What could be finer than that perfect dividend stock: a good, solid investment that delivers a reliable yield and keeps the money flowing into your bank account even when times are tough.
What's the best way to find it, then? Where do you start looking? And what makes one better than another.
Bruce Cooper, managing director at TD Asset Management and manager of the TD Global Dividend Fund, took questions at noon on Tuesday, September 15th.
Bruce Cooper, managing director, TD Asset Management Inc. and manager of the TD Global Dividend Fund
Mr. Cooper is the head of all fundamental equity teams within TD Asset Management Inc., overseeing the management of the Canadian, U.S, and international equity portfolios, as well as a hedge fund team. He also manages the TD Global Dividend Fund and is a member of TDAM’s Asset Allocation Committee.
Mr. Cooper spent three years working in TDAM’s UK office and returned to Toronto in 2005 to continue to build the team’s international expertise. Prior to joining the London office, Bruce managed the TD Canadian Small Cap Fund for several years and the TD Private Small/Mid Cap Fund. He has also worked as an analyst in several sectors, including industrial, health care and banking. Prior to joining TD, he worked in proprietary trading for Lancaster Financial and in the equity research department at Wood Gundy. He received a B. Comm from Queen’s University in 1988, an MA in Political Science from McGill University in 1991. He is a CFA charterholder.
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Sonali Verma, Globe Investor: Hello, everyone, thanks for joining us! We've got quite a few questions in the queue, so let's get started.
Mike Ouellette writes: Does the importance of owning dividend-paying stock diminish when your investment is very small?
Bruce Cooper: Mike, the philosophy around dividend investing does not relate to the size of your portfolio. It really starts from the premise that it makes sense, no matter how much money you have, to try and preserve your capital and grow it in a prudent, conservative way. If you buy the stocks of companies that pay dividends, you are generally buying shares in companies that have strong balance sheets, stable businesses and predictable cash flow.
This is particularly true if you focus on companies that have a very long track record of paying dividends and of increasing their dividends over time. We have found that companies that increase their dividends over time tend to outperform the market with less volatility than the market.
Of course, with all investments, you need to do your research and a dividend is not a guarantee. You want to satisfy yourself that the dividend is sustainable and, ideally, that the company can increase it over time.
Ram Putra writes: Is Great West Life a good investment considering the volatility in the market? Thanks.
Bruce Cooper: Ram, Great West GWO-T is not a stock that I hold in my portfolio. It has a reputation for being conservatively run and it was not heavily involved in the variable annuity business, which got some other insurance companies into trouble. It has a strong track record of increasing its dividends over time, which is a characteristic that we like to see.
When looking at investments in the financial services industry, we look for scale, conservative management, strong balance sheets and a consistent track record. I am not familiar enough with Great West to know whether it satisfies these criteria.
Sonali Verma, Globe Investor: We have a couple of questions on ETFs, though I realise that there might be a slight conflict of interest here, since you run a mutual fund yourself. Still, any advice would be appreciated.
