales reached $70.4M, driven by record performance across grafts (+23%), carotid shunts (+18%), and patches (+4%). The Artegraft international rollout continues to gain traction, now approved in 56 countries and representing 21% of total sales. EBITDA margins expanded on solid operating discipline. Management raised full-year guidance. The 25% dividend hike declared earlier this year shows confidence in the business model, and the balance sheet remains strong. LMAT is executing on its acquisition-led growth strategy while delivering record results across geographies.

Microsoft

Microsoft reported a strong Q4 FY2026, with revenue of $90.0B, 18% increase year over year, beating estimates by more than on-GAAP EPSAAP EPS of $4.74 rose 23%, well ahead of the $4.24 consensus. Azure crossed $100B in annual revenue for the first time, with Azure growth accelerating to 43%. Microsoft Cloud revenue reached $59.3B, up 27%. Intelligent Cloud revenue was $39.3B (+32%) and Productivity and Business Processes was $37.8B (+14%). Commercial remaining performance obligations surged 84% to $678B. Operating income rose 18% to $40.6B and net income grew 31% to $35.8B.

National Bank

National Bank reported a strong quarter with revenue up 18% and EPS up 26%. P&C net income was up 14%, driven by very strong loan growth, improving deposit margins and strong mutual-fund growth. Personal lending overall increased about 13% YoY. Organic commercial loan growth was 10%. Wealth Management was up 21% on higher revenue and fees. Capital Markets were up 32%, bolstered by Global Markets at +57% and equity structured-product origination. U.S. and Intl were the weak segments at +3% with higher PCLs slowing down growth. Global provisions for credit losses increased from $203M to $246M (+21%).

Royal Bank

Ironically, Royal Bank reported a weak quarter compared to the other Big Six with revenue up 10% and EPS up 11%. Results were partially offset by personal banking (-1%) as higher provisions for credit losses ruined the party. Total PCLs were up 14% to $1B this quarter. On a better note, commercial banking was up 12% on strong deposits (+9%) and loans (+4%). Wealth was up 32% on record revenues and higher AUM ($1.70T, +13%). Capital markets were up 16% on strong global markets and higher equities trading. Insurance was down 20% on lower Insurance Investment.

Stella-Jones

Stella-Jones reported a mixed quarter with revenue up 1% and adjusted EPS down 17%, as utility pole strength offset softer residential lumber and lower log volumes. EBITDA margin declined to 16% from 18.3%, impacted by site-specific environmental costs, higher fuel, and temporary inefficiencies tied to a steel-structure capacity expansion. Management expects second-half margins to recover as these headwinds ease. Cash generation was strong at $192M which was used to reduce net debt by over $100M in the first half. The quarterly dividend of $0.34 was maintained and Stella-Jones has grown its payout for 21 consecutive years.

Toromont Industries

Toromont Industries reported a strong quarter, with revenue of C$1.60B up 16% year over year. They reported basic EPS came in at C$1.53, flat versus Q2 2025, due to C$54.3M in purchase commitment expenses tied to increasing its AVL Manufacturing ownership from 60% to 80%. Adjusted EPS excluding those costs was C$2.20, up 42%. Operating income rose 41% to C$242.5M. The backlog reached a record C$2.9B, up from C$1.4B a year ago, driven by power systems and mining orders. AVL contributed C$170.6M in Q2 revenue.

Visa

Visa reported a strong fiscal Q3 2026, with net revenue of $11.6B which was up 14% year over year. Adjusted EPS of $3.32 rose 11%. Payments volume crossed $4 trillion for the first time and was up 10% on a constant-dollar basis. Total processed transactions reached 71.7B which was up 10%. Cross-border volume (ex-Europe) grew 12% in constant dollars. Data processing revenue rose 17% to $6.0B. Visa returned $6.2B to shareholders through buybacks and dividends, repurchasing 14.5M shares at a $330.71 per share average price.

