Safe Dividend Investing
In 2000, I lost $300,000 in mutual funds that an investment advisor had put my lifesavings into.... I lost it because I had entrusted it to an industry that does not educate investors nor encourage them to look closely at what that industry is doing with their money..... I set out to find a better, safer way to invest..... My podcasts relate to what I learned in creating a generous, reliable income and in growing my wealth.... A few of the more important lessons I learned and explore are:.... (1) It is critical that you become a self-directed investor.....(2) If you can not easily measure the risk and potential in an investment, then do not invest in it. This excludes from your portfolio bundled investment devices, like mutual funds, ETFs and Index funds,..... (3) Financially strong companies who have paid “good dividends” for decades will continue to stay strong and continue to pay good dividends because it is both part of their "character" and in their executives selfish interest.....(4) Diversification is critical. Investing equally in the best 20 strong dividend stocks is the ideal.....A portfolio of 20 limits your risk in any one stock to 5% of your wealth..... No matter how strong you think a stock is, do not fall in love with it..... I have lived very well off my steady dividend income for 18 years, through two market crashes and one pandemic. I have watched my portfolio’s capital more than triple from where I started, despite taking out a generous dividend income every year to live on... In charts, for my second investment book,(Safer Better Dividend Investing), I spent months scoring all 628 dividend stocks paying dividends of 6% or greater traded on the TSX, NYSE and the NASDAQ. I discovered dozens of stocks that can provide not only a generous dividend income but outstanding capital growth.....Financial independence is realizable for careful, patient, dividend investors.
Safe Dividend Investing
Podcast 232- AMERICAN, UNITED AND DELTA AIRLINES - ANALYSIS AND COMPARISON
Welcome to Safe Dividend Investing's Podcast 232. This week's podcast is a departure from the format of the last 40 podcasts. Today I am doing a comparison between three major US airlines : American Airlines Group Inc (AAL), United Airlines Holdings Inc (UAL) and Delta Air Lines Inc (DAL).
There are many large publicly traded companies on stock markets from which we buy merchandise and services . At times you can be puzzled by their policies and behavior. By analyzing their public stock market information, that is freely and immediately available, you can gain surprising insights into their policies and behavior.
If you analyze these three airlines, as if you were buying shares in them, you can quickly understand how their financial strength could negatively impact their customers. This knowledge can help guide you in your buying decisions.
The objective of my podcasts and my six investment books is to show investors that they can easily become successful self-directed investors. Not only can they realize a safe dividend income of 6 to 8 percent but show substantial gains in the value of their portfolios. Through self-directed investing, thousands of dollars in investment fees, commissions and charges can also be saved . A great sense of security is realized from knowing exactly what you are invested in and why you chose to invest in that safe strong stock.
For more information on self-directed investing go to my website www.informus.ca and listening to the previous 231 weekly podcasts.
The first 160 podcasts are devoted to answering questions from investors just like you.
Ian Duncan MacDonald
imacd@informus.ca
New York Telephone 929-800-2397 or Toronto 416-2454-994
Ian Duncan MacDonald
Author and Commercial Risk Consultant,
President of Informus Inc
2 Vista Humber Drive
Toronto, Ontario
Canada, M9P 3R7
Toronto Telephone - 416-245-4994
New York Telephone - 929-800-2397
imacd@informus.ca
Safe Dividend Investing
26 July 2025
Podcast 232
Greetings to listeners all around the world. Welcome to Safe Dividend Investing’s Podcast # 232, on July 26 of 2025. My name is Ian Duncan MacDonald, author of six investment books.
Today’s podcast is going to be a departure from the last 40 podcasts. I will not be using 6 selectors to identify and score the 5 outstanding US dividend stocks and the 5 Canadian stocks. This means if you wish this information, you could follow the procedure outlined in the previous weeks' Podcasts to identify these stocks. To score them using my IDM software requires investing in one of my books (for less than $10) and sending me an email at imacd@informus.ca requesting that a free copy of the software be emailed to you. If you want to manually calculate the scores, I will send you instructions on how to do it manually. This will also be free of charge. The software just makes it faster and easier.
What I want to do today is illustrate that scoring stocks could also assist you in determining problems with publicly traded companies supplying you with all kinds of services. For example, I am having what I think is an unusual problem in getting a refund from American Airlines. They admit they made an error and that they owe me close to $700. Rather than just returning the money to my credit card, they are being difficult. Trying to make contact with someone at American Airlines to discuss the matter seems almost impossible. They refer me back to Expedia who booked the trip and Expedia refers me back to American Airlines. Their executives seem to be protected by a moat of lackeys.
