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 247 - A SUDDEN SHARE PRICE DROP REQUIRES THOROUGH ANALYSIS
Welcome to Safe Dividend Investing's Podcast 247- (November 1, 2025)
This week's podcast is in response to a question from one of my listeners. He was concerned that one of his, what he thought was a strong stock, had lost fifty percent of its share price value almost overnight. Yes, even strong stocks can have sudden unexpected drops in their share price. This does not mean that you need to panic and immediately discard the stock. It means that you have to look closely at the history of the stock and its potential. Changes the company may have made that caused the drop in share price many actually strengthen the company in the years to come. This may actually be an opportunity to buy more of the stock at a low price.
I write my investment books for those who fear that they will lose their life savings by investing in the stock market My books show investors an easy, safe way to select financially strong, safe, growing companies who pay high dividends . I have been successfully investing this way for twenty years .My portfolio of strong dividend stocks not only provides me with a reliable, growing source of income but over time has increase the value of my portfolio by several multiples.
Unlike mutual funds and index funds - where investors have no control over their investment and only a vague idea as to what stocks are in the fund - a self-directed investor can fully understand and appreciate the value of each stock in the portfolio that they created. They can escape the mundane returns and high fees inherent in owning funds.
For more information on self-directed investing go to my website www,.informus.ca or listen to the previous 245 weekly podcasts. The first 160 podcasts are devoted to answering questions from investors just like you. The remainder give you an opportunity to practice choosing stocks and introduce new relevant topics.
Ian Duncan MacDonald
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
Podcast 247
1 November 2025
Attitude Determines Investment Success
PODCAST 247 (1 November 2025
SAFE DIVIDEND INVESTING
Greetings to investors all around the world. Welcome to Safe Dividend Investing’s Podcast # 247, on November 1st of 2025. My name is Ian Duncan MacDonald, and I am an author of six investment books.
This week podcast was triggered by a concerned email from one of my book reader. He asked me to look at a stock that had “slashed its dividend resulting in the share price tumbling. half of my capital invested has been lost so far. The company received a score of 64. Please advise further on how to navigate this situation? Buy, Hold or Sell?”
I will never tell anyone what specific stock to buy, hold or sell. That is a decision only they can make. However, I can ask them some questions to help them make that decision. Following are some of the questions I asked and the answers I got.
Are you saying that half of all your investment money was in this stock? If so, why was your money not spread over 20 stocks?
ANSWER: No, 5% of my capital in this one stock has been reduced to around 2%.
What price did you pay to buy the shares?
ANSWER: $37.00
What is the price now
ANSWER :$15.17
How much was the dividend yield percent when you bought it?
ANSWER: 6.15%
What is the dividend yield percent now?
ANSWER: 15.29%
What was the score when you bought it?
ANSWER: 64
What is the score now?
ANSWER: 66, it seems to have increased due to the high volume sell off
When was the last dividend payout made and how much was it?
ANSWER: A dividend payout of $0.98 was paid September 30th
I replied, “Yes, if a financially strong company cuts its dividends this can cause some speculators to emotionally sell. However, remember this. To sell, there always must be someone willing to buy who sees value in the stock. This may be a great time to buy more shares of what may be a strong company. Dividend yields can also go up. I own a few strong stocks that have cut dividends in their past for many good reasons. I have seen no reason to sell them. “
Perhaps this is a good time to review the fundamentals of safe investing.
You buy shares in companies traded on the stock market to make more money than you have invested in your purchase. Thus, your number one objective is to concentrate on only investing in companies whose shares have a high probability of increasing by several multiples over the next ten years - not in the next week or next month.
Which company is most likely to be here in 10 years and have a higher share price than it has now? A company that has already survived for 10 years or one that was created in the last three years. A company with an operating margin over 20% or one with an operating margin of 3% or less? A company with a price-to-earnings ratio 5.1x or 200.1x? A company paying a dividend or one not paying a dividend?
To determine the strength and potential of stocks requires some effort however to make it easy I developed stock scoring software for myself that I share with others. The software takes 10 easily accessible risk factors associated with any stock into its calculation. It scores the stock between 1 and 100. The higher the score, the more likely a company’s share price in ten years will have increased and be profitable.
Few stocks score over 70. Most stocks score under 50. I personally avoid stocks scoring under 50. The scoring software focuses an investor’s attention on looking for the best long-term upside. It helps investors avoid short-term buying decisions that can expose a portfolio to a loss.
Many investors view the stock market as a slot machine which only pays off to those who are lucky. They have never been exposed to an intelligent, common sense, approach to picking strong stocks with profitable growth potential.
Investors are presented with multiple choices. Too many choices can cause indecision. For example, do you buy the least expensive of stocks and expect them to show the highest share price gain and investment return? The reason they may be inexpensive is that there may be nothing to attract the interest of investors.
The stock market is an auction. Investors post bids in the stock market to acquire the stock they want from someone who now owns that stock. Only if their bid is attractive, which means being high enough, will the seller be motivated to sell you that stock.