Waste Connections

Waste Connections reported a strong quarter with revenue up 6.4% to $2.56B and adjusted EPS of $1.50, both beating analyst estimates. Solid waste organic growth was 6.7%, driven by core pricing of 5.6% plus fuel surcharges. Adjusted EBITDA margin expanded 70 bps to 32.8% despite fuel cost headwinds and lower commodity values. Management raised full-year guidance to revenue of $10.02-10.05B and adjusted EBITDA of $3.33-3.34B. Acquisitions with over $100M in annualized revenue were completed in the half.

My Entire Portfolio Updated for Q2 2026

Each quarter we run an exclusive report for Dividend Stocks Rock (DSR) members who subscribe to our very special additional service called DSR PRO. The PRO report includes a summary of each company’s earnings report for the period. We have been doing this for an entire year now and I wanted to share my own DSR PRO report for this portfolio. You can download the full PDF showing all the information about all my holdings. Results have been updated as of July 2^nd, 2026. The next quarterly report will be available in October.

Download my portfolio Q2 2026 report.

Dividend Income: $351.16 (-13.62% VS. August 2025)

The dividend is smaller this month because, last year, I sold my positions in Apple and Starbucks. All holdings increased their payments on the Canadian side.

Since I started this portfolio in September 2017, I have received a total of $37,864.26 CAD in dividends.  Keep in mind that this is a “pure dividend growth portfolio” as no capital can be added to this account other than retained and/or reinvested dividends. Therefore, all dividend growth is coming from the stocks and not from any additional capital being added to the account.

Final Thoughts

I started taking notes on what to look at for my year-end review. I’ll share my process in a workshop in December or early in January. The current economic situation calls for a good review that goes beyond current numbers.

I think it makes sense to position our portfolios to protect ourselves against a potential bear market and thrive once we get past the storm.

Cheers,

Mike.

The post Pension to LIRA: 9 Years of Real Returns, No New Money – Dividend Income Report appeared first on The Dividend Guy Blog.

That is not my line. It belongs to Todd Wenning, a dividend investor who spent years making the case for dividend growth stocks. He published it on Flyover Stocks. The Globe and Mail picked it up. A reader named Kevin sent it to me.

I read it twice. Then I did something you might not expect from a guy who has been following a dividend growth investing strategy since 2010.

I agreed with most of it.

Not all of it. But most of it.

Here is what died, what survived, and how I run a dividend portfolio in a market where the old playbook stopped working.

*Disclosure: I own Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Broadcom (AVGO) and Costco (COST). This is education, not advice. Do your own due diligence.

Is Dividend Investing Dead?

No. What died is the 3% to 4% starting yield paired with 6% to 7% growth. The dividend metrics still work as a screen for business quality, and dividend growers still exist.

That distinction matters, so let me walk through what changed and what did not.

Why the Dividend Playbook Worked in the First Place

Wenning’s original case rested on five ideas. They line up with the rules I teach at Dividend Stocks Rock.

Dividends come from cash flow, not accounting. A company can dress up earnings. It cannot dress up a wire transfer to your brokerage account. When a business raises its payment year after year, cash flow is growing behind it. If not, the board made a foolish decision that will surface within a few quarters.

A rising dividend signals confidence. Management is telling you they expect more cash next year than this year. That is a forecast with money attached to it.

Dividend growth points to a competitive advantage. A company that generates more cash than it needs to defend its position owns something the competition does not.

A dividend proves the board thinks about shareholders. Value gets converted into dollars that land in your account.

A dividend shrinks management’s sandbox. This is the one investors skip. Cash committed to shareholders is cash that cannot fund a bad acquisition. Capital allocation gets sharper when the budget gets smaller. That is the theory. It does not always play out. The incentive is real.

His target back then was a diversified portfolio yielding 3% to 4%, with cash flow per share growing 6% to 7% a year.

A paycheck today, and a raise that beat inflation.

Why That Portfolio No Longer Exists

A 3% to 4% yield paired with 6% to 7% cash flow growth has become rare. There are not enough of those companies left to fill a diversified portfolio.

