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 255 - MICROSOFT IS NOT ALL THAT WONDERFUL.
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Welcome to Safe Dividend Investing’s Podcast # 255, on December 27th of 2025. My name is Ian Duncan MacDonald, and I am an author of six investment books.
I finally finished the editing and formatting of my latest book, “Achieving Financial Independence Safely. 200 NYSE Stocks - Analyzed and Scored”. Early next week it will be forwarded to Amazon/Kindle. As soon as it is available, I will be informing all those who sent emails to me at imacd@informus.ca requesting when they could order it at the the initial discounted price.
During the following week I came across an article by an investment analyst at a large firm. He excitedly reported that Microsoft paid out in dollars a higher dividend than any of the S&P 500 companies. Since a Microsoft stock could be bought for $487.71 and paid out a dividend $3.64 over a year I found it hard to believe that $3.64 was something to brag about. I also wondered for such a profitable company where were the billions in profit going?
This podcast deals with stock options, investment charges, greed, inflation, Verizon, portfolio's of 20 stocks, speculator blindness and achieving financial independence.
My books are not get-rich-quick books. They are about taking a little time to carefully seek out financially strong companies with long histories of paying ever rising high dividends accompanied by rising share prices. Diversification and patience win out in investing.
Please, visit my website www.informus.ca if you wish to learn more about me and my writing.
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 255
SAFE DIVIDEND INVESTING
Greetings to investors all around the world. Welcome to Safe Dividend Investing’s Podcast # 255, on December 27th of 2025. My name is Ian Duncan MacDonald, and I am an author of six investment books.
I have finished the boring, tedious job of editing and formatting all 320 pages of my new Investment book “Achieving Financial Independence Safely - 200 NYSE exchange Stocks Analyzed and Scored”. I expect to load it into Amazon Kindle on Monday or Tuesday. They will get back to me with the proofs. As soon as they are reviewed and approved, I will release the book.
The next step will be to notify its release to all those who sent emails requesting to be notified of its release. This will allow them to purchase the book at is initial discounted price. If you have not yet made such a request, please send me an email to imacd@informus.ca.
Last week I discussed the Artificial Intelligence stock data pages that appear in this new book and why I would not be adding these AI stocks to my portfolio. Coincidentally, this week a stock analyst from a major company wrote an article with the heading :
“Meet the Magnificent Seven . A stock that pays more dividends than any other S&P 500 Company’.
He went on to enthusiastically identify Microsoft as this amazing company. I am puzzled as to why he thinks a stock with a dividend yield percent of only 0.75% whose total dividend payment for the year will be$3.64. This seems thin for a very profitable company with a current share price of $487.71.
The analyst goes on to say that this unimpressive $3.64 annual dividend return is “more in dividend total cash than any other S&P company” . He identified such notables as J.P. Morgan Chase, Exxon and Verizon. Interestingly Verizon’s data page qualified to be included in my new book as a recommended stock, Its dividend yield is 6.39% which is almost ten times greater than the Microsoft dividend yield percent of 0.75%.
Suppose someone like the naive 80-year-old widow whose plight I describe in my first investment book, “Income and Wealth from Self-Directed investing” read this Microsoft recommendation and acted on it. What if she took her life savings of one million dollars and invested all of it in these wonderful Microsoft shares. At the current share price of $487.71 the $1,000,000 would buy her 2,050 shares.
From each share, over the year, she would realize a total dividend income of $3.64 or a grand total of $7,463 from all 2050 shares. This $7.463 is equivalent to what someone would earn over a year if they were paid $3.73 an hour. That is a starvation wage, far below any minimum wage in North America.
Of course, we must not ignore the hidden investment costs. Being a investor with little investment knowledge, she would feel that she must engage an investment advisor to buy the shares for her. No one, least of all, the investment industry, would ever show her how easy it is to open a self-directed trading account and buy the shares herself.
If she bought the Microsoft shares as a self-directed investor, she might pay as much as $9 in total fees for all 2,050 shares. However, by engaging an investment advisor “to help her” with her investing means she could end up paying 2.5% of the value of her portfolio for the advisor’s service. On her million-dollar portfolio this would be about $25,000.
Where is this $25,000 going to come from? Certainly not, from the $7,463 in dividend income that the 2,050 Microsoft shares will generate over the year.
The $25,000 would be deducted, by the investment advisor, from the $1,000,0000 portfolio of Microsoft shares. Some shares would have to be sold to pay this $25,000. Not only would she pay this $25,000 now but every year that the advisor was involved with her portfolio. Over her remaining life this could be hundreds of thousands of dollars.