This lack of customer service surprises me. At one time I ran an operation with tens of thousands of customers. Thinking back. I am now surprised how few customers with a problem would contact me directly for help in solving a problem or getting a refund. A quick telephone call to me always solved their problem. Sometimes it would be my managers in distant offices seeking to solve one of their customer problems. I was quick to resolve any problem with a customer to the customer’s satisfaction. We were very profitable. I had little doubt that the thousands of dollars I was parting with would settle their problems and be returned with future business from these customers.
So, why has American Airlines adopted an attitude of not taking advantage of a complaint to show how good they are at keeping their customers happy? Could it be that they have problems with revenues and expenses? Perhaps all airlines are having financial problems right now.
I decided to treat American Airlines as if it were a company that I wanted buy shares in. Since nothing is good or bad except by comparison, I also decided to score Delta Airlines and United Airlines. I think you will find the comparison interesting:
The first data element to be looked at in a score is their share price. A high share price is an indication of strength. The highest share price was United at $90.62, the lowest was American at $11.65. Delta was in the middle at $55.00.
The second element was the share price 4 years ago in July of 2021. American was at $20.20; Delta was at $39.30 and United was at $46.72. In the last 4 years American has declined by almost 50%, Delta increased its share price by almost 50% and United has increased its share price by more than 100%.
The third element is the book value of the shares. This is a financial evaluation calculated by accountants. American Airlines has a book value of minus $6.05. United has a book value of $33.66 and Delta’s book value was $23.66. I always like strong stocks whose book value is close to their current share price or even exceeding the share price. This is a bargain like paying for a Honda Civic and getting a Lexus.
The fourth element and fifth element are how many investment analysts have given the stocks “buy” and “strong buy” recommendations. While at best I think an analyst is lucky to accurately predict future stock prices 50% of the time, I included analyst recommendations as an element in my scoring knowing analyst buy recommendations can motivate some investors to buy a stock and cause some share prices to increase. Interestingly American had 2 buy recommendations and 4 strong buy recommendations. Delta had 11 buys and 2 strong buys while United had 14 buy recommendations. I define a strong buy as a predicted share price 50% higher than its current share price.
The sixth element was the dividend yield percent. Only one of the three was currently paying a dividend, that was Delta, and it was paying 1.36%, which is far lower than the minimum of 5% that I would choose for my portfolios. However, 1.36% is a typical dividend payout for many large US companies. Since dividends are paid out of profits, they are a good indicator of a company’s financial strength. The higher the dividend usually the higher the score for this element.
The seventh element was the operating margin. The higher the operating margin percentage, the stronger the stock. It illustrates the amount of money left over after operating expenses are deducted from revenues. American’s operating margin was 4.26%, Delta’s was 9.30% and United’s was 8.62%. Good managers are focused on increasing revenues with as little increase in expenses as possible to drive up their operating margins.
The eighth element was the stocks share trading volume. High trading volumes usually, but not always, indicate rising prices for a stock in high demand. More than 73 million shares of American were traded that day. Trades means both buys and sales of shares. That is a huge volume of shares to be traded. Delta traded 5 million shares and United traded 4 million shares.
The final element was the price to earnings ratio. It is not unusual to see hot speculative stocks with ratios of 300 to 1 or even in extreme cases 1,000 to 1. I always think of price-to-earning as indicating how many months it would take of profits for me to get back the money I had invested in the stock. American’s Price to Earnings was 15.1, Delta’s 8.0 and United was 9.1. Any stock with a price-to-earnings ration of under 20.1 would be normal.
Finally, when all these sub elements were entered into the scoring software and the scores for each element were added to create each stock's total grand score . The American total was 42, for Delta it was 64 and for United 60.
The IDM scoring software rates stocks between 0 and 100. The highest score I have ever calculated was an 86. The lowest was 3.
I personally avoid adding stocks to my portfolio that score under 50. (Most stocks score under 50). The higher the score, the stronger the stock appears to be, however there can be exceptions where the highest score may not always be your best choice for your portfolio. That is why it is always recommended that you next do a check of historic share prices and dividend payouts going back, year by year, to 1999. You are looking for a trend over those years in which both the share price and the dividend payout are increasing. It would be unusual to see consecutive increases each year but over many years there should be an upward trend.
