Includes Apple Inc., Canadian National Railway Co., Coca-Cola Co., Walt Disney Co., Johnson & Johnson, SNC-Lavalin Group Inc., Telus Corp., Wal-Mart Stores Inc. and National Bank of Canada.
Mike McNeil's start as an investor was initially encouraging. After landing a bank job in 2003, he got a $20,000 line of credit and began trading high-flying stocks, scoring a $70,000 gain within three years.
Emboldened by his success, Mr. McNeil fell into a trap common to investors when times are good and "started to take additional risk." The biggest setback came in 2006 when half his money was lost in one trade.
After much reading, he switched to dividend investing. He also started a blog on dividends (The Dividend Guy), which soon grew into an online business of several dividend websites.
He is now leaving his full-time job in the finance industry. Supported by dividends and online income, he is about to take a year-long road trip with his wife and children.
How he invests
Mr. McNeil began his conversion to dividend investing around 2006. "I like dividend companies because they are more stable and don't demand that I look at the markets every day," he says. That means more time for family and his online business.
High dividend yields do not necessarily equal high returns: Better to screen for consistent dividend growth because a business that regularly raises its dividend is usually a strong one, he says. Its dividend also provides investors with an income stream that usually keeps up with inflation.
To assess the likelihood of a company continuing to hike its dividend in the future, the past track record can be examined. Mr. McNeil also analyzes the company's business model for enduring competitive advantages.
He believes in having a dividend portfolio only if it is doing better than the simple approach of buying and holding an index fund or exchange-traded fund. He thus compares his portfolio annually against select dividend ETFs and has found the dividend portfolio to be the better performer over the past four years since the benchmarking exercise began.
His dividend portfolio contains solid companies held for the long term. But it also has a growth component that includes companies with good growth prospects for the next 18 to 24 months.
"I sat down and read academic studies to a point that I was able to draft my own investment strategy and detailed investment process."
Before commencing dividend investing, he put a down payment on a house but then encountered a big loss in the stock market, requiring him to borrow from his parents to finalize the purchase.
Take the time to establish your investing strategy."