Try to build it today. You will find a handful of names. Not forty.

Canadian banks used to fit the bill. For two decades they anchored every income portfolio in this country. Most of them now yield under 3%. The math that made them the automatic choice no longer works the same way.

Wenning points to three shifts. He is right on all three.

The Classic Staples Are Under Attack

Coca-Cola. Colgate-Palmolive. J.M. Smucker. Clorox. These were the Dividend Aristocrats you bought and forgot about.

They now compete against private label brands, influencer-driven upstarts and a shopper who reads labels. Add GLP-1 drugs reshaping how people eat, and the volume growth these businesses counted on gets harder to find.

Many of them pay out more than 75% of earnings. That leaves little room to reinvest, adapt or acquire their way out of the problem. Diageo cut its dividend in 2026. Ten years ago, nobody modeled that.

Boards Would Rather Buy Back Stock

Since the SEC cleared the path in 1982, buybacks have taken share from dividends. They are flexible. They are tax efficient in a taxable account. And the average new board member is 59 years old, which means these directors built their careers in the buyback era.

I have no problem with buybacks. A company that repurchases shares at a fair price and retires them creates value. Paired with a growing dividend, it is a strong package.

The problem is reliability. A buyback gets announced, then it speeds up, slows down or skips a quarter. Nobody holds a press conference to explain why. Worse, plenty of boards buy at the top and destroy value on the way down.

A dividend increase is a public promise with a track record attached. That is why I still prefer it.

The Index Got Younger

The average age of an S&P 500 company fell from 57 years to 15. Campbell’s, Newell Brands, Macy’s, Xerox and Harley-Davidson all left the index. Those companies were founded in 1869, 1903, 1858, 1906 and 1903.

The businesses replacing them are younger, faster and hungry for capital. They pay their people in stock, not their owners in dividends.

Where I Part Ways With Todd Wenning

The 3% to 4% yield model is dead. Dividend growth investing is not. Some of the best dividend growers today sit in the sectors blamed for killing the strategy.

Read his article again and you find the counterargument inside it.

He names GLP-1 drugs as a threat to staples. Who sells those drugs? Eli Lilly. A company with a strong dividend triangle and a long record of increases.

Costco appears in the story about the pressure on the old Staples. Costco is one of my holdings. It is one of the better dividend growers I own. Its yield sits well under his 3% floor.

He points to technology absorbing all the capital. Technology is one of the largest sectors in my portfolio. Broadcom. Alphabet. Apple. Microsoft. Small yields. Strong balance sheets. Dividend increases year after year after year.

His diagnosis is accurate. The conclusion drawn from it is too narrow.

What died is a yield target. What survived is the signal.

How I Invest Now: Yield Agnostic

I ignore the yield and read the dividend metrics as clues about business quality. Dividend trend, current yield against the 5-year average, payout ratio, dividend triangle.

I started this in 2010. Sixteen years later I run the same process.

I do not care about the yield. I care about what the dividend tells me. 

Here is the checklist.

1. The dividend growth trend. Is the payment rising every year? For how long? Did the growth rate slow down? A company that goes from 8% raises to 2% raises is telling you something about its cash flow before the income statement does.
2. The current yield against the 5-year average yield. A yield above the historical average can flag a discount. A yield under it can flag a stretched price. That is a valuation clue you get for free.
3. The payout ratios. Both the earnings payout and the cash payout. A rising payout ratio with flat cash flow is a warning sign. That is how a dividend cut gets built.
4. The dividend triangle. Revenue growth, earnings growth, dividend growth. All three pointing up over five years. This screen works on a 0.6% yielder the same way it works on a 5% yielder.

Notice what is missing from that list. A minimum yield.

Dividend Investing: Yield Agnostic Investors Will Win

That is the change. A company paying 0.8% and raising the dividend 15% a year tells me more about its future than a company paying 6% with a frozen payment for three years.

Companies that pay no dividend at all give me none of these metrics. That is not a rule against owning them. It is the reason my process starts with dividend payers.

