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
UPS & FDX WHICH IS BEST FOR YOUR PORTFOLIO?
Welcome to Safe Dividend Investing's Podcast 249- (November 15, 2025)
When you ask someone's advice in choosing a stock are you subconsciously looking for someone, other than yourself, to blame if the stock loses money?
You are perfectly capable of doing some simple, easy analysis to determine the strength and potential of a stock. In this podcast I walk you through the process. It is not difficult and takes minutes not hours to do. Two stock multi billion dollar companies UPS and FDX are used to illustrate the procedures. Rely on your own analysis and know exactly why the stock you chose was based on factual not hearsay information or stock tips.
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 more than twenty years . My portfolio of strong dividend stocks not only provides me with a reliable, growing six figure income but over time has continued to increase the value of my portfolio by multiples multiples. This conflicts with what I was told by investment who told me my portfolio would gradually shrink as the years went by.
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 248 weekly podcasts. The first 160 podcasts are devoted to answering questions from investors just like you. Some of the remainder give you an opportunity to practice choosing stocks and introduce new relevant topics
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 249
November 15, 2025
STOCK SELECTING RISKS AND COMPARING UPS, FEDEX
When someone asks me whether they should buy a particular stock it bothers me. It indicates to me that they wish to avoid taking responsibility for their stock portfolio. If the stock loses money, then consciously or subconsciously, they want to be able to blame someone other than themselves for what they now see in hindsight as bad stock choice. The reality is that only they are responsible for everything that goes into their portfolio. Even if it was a mutual fund that was selected on a financial advisor’s recommendation, you are one responsible for approving its purchase.
It only takes minutes, not hours, to do some basic analysis of an investment. Yet investors invest hundreds of thousands of dollars based solely on a recommendation that they have not verified.
You do not have to be a genius, a chartered accountant or have an MBA to look at easily obtainable, free historical records that show such important data as the share price of a stock increasing or decreasing over the last 30 years. A wealth of free stock information is instantly available on the internet from sources like Yahoo Finance, Google and others.
There is nothing complicated in seeing if a stock has been listed on the stock exchange for decades versus a stock that first appeared on the stock exchange in the last year or two? A company that has survived for decades whose share price has grown constantly is not about to disappear for many more years.
The same thing with dividends. Dividends are paid out of profits. It takes just seconds to determine if a stock’s dividend yield percent is high or low - or if the stock has never paid dividend. Wouldn’t you prefer to invest in a company you knew was profitable because but could see its management had been paying ever increasing dividend payouts monthly or quarterly for decades? Such companies take pride in their growing dividend payout and know that the payouts bind their shareholders to them.
Even if you see that a company does not pay dividends, you can still instantly see if they are profitable or not by looking at the stock’s latest operating margin percentage. You may even encounter some stocks with a minus operating money which is proof that their operation is unprofitable. If the company cannot make changes that will generate a profit it will no longer be able to generate enough money to cover their operating costs. Investors would most likely lose all the money they may have invested in that company. In the research for my books, it seems most financially strong companies have an operating margin exceeding 20 percent.
The other key financial figure that takes just a second to check is the stock’s value compared to its share price. This is the number calculated by certified accountants who audit all publicly traded stock and report their findings to the security commissions. If the stock price was $100 and the accountants recognize its book value per share was at $1, you are not looking at a financially strong company even if their operating margin is high. It could be that low and still operating because it was making just enough money to pay the interest on its massive debts but are unable to reduce the debt. Their suppliers and creditors are watching them closely. A few missed payments and they can be petitioned into bankruptcy. The liquidation value of the company’s assets would be far below what is owed to banks and suppliers. From working on several bankruptcies, the chances of shareholders realizing 1% of what they invested are unlikely.
Just because the company has a liquidation challenge does not mean you have to buy such stocks and share their risk. Almost all companies need to invest in their future growth, and this may often require using borrowed money. However, it is the skill of the management team to safely take on calculated risks.
Competitors are always trying to undercut your company’s prices and market a better product than your product. The future financial wellbeing of any company is never totally predictable. However, wouldn’t you prefer for safety’s sake to see a company with a strong book value close to their share price.
Mutual funds are not free from risk. Have you ever looked at the prospectus for a mutual fund you own to see what stocks the fund is invested in. All prospectuses are usually available online. Have you just assumed that these must be “good” stocks because “professionals” chose them? Have they told you the mutual fund is heavily invested stocks like Microsoft and Amazon? When you looked at the prospectus did you find these two outstanding stocks made up 2% of the portfolio with hundreds of other mediocre stocks each making up a fraction of one percent of the portfolio.
When the mutual fund declined in value did you buy investment advisor’s explanation that this is just a typical stock market fluctuation? Maybe it is time to look at the mutual fund’s prospectus. I doubt if your advisors have. Advisors only need to be good at selling the “sizzle’ to the investors who trust them. Few can be bothered to analyze what they have sold you. The fund managers have all sorts of tricks to make a their fund sound like the best thing since sliced bread.