In addition to financial advisor fees there is the reality of inflation. Over the last 100 years the average inflation rate has been 3.5%. Thus, her million-dollar portfolio is going to lose an additional $35,000 of its buying power every year.
Now, suppose as a self-directed investor, the widow had chosen to invest in Verizon and 19 similar stocks paying dividend yield percentages between 5% and 8%. Data pages of over 100 such strong, generous stocks are identified in my new book. The Verizon 6.39% dividend yield would generate an income of $63,900. This would be equivalent hourly employment rate of $31.95 an hour, which while not luxurious would certainly provide the widow with a more reasonable lifestyle than the $7,463 that $1,000,000 worth of Microsoft shares would pay.
Why would you want 20 financially strong, high-dividend stocks in a portfolio? Because it beats attaching your fate to one stock.
Speculators do not seem to want to accept that no one can accurately predict future share prices. They want to believe that the next hot stock they buy is going to grow by a thousand percent and make them fabulously rich.
They turn a deaf ear to the advice that there is safety in spreading your wealth over enough diversified safe shares that If one or two of the stocks was not doing well that the growth in the other strong stocks would offset the temporary decline of the few. It is the average dividend return and capital gain by your total safe portfolio that will achieve your financially independence not one individual stock
You might suggest that Microsoft’s shares are different and they can never decline. While they may pay a ridiculously low dividend, their exceptional high capital gain potential makes the dividend irrelevant in reaching financial independence. However, when you look back at historical share prices for Microsoft they are not always increasing.
After the market crash in 2008 Microsoft’s share price fell from $28.93 in February to $20.52 in August. In February of 2009 it was down to $16.96.
Just after the next market crash in October of 2021 Microsoft’s share price had climbed to $324.35 a share but then fell to $256.06 in September of 2022. If you had bought the shares at $324 you might have been tempted to sell a stock in which your had experienced a 20% loss. Since there is no generous dividend income to help support you through the rough patches you may be compelled to sell Microsoft shares just to put food on your table.
The analyst who wrote the article did explain the pitiful value of the dividend yield. He said it was good management because a high dividend yield would put strain on Microsoft’s balance sheet and their free cash flow. They needed all that cash to pursue the big payoff in Artificial Intelligence opportunities which weren’t here yet but were bound to appear.
He also explained why Microsoft was spending so much of its profits on buying back their shares which they saw as being undervalued. I always understood in a free market that the investors with their competing bids were supposed to set the price of a stock and not a company buying billions of dollars in their shares to create an illusion with investors that their stock was in high demand. I believe buy backs is a form of stock manipulation and there was a good reason why buybacks were banned from the nineteen thirties until the nineteen eighties.
Microsoft is a very profitable company with an operating margin of 45.9%. If money is not flowing to investors via dividends who is benefiting? Well, 9.8 billion dollars was spent by Microsoft on stock-based incentive compensation for employees. Some directors are said to receive $750,000 a year from their stock options grants.
The way stock options work is a manager is told at the beginning of the year that they have the option to buy thousands of company shares at a set price a year from now. They don’t really buy the shares to get the benefit between the set option price and the later market price. The stocks are bought and sold at the same time so that the employee receives the difference in cash. Thus, a stock option bonus, is worthless if the share price does not increase. Could it be that what you see at Microsoft is a form of allowable stock manipulation to ensure that managers receive the benefit of their stock option bonuses.
The billions of shares of Microsoft are so widely owned that what its shareholder might prefer is ignored by the Microsoft directors who see no need to share the wealth by paying reasonable dividends. This raises the question, is the company being run for the benefit of its employees’ stock option bonuses rather than rewarding loyal shareholders?
Shareholders are the owners of the company not the employees.
The Microsoft management tries to argue that their buy backs are a tax benefit for the shareholders because the buybacks maintain the high share price for the shareholders and capital gains by shareholders are taxed at a lower rate than if they returned money to them as dividends. While it may be nice to see the value of your Microsoft shares rising. The benefit of higher share prices can only be realized when you sell the shares.
I like companies who recognize that shareholders are the owners of the company. I want the company’s managers, who are employees, to listen to the shareholders, and see that the company’s profits are shared with them through predictable, fair, dividends. I don’t like companies who force their shareholders to sell a percentage of their ownership in the company just to put food on the table.
The rest of the wealthy “Magnificent Seven” AI companies pay even lower dividend yields than Microsoft. I suspect that they do it for the same reason as Microsoft. I will not be buying any of their stocks.
That’s all for this week.