Investment Club Meeting on February 20, 2024 (Webinar)
Ellen's Investment Club (Toronto Central Investment Share Club)
Regular Session
Tuesday, February 20, 2024, 7:00 – 9:00 P.M.
By videoconference
1. Member introduction
2. Approve Agenda
3. Ellen Roseman will do a presentation about the Beat the TSX (BTSX) strategy. It’s similar to the Dogs of the Dow stock picking strategy devoted to selecting the highest paying dividend stocks in the Dow Jones Industrial Average.
How does the BTSX approach work?
- Find the TSX 60 Index and sort by dividend yield.
- Select the top 10 yielding stocks of that index provided they have a history of consistent dividend payments. Usually these will be “TURF” stocks (T = telecoms, U = utilities, R = REITs, and F = financials). Avoid companies with any recent dividend cuts, stopping their dividends, etc.
- Purchase your 10 stocks in equal parts and hold each stock for one year. At this point, your top 10 list is reconstituted and repeated the following year.
- Repeat annually.
Here is the current list of BTSX stocks, with prices, dividends and yields, from DividendStrategy.ca.
David Stanley, who started tracking the results of the BTSX strategy back in 1987, found that individual investors could get higher returns over the long term than if they tracked the full S&P/TSX 60 index.
“Beating the TSX is a simple method of selecting Canadian dividend-paying stocks that rarely offers spectacular short-term returns,”
says Matt Poyner of DividendStrategy.ca. In fact, in 2023 it lagged the index by about 3.5 percentage points. But, on average, it has performed better than the index by 2.66 percentage points to be exact – and, as Charlie Munger says, that’s what matters in investing.
Mark Seed runs a popular investing site, called MyOwnAdvisor.ca. He is a dividend investor, but he has a problem with following the BTSX strategy.
“I tend to avoid selling assets, so I don’t really subscribe to the set rules of this approach. Not many people / DIY investors I know do, since BTSX is about owning and turning over 10 stocks. Probably not that great for diversification benefits to reduce portfolio risk,” he says.
“Even if you decide not to invest in individual stocks (no problem there!), consider buying and holding and adding to low-cost ETF XIU. “XIU happens to be one of my favourite Canadian ETFs for dividend
income and growth.”
4. Discussion of dividend investing
- Do you have a preference for buying Canadian and/or U.S. dividend stocks?
- How do you decide on which stocks to buy?
- Do you look at the dividend yield, which may be high because the stock price has declined?
- Or do you look for stocks that have a history of increasing their dividends?
- If you like stocks with consistent dividend growth, do you own any of the ETFs that hold such stocks, such as:
- 10 of the best Canadian dividend ETFs for February 2024, by Mathieu Litalien of StockTrades.ca
- The best dividend stocks in Canada 2024, by MoneySense.ca
- Canadians love dividends. Here’s where to find them in ETFs, by Rudy Luukko of Investment Executive
5. Ellen's Investment Club Stock Contest
- Tom Loftus will update the results of our stock picks in a chart that shows who’s ahead
6. General discussions
- What are members buying, selling, or watching?
- What's the best or worst move you made recently?
- Would you do anything differently? If so, why not?
7. Next meeting: March 19, 2024, 7 to 9 p.m.
8. Adjourn
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