Stocks that are often very attractive to investors are often leaders in their industry. Compared to their competitors they have shown the most reliable profitable growth. They have proven that their management have the skill and the experienced to make good business decisions. Such companies will most likely be seen by investors as being “expensive.
A few of these leaders can anchor your portfolio and act like a fortress through the inevitable recessions and the market crashes. Their share prices may dip temporarily but their profits and dividend payouts will usually remain steady. This stability can easily be seen by looking back at their dividend payouts and share prices during the market crash years of 2000, 2008 and 2020.
Those over extended speculators fleeing stocks because of current negative media hype sell to escape a stock which they are certain will take their investment in it to zero. They fail to accept that a widely diversified stock portfolio of at least 20 stocks will never go to zero and that the stock market does recover in time and reach new record levels.
Only a few stocks in your portfolio need be such leaders. Most of your portfolio can be made up of inexpensive stocks who have shown steady share price and dividend payout growth for years. It is far more likely for a $10 stock to double to $20 in a year then for a $100 stock to double to $200. There are many more people willingly to buy a $10 stock then a $100 stock.
While a steady dividend income can help keep your portfolio growing, you also want to invest in shares whose share price indicates they will increase over many years. To accumulate such growth stocks, it is wise to keep a reserve of about 10% of your portfolio in cash. This reserve allows you to purchase the shares of a strong stock at a low price when speculators cause a share price to dip.
Stock’s rarely move only in one direction. Such buy opportunities arose during the Covid pandemic in 2020 when fear of the unknown drove almost all stock prices down. However, the share prices quickly recovered as the population adjusted to the threat. A 10% reserve is also emergency cash fund available for those unexpected.
The opposite of a market crash is an inflated market where greedy investors convince themselves that the share price of certain stocks have no limits on how high they can rise. Such investors ignoring history and reality sink every penny they have and can borrow into buying such a stock.
An example would be some of the Artificial Intelligence stocks being pushed by the media. In them I see a repeat of the investor excitement that I saw with the dot com companies prior to the year 2000. At that time the internet was the next new hot think that was going to change the world. Investing in a stock that had a “dot com” connection was certain to make you instantly rich.
Now, to attract speculators a company must have an “AI” connection. Such investors expect by Saturday they will be able you sell that hot stock and cash out a winner. However, what happens when the stock does not go up? What happens if instead the share price falls. Do you sell? Do you buy more of it? Do you wait to see if this is just a hiccup in its upward momentum?
Now may be the time when you finally decided to score that AI stock and judge its real value. With no history, questionable management, a share price many times higher than its book value and a price-to-earnings ratio over 200 to one, this investment doesn’t look like a money maker, it looks like a risky investment.
Such exciting stocks eventually reach an ultimate high price, loose their lustre and shrink back to a rational price. Why could it not keep going higher? Highly successful companies who attract a lot of attention motivate competitors to get involved. The competitors undercut the leader’s prices and introduce new features and benefits that are more attractive to buyers.
If popular money is now selling those steady producers with long histories of profitable operations to buy AI stocks, you may want to buy those steady producers that they are selling. When the expensive high-flying stocks fall out of popularity there will be a move by those burned by AI stocks back to investing in reliable, steady, affordable, safe stocks.
You do not need to be exceptionally smart to grow your wealth in the stock market. You do need to be disciplined and the patient to. You do need to be able to ignore what the investment crowd is excited about. You do need to objectively take your time and choose only stocks that measure up to your standards of strength and reliability.
This is the opposite of most investors who are speculators. They buy stocks for the fear that they will miss out on the next big thing to make them rich. They do not consider the strength of the stocks they feel compelled to buy because they accept without question the popular consensus that the stock is a money maker.
What is most important is the growth of the total portfolio not any one stock in it. it is critical that your portfolio contain at least 20 strong stocks. Once a portfolio exceeds 20 you can no longer quickly analyze and score the stocks in it.Some stocks may go down for awhile, while others may go up. If you keep investing the portfolio’s dividend income back into these stocks in your portfolio you should expect to see the value of your portfolio double within five years.
Why not just delegate the selection and maintenance of a portfolio to others. You can but then you will lose control and money. No one is going to care as much about your money as you do.
Investment advisors are employed by financial institutions to separate you from as much of your money as possible. Even when your portfolio loses hundreds of thousands of dollars, they are still going to keep taking a percentage of your portfolio each year for the rest of your live. Two percent may not seem like much to take on a million-dollar portfolio, but it is $20,000 for the few hours they with you each year. They do not bill you they just subtract it from your portfolio.
Investment advisors do not want you to invest in individual stocks. They want you to invest in mutual funds where they are not required to analyze stocks but only to sell you on how wonderful the fund is and how rich it will make you. They will have you invested in hundreds of mediocre stocks with one or two percent in strong stocks to try to give the fund some credibility. If you don’t believe me look at the prospectus that accompanies every mutual fund. Score some of the stocks. Expect the investment advisor to become very defensive
Until Next week, this is Ian Duncan MacDonald encouraging you to become a wise, successful self directed investor.