How Do You Retire on a Portfolio Yielding 1.5%?

You build your own dividend. Treat the portfolio as a holding company and pay yourself a distribution funded by dividends, interest, fund distributions and capital gains. You set the income, not the boards of the companies you own.

This is the objection I get every week, and a reader named Edward sent me a version of it.

Fair question. The answer starts by dropping an assumption most dividend investors carry without examining it. The assumption is that retirement income must arrive as a dividend payment.

It does not.

Think of your portfolio as a holding company. You are the CEO. Your job is to pay yourself a distribution. That payment can come from dividends, interest, fund distributions and capital gains. You decide the mix.

This puts you in control of two things at once. You control which businesses you own, because you are no longer forced into high-yield names to hit an income number. And you control your income, because you set the amount instead of waiting for a board to set it for you.

The dividend still matters. It funds part of the payment and it confirms the business is healthy. It stops being the only source of your paycheck.

I own technology companies yielding 0.7% next to companies paying 5%. The portfolio pays me what I decide it pays me.

Dividend Income for Life: What and When to Buy in an Overvalued Market?

Reading a framework is one thing. Watching someone run it against a market at an all-time high is another.

On Thursday, September 17 at 1 PM ET, I am hosting a free webinar: Dividend Income for Life.

I cover why traditional dividend investing is failing investors, how yield traps set up the cuts that follow, and the method that puts quality ahead of yield. Then, how to build a retirement paycheck from your own portfolio, including the withdrawal order and the cash reserve, with a full retirement portfolio example built for income that lasts.

About 50 minutes, then I stay for an open Q&A and answer questions live.

Registration is free, and everyone who signs up gets the replay.

SAVE YOUR SPOT NOW

The post Is Dividend Investing Dead? What Died and What Didn’t appeared first on The Dividend Guy Blog.

Now open Power Corporation’s second quarter and look for the Wealthsimple line.

You will find Great-West Lifeco at $871 million. You will find IGM Financial at $211 million. You will find Sagard at $33 million. You will not find Wealthsimple.

That gap between the story and the statement is the whole article.

Here is the short version. Wealthsimple is a real success and the growth is not in question. It is also a business whose profits never reach Power Corporation’s income statement, for a reason most shareholders have never been told.

I am a client, by the way. They dangled a transfer bonus in front of me and I took it, same as a lot of you did.

*Disclosure: I am a Wealthsimple client. I own National Bank (NA.TO) and Royal Bank (RY.TO). I do not own Power Corporation (POW.TO) or IGM Financial (IGM.TO). This is education, not advice. Do your own due diligence.*

Here is the full breakdown on video if you would rather watch it than read it.

How Big Is Wealthsimple Compared to the Banks?

$155.6 billion in assets under administration puts Wealthsimple in the top three or four brokerages in Canada. Questrade holds about $50 billion. TD and RBC sit somewhere near $200 billion to $250 billion.

Those numbers took work to assemble. Wealthsimple is private, so it discloses what it wants to disclose. The banks are public and disclose plenty, but not this. They report wealth. They report investments. Not one of them breaks out what sits inside RBC Direct Investing, Investor’s Edge, BMO InvestorLine or National Bank Direct Brokerage on its own.

I searched. I read financial statements. I used AI to help me dig. The cleanest comparison I found was Questrade, which is not a bank but is a direct competitor, and it has declared roughly $50 billion.

So Wealthsimple is three times the size of Questrade. TD is likely the largest platform in the country with Royal Bank close behind, and my estimate puts each of them in the $200 billion to $250 billion range.

Let me be clear about something before I take this apart. The success is real. Close to one in four Canadians between 18 and 40 uses at least one Wealthsimple product. J.D. Power has ranked it the top brokerage in the country for customer satisfaction three years running. The product is good and I use it.

Top three or four in Canada, from a standing start in 2014. I am not going to pretend that is not impressive.

Then you ask the second question, and everything changes.

What Is the Difference Between Assets Under Administration and Assets Under Management?

