Occupation: Semi-retired consultant and author
Portfolio: BCE, Fortis Inc., TransAlta Corp., TransCanada Corp., Manitoba Telecom Services, TD Bank, Bank of Nova Scotia, Royal Bank of Canada, Bank of Montreal, CIBC.
"It's not what you make that matters, but what you get into your pocket!" Truer words have never been spoken about investing steadily and slowly as a way to accumulate wealth, and they come from Hedley Dimock, who worked for the YMCA making less than $50,000 a year and still managed to amass $1-million by the time he was 50.
How he got rich: Mr. Dimock says just a few simple steps account for his wealth. He began "paying himself first" when he was 30. "Each month, we automatically deducted an amount from my paycheque and put it in our savings account."
Shortly after, he began investing in things that reflected his lifestyle and values, including a piece of land for a summer cottage and a derelict farm he fixed up and later sold. He also made other things he was interested in into businesses, and worked hard to defer whatever taxes he could. For example, he invests in split shares - dividend-paying stocks that have been separated into a purely dividend-earning portion, and a capital portion. The capital portion is where he puts his money, enjoying not only the leveraged return compared to the underlying stock's performance, but also tax-friendly growth.
What he discovered: "It didn't make as much difference as to exactly what I invested in and how much, as long as I stuck to the plan," he said. He kept his savings intact and if he did draw on what he had put away, he quickly replaced the money. "I always had the prior year's total plus my earnings. And that compound interest over several decades made a big difference."
How he picks stocks: Mr. Dimock attributes a lot of his success to seeking out stocks that increased their dividend every year. "I got a list of about 10 or 12 that I stuck with." That list included a number of utilities, as well as all five big banks.
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How he stayed rich through the recession: Simply put, he did nothing. "Everybody said, 'Ditch the banks! They're going broke!' I looked at our banks and I said two things. One, I do not think our banks are going to go bankrupt or have serious problems. Two, there's always a double-edged sword." In short, he asked himself what he would buy instead, and the answer was nothing. So he held all his bank shares, which together are his single largest investment, and enjoyed their strong recovery.
Best move: He said his all-round best move has been holding all the banks, as well as bank split shares. Second-best is one particular investment, Bank of Nova Scotia, along with pipeline powerhouse Enbridge Inc. "I've held it for at least 10 years, and during the recession it hardly moved."
Worst move: He said worst move was Seamark Asset Management Ltd, a Halifax-based investment service. He bought the stock seven years ago at its high-water mark, after which it went steadily down. Shares ceased trading last January, when the firm became a wholly owned subsidiary of Matrix Asset Management Inc.
Advice: "Stick to your plan. Pay yourself first, and don't get excited or nervous about the market's movements up and down."
Special to The Globe and Mail
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