This rant on basic stock analysis came up after I was asked what I thought about UPS the United Parcel Express price and whether it would be a good stock to buy. I never recommend a stock, but I do analyze and compare stocks.
Keeping the above in mind and you having a great desire to own shares in one of the parcel express companies let us do some easy basic analysis of the two leaders in the delivery service industry are United Parcel service (UPS) and Federal Express (FDX) to try to determine which would be the best stock to own.
The share price for UPS on November 13 was $95.95 and for FDX $267.34. Is the potential for share price growth with the lower priced stock?
The price 4 years ago for UPS was $203.90. It has gone down in price. For FDX the share price has increased by about 10%.
The book value for UPS 4 years ago was $19.58 or about 25% of the share price and for FDX it was $117.96 or about 45% of the share price. Which one has the bigger cushion of value if they ran into a problem?
The dividend yield percentage for UPS was 6.84% and for FDX it was 2.17%. If you were to invest $100,000 in each stock you would realize a dividend of $6,840 from your UPS stock and $2,170 from FDX. If both stocks were about equal in risk and you lived off your dividend income which stock, would you choose? To take advantage of capital gains it is necessary to sell a portion of your shares in a company if you think selling some shares in the stock will give you an income to live on.
The operating margin percentage for UPS 9.18% for FDX it was 6.07%. It appears that UPS is a third more profitable. Does that make it safer or is the difference too little to come to such a conclusion?
Interestingly UPS traded more than 6 million shares today compared to the little over one million that FDX traded. A one-day share price change does establish a trend. The volume of shares traded does indicate investor interest in a stock. The share price for FDX today declined by 1.33% versus UPS whose share price declined by 0.02% on a much higher trading volume.
The UPS Price- to- Earnings ratio was 14.9x while FDX was 15.7x which are both good. I am concerned when I see this index climbing towards 50. I have seen some rations exceeding 1000. The lower the figure the stronger the stock.
When you look back over 25 years of quarterly dividend payouts for UPS you see a steady consistent rise in the quarterly dividend payouts year after year. They have gone from a low of 62 cents for UPS in 2013 to their last dividend payout in August of this year at $1.64. For FDX you see a low of 20 cents in 2013 to its current $1.45.
These are both strong stocks, but you need to decide as to which one you will purchase. To help make such stock purchase decisions easier I developed stock scoring software about ten years ago that I and thousands of others have used. It rates stocks from zero to 100. The higher the number the stronger the stock. Both stocks scored well. UPS had a score of 60 and FDX had a score of 65. Most stocks score below 50 and very few ever score greater than 70.
I also did a Google search to see if there were any significant legal actions or complaints against either company. I could find nothing. Due to the nature of their business I am sure every day they receive some complaints and threats of minor lawsuits.
Which company do you think has the highest sales volume? It is UPS with a sales volume of $89.5 billion compared to FDX at $88.68 Billion.
This was a straightforward, uncomplicated, common-sense analysis from easily obtainable information. It took a few minutes. Is this more analysis than you have been doing in picking stocks for your portfolio?
If you decide to do more internet research, you will find analysts reporting that UPS is projecting the elimination of 48,000 jobs to improve their profits. The analysts excitedly report that its share price has fallen 24% in 2025 investors fear a possible slowdown in the economy caused by trade wars reacting to new tariffs.
Now that you have some insight into identifying value in a stock, I hope that you will always take the little time it takes to analyze any future stocks you are considering. If you can’t measure the strength of any investment, then I recommend you stay far away from it.
The security exchange commissions are set up to protect you. They require companies on the exchange to submit financial data every 90 days. It is free public record information. There is no reason to solicit opinions about a stock from others when free factual data is immediately available.
You can invest safely and well but it does require you to be patient and to spread your investment money equally among 20 carefully chosen strong stocks. How each stock performs is not as important as how the total portfolio performs over many years.
You should find that the value of your diversified portfolio should increase most years about 9% plus by the average dividend yield percent you realize from of 20 stocks. I average about 7 percent dividend return. If you reinvest that divided income back into those 20 stocks you could see a doubling of the value of your portfolio within 5 years.
The stock scoring software I referred to is provided free to those who purchase any of my investment books. It is a big help. In my books I score and analyze hundreds of stocks so that you can easily and quickly build your portfolio. They are full of detailed practical advice with no technical jargon to confuse you. The six books are available at Amazon. Just enter my full name “Ian Duncan MacDonald” in an amazon or Google search and they should all appear with sample chapters and reviews by readers. For more information on the books, YouTube interviews and other material you can also go to my website www.informus.ca.
Until next week this is Ian Duncan MacDonald urging you to invest safely as a wise, self-directed investor who knows exactly what is in their portfolio and why those stocks were chosen.