Assets under management means the firm charges a fee to manage the money. Assets under administration means the firm holds the money for you. Same dollars on the page, different revenue behind them.

This distinction gets skipped in almost every headline written about Wealthsimple, and it does more damage than any other error in this story.

A dollar under management pays the firm every year, whether the client does anything or not. Think of the 1% management fee your advisor charges. That is a subscription with your name on it.

A dollar under administration pays the firm when the client does something. A trade, a currency conversion, a margin loan, a subscription. If the client buys three ETFs and goes quiet for a decade, that dollar generates close to nothing.

Wealthsimple’s $155.6 billion is mostly the second kind.

Hold that thought while we look at where the money comes from.

How Does Wealthsimple Make Money?

Four sources. Management fees on the managed portfolios, paid subscriptions, foreign exchange fees on currency conversion, and net interest margin on cash balances and margin lending.

Let me take them one at a time.

Management fees. Wealthsimple runs a robo advisor, and that piece behaves like traditional asset management. Recurring, predictable, tied to the asset base. This is the good stuff, and it is a slice of the total, not the whole thing.

Subscriptions. Tiered plans that unlock features and better rates. Small per client, meaningful across 3.6 million of them.

Foreign exchange. Every time a Canadian buys a US stock, dollars get converted. That conversion carries a fee.

Net interest margin. The spread between what Wealthsimple pays you on your cash and what it earns on that cash, plus the interest charged on margin loans.

Look at that list and ask which of those four you feed.

If you hold Canadian dividend stocks in a Wealthsimple account, do not trade often, do not use margin, do not carry a big cash balance and do not convert currency, you are a client who costs money to serve and pays close to nothing. Trading is free. The account is free.

I know this pattern well. I worked in a bank for more than ten years and I had clients exactly like that. Big portfolios, quiet accounts, no options, no margin, no active trading. Lovely people. Terrible revenue.

Now multiply that across millions of accounts.

The one thing worth flagging is that this is changing. Wealthsimple’s own second quarter release credits chequing and spending products for the flows. Chequing balances and credit cards feed net interest margin and interchange, which are better revenue lines than a buy and hold brokerage account. The mix is improving. It is still not a 1% management fee.

What Does Wealthsimple Earn on $155 Billion?

My estimate is $1 billion to $1.2 billion of annual revenue and $100 million to $250 million of net income. Wealthsimple is private and publishes neither figure, so treat this as arithmetic, not disclosure.

Start with the one number we have. Back in 2024, with an asset base near $50 billion, Wealthsimple was running about $129 million of revenue in a quarter. Annualize it and you get close to $500 million a year at that size.

The asset base is now about three times larger. Apply the same ratio and you land near $300 million to $400 million per quarter, or $1 billion to $1.2 billion for a full year.

Now the margin. Wealthsimple turned profitable about two years ago, so this is a business still early in its margin story. At a 10% to 20% net margin, $1 billion of revenue produces $100 million to $250 million of net income.

Take the top of that range. Call it $250 million. It flatters them, and the point still holds.

Why Doesn’t Wealthsimple Show Up in Power Corporation’s Earnings?

Because of how the stake is accounted for. IGM carries Wealthsimple at fair value through other comprehensive income, and the change in fair value is not recorded in earnings. The gains land in book value, not on the income statement.

This is the part I did not expect to find, and it is a better answer than the one I went looking for.

I assumed Wealthsimple was too small to break out. The real reason is an accounting choice.

IGM Financial owns about 25% of Wealthsimple and carries the position at fair value through other comprehensive income. In plain English, IGM revalues the stake every quarter and the change goes straight to equity. It never touches the earnings line.

At June 30, 2026, IGM marked its stake at $2.6 billion, up 15% in a single quarter. The full Power group interest, held across Power Corporation, IGM and Portage, was valued at $4.4 billion net of carried interest, up 15% on the same basis.