You are looking for stocks in which the executives of the company believe in sharing their profits with their shareholder/owners. Once such a habit is established they will control expenses and revenues to maintain dividend payments which tend to rise as share prices rise. The executives take pride in maintaining a high dividend yield percent which means they increase dividend payouts when share prices increase. This keeps those who depend on a dividend income well ahead of inflation.
When I did a history check I found that American Airlines share price when first listed in 2014 was $49.81. It rose to $58.47 in 2018. In 2020 the Covid market crash dropped their share price down to $10.38.
Delta’s share price was at $20.91 in 2007 and dropped to $4.95 in the 2008 market crash and then rose steadily to $62.03 in January of 2020 only to then drop to $21.35 in the depths of the Covid crash. Since then, it has hit a high of $67.27 in January of 2025.
In October of 2007 United was at $47.82 dropped to $3.63 in the 2008 market crash. In 2018 it hit a high of $94.82 and declined to $25.42 during the Covid crash. It has since hit a high of $109.00 in February of 20.25.
It is also wise to check historical dividend payout amounts. Between 2014 and 2020 American Airlines was paying a dividend of 10 cents. Since February 2020, just before thev Covid market crash, they stopped paying a dividend. United has never paid a dividend. Delta was paying out a dividend of 6 cents in 2013 which climbed to 40 cents in 2020 just before the Covid market crash. In 2023 they again started to pay out a dividend of 10 cents which by May of 2025 had risen to 15 cents.
The final historical record to check is to do a Google search of the company name along with the word’s “complaints” and “legals”. Little of interest appeared for Delta and United search. However, a long list of complaints appeared about American’s customer service and flight disruptions. A class action legal suit filed in 2024 against American Airlines alleging misleading financial projections and other problems had been issued.
All three of the airlines received poor service ratings from their customers, which indicates customer satisfaction is not a strong point in this industry.
This is a lot to absorb. You might want to consult the written transcript that accompanies this podcast to review the numbers.
Which of these 3 airline stocks do you think has the biggest problem? If you could only invest in one of these stocks which one would you choose? Do you think I should now have some insight into why American Airlines may be reluctant to pay out money to settle complaints.
While scoring a stock can help steer you away from questionable stocks, safety is also increased when you invest equally in a portfolio of 20 strong stocks. With 20 stocks only 5% of what you have invested in your total portfolio would then ever be at risk. The impact upon your total portfolio of 20 stocks of one bad stock would be negligible because your total portfolio can be generating between 6% and 8% in annual dividend income while also generating an annual capital gain of 9% or more. Another consideration is that it takes time to acquire stocks and to monitor them. Twenty stocks are manageable. Too many stocks can create too much work and turn investing into an unwelcome chore.
In choosing your stocks you have to recognize that the perfect stock does not exist. You choose the “best” 20 stocks you can find - always with the intention that you will hold them for decades. Choice is always a job of using your best judgment in comparing stocks as I did with the three airline stocks. It is not unusual to initially see the price of a strong stock you have carefully chosen immediately decline. Be patient. If it is strong, it will bounce back.
The objective of these weekly podcasts is to assure those who are hesitant about self-directed investing that they too can safely build a financially strong portfolio of stocks that will give them a generous high dividend income for the rest of their lives and grow in value by several multiples.
Out of about 400 million companies in the world, there are approximately 12,000 North American public stocks available to purchase. Fortunately, free selector software supplied by many financial institutions allows you to narrow your search for a few strong stocks down to those whose share price will grow while providing you with a generous, reliable dividend income. I personally use the TD Bank’s free research tools that they supply to self-directed investors to make my selections, however on occasion I do use a similar free research service available at the Yahoo Finance website. There are many financial institutions supplying similar stock selection tools.
(FOR MORE INFORMATION ON HOW THIS APPROACH TO INVESTING CAN GUIDE YOU TO A SAFE, PROFITABLE GROWING PORTFOLIO VISIT my website www.informus.ca
Note #1. In the first 190 Podcasts of Safe Dividend Investing, you can find answers to hundreds of investment questions.
Note #2. In Podcast 210 you can see detailed information on how scores are calculated and why these scoring elements were chosen. To have faith in a score I learned long ago that it was important to understand how it is calculated
Until next week’s podcast this is Ian Duncan MacDonald encouraging you to become a successful, wise, self-directed investor.
Any questions and comments can be sent to imacd@informus.ca. or Telephone New York 929-800-2397 or Toronto 416-245-4994