Now look at how Power Corporation reported the quarter. Adjusted net earnings of $974 million. Great-West Lifeco contributed $871 million. IGM Financial contributed $211 million. Sagard contributed $33 million. Groupe Bruxelles Lambert lost $5 million and Power Sustainable lost $4 million.

Add the pieces and you have the quarter. There is no Wealthsimple line because there is nothing to put on one.

Great-West Lifeco alone accounted for close to 90% of Power Corporation’s adjusted net earnings. Insurance. The least exciting business in the group.

That is the sentence I want you to carry out of this article.

So What Are You Actually Buying?

A valuation mark, not a stream of earnings. Wealthsimple’s growth raises Power Corporation’s book value. It contributes nothing to the profits that fund the dividend.

Everything we estimated about Wealthsimple’s profit still matters, and not the way you would expect. That profit never reaches Power’s income statement. What reaches Power is a valuation, and that valuation gets set by revenue expectations and by what public peers trade at.

When IGM raised its mark 15% in a single quarter, it pointed at Wealthsimple’s performance and at revised revenue expectations as the reason. That is a judgment about the future, refreshed every ninety days.

So your exposure to Wealthsimple through Power Corporation is a mark. Marks move in both directions.

Dividends get paid out of earnings.

How Does That Compare to a Bank?

National Bank, the smallest of the Big 6, earned about $4 billion last year. Royal Bank earned about $20 billion. Wealthsimple, on my most generous estimate, earns a quarter of a billion.

My own guess sits at the lower end. They have been profitable for two years, and early profitability is thin. I would put the number closer to $150 million.

Here is the comparison that explains the whole gap. A client with $1 million invested in a fund charging 1% generates $10,000 of revenue a year. Every year. Without anyone lifting a finger.

To generate that same $10,000 from self-directed brokerage accounts, you might need $10 million to $50 million of assets from investors who buy, hold, and pay no trading fees.

Same dollars on a statement. Two different businesses.

What Is Wealthsimple Worth?

About $10 billion, based on IGM’s own mark. A 25% stake carried at $2.6 billion puts the whole company near $10 billion, and the Power group’s combined interest sits at $4.4 billion.

That is a serious number for a company that opened its doors in 2014.

It is also a number any of the Big 6 could absorb without straining a balance sheet. Royal Bank earns twice that in a single year.

I do not expect a sale. Power Corporation is not a distressed seller and the mark keeps going up. But the idea that Wealthsimple is untouchable, or that it is about to eat the banks’ lunch, does not survive contact with the numbers.

What Should You Take From This?

Separate the story from the statement. A great narrative and a meaningful profit contribution are two different things, and only one of them shows up in what you own.

Wealthsimple is good at what it does. The growth is real. The client count is real. If you use the platform and like it, keep using it. I do.

But if you hold Power Corporation because you think you are buying a piece of the Wealthsimple story, look at what you are buying. A $4.4 billion mark, and none of the $974 million of earnings the company reported last quarter. The businesses paying your dividend are insurance and traditional wealth management.

This is the habit I want you to build. When you hear a number that sounds huge, ask what it earns, and then ask where that number lands in the financial statements.

Assets are not revenue. Revenue is not profit. Profit for the company is not profit for your slice of it. And a mark on a balance sheet is not a dividend.

Four questions. They take ten minutes. They protect you from most of what passes for analysis on the internet.

Learn to Read the Numbers Yourself

Everything in this article came from public documents and a calculator. A quarterly press release, one line in IGM’s disclosure about how the stake is carried, a few segment figures, and some arithmetic. No insider access. No expensive terminal.

That skill is what separates an investor who reacts to headlines from one who checks them. The line that explains this entire article, the one about fair value through other comprehensive income, sits in a place almost nobody reads.

It is also what the third course in Dividend Simplified teaches. Simplified Quarterly Earnings walks you through a quarterly report the way I walk through one. Which lines matter, which ones are noise, how to tell growth that came from the business apart from growth that came from an accounting choice, and how to decide in fifteen minutes whether your thesis is still intact.

The other two courses cover the Simplified Buy Process and the Simplified Sell Process. Three courses, $150 of value, fifteen dollars for the set.

Get Dividend Simplified here

The post Wealthsimple Revenue: Why $155 Billion Earns Less Than You Think appeared first on The Dividend Guy Blog.

Both used the word record. Neither was exaggerating.

This is the best week of the summer if you own Canadian banks, and it started about as well as it could have. I went through both quarters line by line looking for a problem. In the operations, I could not find one.

I found something else instead. It is not in the results. It is in the price.

Here is the short version. The growth is real. Most of it came from two segments that only perform like this in a bull market. And both stocks now trade about 39% above the price-to-earnings ratio they have averaged over the past five years.

*Disclosure: I own National Bank (NA.TO) and Royal Bank (RY.TO). I do not own Scotiabank (BNS.TO) or Bank of Montreal (BMO.TO). This is education, not advice. Do your own due diligence.*

Here is the full breakdown on video if you would rather watch it than read it.

How Did Scotiabank and BMO Do in Q3 2026?

Both posted record quarters. Scotiabank grew earnings per share 21% on revenue up 11%. BMO grew adjusted earnings per share 22% on revenue up 10%.

Start with Scotiabank, and keep in mind it is not my favourite name in the group.

Revenue rose 11%. Earnings per share rose 21%. The CEO called it a record quarter, and the segment numbers back him up.

Canadian banking net earnings were up 12% on stronger revenue and a better interest margin. That is the core business doing what it is supposed to do. Higher provisions for credit losses, mostly in the corporate and commercial portfolio, held it back a little, and I will come back to that.

International banking rose 8% on better margins, better revenue, and lower provisions.

That number deserves a sentence of its own. The whole Scotiabank thesis is that international exposure lets it outperform a bank built only for Canada. This quarter, international grew 8% while Canadian banking grew 12%. Positive, and high single digit is nothing to complain about. It is still not the outperformance the strategy promises.

Then the two that carried the quarter. Wealth management up 23%. Capital markets up 37%.

BMO told a similar story with different numbers.

Revenue up 10%. Adjusted earnings per share up 22%. I use the adjusted figure because it gives the cleaner picture of the operating business.

Canadian personal and commercial banking rose 15%, built on a 6% revenue increase and lower provisions for credit losses. More loans issued, more interest earned, and less money set aside for bad debt.

US banking rose 11%, again on higher net interest income, a higher net interest margin, and lower provisions.

Wealth management rose 22%. That came in despite insurance falling 8% against last year, and that decline is not a business slowing down. It reflects assets BMO sold in earlier quarters.

And capital markets rose 45%.

Read that last one again. Global markets, investment banking, corporate banking, all firing at once. Am I describing an AI chip company or a boring, stable Canadian bank?

Where Did the Growth Actually Come From?

Capital markets and wealth management. Scotiabank grew capital markets 37% and wealth 23%. BMO grew capital markets 45% and wealth 22%.

Line the segments up and the pattern is impossible to miss.

The banking businesses, the parts that take deposits and make loans, grew between 8% and 15%. Good numbers. Normal numbers.

The market-linked businesses grew between 22% and 45%.

That gap is the entire quarter.

Here is why it works this way. Wealth management earns a percentage of assets under administration. When markets rise, that asset base rises with them, and so does the fee. The bank does not have to win a single new client to make more money. Its existing clients got richer, so the bank did too.

I worked in a bank for more than ten years, and I can tell you what that looks like on the ground. Trying to move a client’s account in a rising market is close to impossible. You call, you are professional, they like you fine. Then they tell you they just got their statement, they are up 12% this year, and why would they change something that is not broken? Totally fair question.

So the business is sticky on the way up.

Capital markets is the same story, with more leverage. Market making, order flow, new issues, institutional demand. When everyone is bullish, there is demand for all of it, and the bank takes a cut of every piece.

Both of those work in reverse.

What Are Provisions for Credit Losses Telling You?

They split this quarter. Scotiabank raised provisions 3.7% to $1.079 billion. BMO cut provisions 9% to $722 million.

Provisions for credit losses are the money a bank sets aside for loans it expects will not be repaid. It is a judgment the bank makes about its own loan book. Set aside less and reported earnings go up. Set aside more, and they go down.

That makes it the biggest swing factor in a bank quarter, and the line most investors skip.

Scotiabank raised its provisions 3.7%, to $1.079 billion. A small increase, concentrated in the corporate and commercial portfolio.

BMO went the other way and cut its provisions 9%, to $722 million.

Put those side by side and it changes how you read the headline growth. BMO’s Canadian personal and commercial segment grew 15% on a 6% revenue increase. Some of that gap is the operating business. Some of it is the provisions line moving in BMO’s favour.

Neither bank did anything improper. Releasing provisions when your credit book is performing is exactly what a bank should do. But a quarter built on falling provisions is a different quarter from one built on growing revenue, and the difference matters if you plan to hold the stock for a decade rather than a quarter.

The bigger signal is the one both readings share. Loans are getting paid. Despite tariff threats, commercial wars, and inflation, the economy is still resilient enough for these banks to make a lot of money.

Why Does the Canadian Bank Valuation Look Stretched?

Both trade roughly 39% above their own five-year average. BMO sits near 18 times earnings against an average of 13. Scotiabank near 16.7 against 12.

This is where the good news stops.

BMO trades near 18 times earnings. Its five-year average is about 13. That is a premium of 38.5%.

Scotiabank trades near 16.7 times earnings. Its five-year average is about 12. That is a premium of roughly 39%.

Scotiabank’s lower absolute multiple is not a bargain, by the way. It is earned. Scotiabank has lagged the other five on revenue and earnings growth over five, ten, and fifteen years, so the market has always paid less for it. That discount is justified. What is harder to justify is the same 39% premium sitting on top of it.

You are paying about 40% more than you have paid, on average, for the past five years. For both banks.

That is the number I keep coming back to.

What Happens When the Bull Market Ends?

The market-linked segments shrink with the market. A 10% to 15% drop in bank stocks at that point would be ordinary, not a crisis.

Wealth management and capital markets have posted double-digit growth quarter after quarter after quarter. That is the engine behind both of these results, and behind a good part of the premium.

It will not run at this speed forever. Markets are cyclical. At some point growth slows, or we get a bear market, because that is what markets do.

When it happens, those two segments shrink with it. Fee income on a smaller asset base. Less issuance. Less institutional demand. And the earnings that justify an 18 times multiple stop showing up.

So if your bank stocks drop 10% or 15% at that point, understand that nothing has broken. That would be normal.

Consider yourself warned, and then do nothing with the warning that you would not have done anyway. I am not telling you to sell. I am not changing a thing in my own portfolio. What I am saying is that knowing what you own, and how much of it you own, is worth more right now than it was two years ago, when the price left more room for a mistake.

What About the Rest of the Big 6?

National Bank reported Wednesday. Royal Bank and TD report this morning. All six Q3 releases land inside three days.

Scotiabank and BMO opened the week and set a high bar. National Bank followed on Wednesday. Royal Bank and TD close it out this morning.

If the first names set the tone, the rest should look similar. Strong operating results, a large contribution from the market-linked segments, and multiples that have moved a long way from their own history.

The thing to watch across all six is not the headline beat. It is the split between the banking segments and the market-linked ones, and which direction provisions moved.

I just did a live this morning to share a recap. Watch it here:

Get the Free Canadian Banks Report

All six banks reported within three days, and by the weekend most coverage will have moved on to something else.

So I built a complete report on the Big 6. It covers each business model, the latest quarter for all six, and a full section on valuation, because that is the part that is getting crazy.

It is free, and it goes out tomorrow morning, Friday, August 28th. Today is the last day to register if you want it in that first send.

You have to be on the newsletter to receive it.

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The post BMO and Scotiabank Earnings: Great Results at a 39% Premium appeared first on The Dividend Guy Blog.

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.