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 261 - IS THE 4% STOCK PORTFOLIO LIQUIDATION RULE NONSENSE?
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Welcome to Safe Dividend Investing’s Podcast # 261 on February 7th of 2026.
My name is Ian Duncan MacDonald, and I am an author of 7 investment books. My seventh investment book, Achieving Financial Independence Safely - 200 NYSE Stocks Analyzed and Scored" became available January 3rd on Amazon. You can easily find it by searching in Amazon or Google for "Ian Duncan MacDonald books". I will maintain the introductory price for this new book until I have finished contacting all the previous buyers of my books have been contacted and given a chance to purchase it at its introductory price.
In this podcast I discuss the 4% rule. It advises that once you retire you should only sell off 4% of your portfolio each year if you want that portfolio to provide you with a steady income until you are ninety. However, I have found over the last 20 years that if you carefully invest equally in 20 financially strong companies that have long histories of paying high dividends you will find that your dividend income and the value of your portfolio will almost automatically keep increasing.
There is no reason your portfolio and your dividend income can not keep growing until the day die. Years will go by, where by living within your dividend income you will have no need to sell stocks to live well. Your income will rise ahead of inflation and if you live to 110 your portfolio will still be growing.
I wonder if promoting the 4% liquidation rule was a strategy spread by investment advisors to assure them of a reliable income from your portfolio for the next 30 years? If your dividend income is going to roll in automatically from your carefully chosen dividend stocks, what are you paying an advisor tens of thousands of dollars for every year? It has been my experience that few investment advisors know much about dividend investing other than it is a threat to their income.
My books are not get-rich-quick books. They are about showing people just like you how to select, from the thousands of stocks available, those few that are financially strong with long histories of paying ever rising high dividends with ever increasing share prices. My objective is to give investors the confidence to consider building safe stock portfolios as self-directed investors. Once your financial independence is realized, you will, like me, enjoy a generous, reliable, income for the rest of your life.
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
imacd@informus.ca
Podcast 261
Safe Dividend Investing
7 February 2026
Greetings to investors all around the world. Welcome to Safe Dividend Investing’s Podcast # 261, on February 7 of 2026. My name is Ian Duncan MacDonald. I am the author of seven investment books. The latest, Achieving Financial Independence Safely – 200 NYSE exchange Stocks Analyzed and Scored” became available for delivery from Amazon on January 3 of 2026.
I am delaying increasing this book’s price until I can finish contacting all the buyers of my previous investment books. I want to give them the opportunity to purchase the new book at its current discounted launch price.
If interested, you can find more information about the new book along with my other six books by going to my website www.informus.ca. The other alternative is to do a search in Amazon or Google for "Ian Duncan MacDonald books” where you can read reviews and sample chapters.
I recently read an article on the 4 percent rule that investment advisors recommend that their clients follow. This rule is to avoid liquidating your portfolio too quickly. Advisors want you to fear being left penniless in your old age. They tell their clients to sell off only 4% of the shares in their portfolio each year. Supposedly with the stock market increasing on average by about 10% each year and the number of shares you own shrinks, as you sell them off to survive, you are told you would be able to maintain a steady income until you are 90 years of age. The expected rise in share prices offset the loss of number of shares. Nothing is said about inflation, which over the last 100 years averages a growth of about 3.5%. Does this mean with the 4% rule you are only gaining about half of one percent each year?
My investment advisor told me to follow the rule of four as I handed over my life savings to him. I knew little about investing. I trusted him. He was a friend with decades of investment experience. I presumed from his lavish lifestyle that he was very successful. Within a few minutes after taking my money it was all invested in the mutual funds - of his choice. He assured me that mutual funds were as safe an investment as one could make. The stocks in the fund were blue chip stocks carefully managed by managers with decades of experience. I was assured that the value of the fund would grow until I retired. When I retired, I would survive by liquidating 4% of the funds each year until they were all gone in thirty years.
At that time, I was in my fifties. Ninety seemed an impossible age for me to ever reach. I did not research my newly acquired fund, nor did I have any idea how to evaluate a fund. I glanced at the total amount invested when the monthly statements arrived. (I have told this story on many occasions in the past and I now repeat it for those who have joined this podcast for the first time).
Three years later I noticed that the value of my portfolio had shrunk by $300,000. This was a loss of about 45 percent of my original saving. Unless I died very young my retirement looked like it was going to be very bleak. Retirement was fast approaching.
Enough was enough. If I was going to lose all my money, I at least wanted to know what I was invested in and do my best to recover the $300,000. I sold the mutual funds and opened a self-directed investment account. No one ever again was going to touch my money but me.
I read investment book after investment book. This led me to see that investing in stocks is just another form of commercial risk. I knew commercial risk. For decades I had been employed as a senior executive in the commercial risk information industry. There, I built databases to screen millions of businesses and constructed effective computerized scoring systems to predict commercial losses. I could do the same thing to determine the risk and opportunities in stocks.
Much to my surprise all the data I needed to find and screen stocks were instantly available, free and monitored for accuracy by the security exchange commissions. There were only about 15,000 stocks being traded in North America.
I sat down and constructed a stock scoring matrix. My friend, Peter King, surprised me by turning it into computer program that I could use to score stocks quickly on my personal computer instead of doing the calculations manually. Using my bank’s stock screening system I easily searched through thousands of stocks to find those I could score and consider for my portfolio.
One of the most important screening factors I used was a stock’s dividend yield percentage. If a stock was not paying a dividend, then I had no interest in it. Dividends are paid from profits. I only invest in financially strong profitable companies who share their success with stockholders by paying dividends.
If the 4 percent rule claimed it was possible to live on 4% of a liquidated portfolio each year, it seemed logical that if I could realize a dividend income between 6% and 8% from a portfolio of 20 stocks whose shares were increasing about 10% or more each year that my portfolio and my income would grow forever.
Not only was I going to realize a benefit from the dividend income, but I was also greatly reducing the investment expenses I had experienced with the mutual funds. Upon turning my money over to the financial advisor, I had asked him how much it was going to cost me for his services. He had very cleverly replied, “So little I would not even notice it.”
Every year, unbeknownst to me, the investment advisor was helping himself to 1% to 2% of the value of my mutual fund portfolio. On top of that I was paying mutual fund management fees and whatever other charges could be legally extracted from my portfolio.
Without parasites nibbling on my portfolio a return of 8% on my investments each year seemed logical and easily achieved. I concluded that the 4% rule must have been created by a clever investment advisor who saw an opportunity to receive a steady 1% or 2% cash payout from all of his client’s portfolios for the next thirty years until the portfolios was drained.
It is now 22 years later. Ninety is not that far off. My dividend income and my portfolio have grown constantly. The income is well into the six figures and my portfolios are well into the seven figures. Even during the market crash years of 2008 and 2020 when the value of my portfolio greatly declined there was almost no change in my dividend income. After each crash it did not take long for the portfolio to recover and reach a new record high values. Financially I am far better off than when I was employed thanks to lower income taxes on dividend income.
Knowing of my interest in investing I was approached by a friend, an eighty-year-old widow, whose investments, managed by her investment advisor, had shrunk by hundreds of thousands of dollars. She asked me for help. I looked at her portfolio and could not believe how poorly it was being managed. Over several months I taught her how I invested. She adapted easily to the stock scoring system. Within a year she had not only recovered the hundreds of thousands of dollars, but she doubled the income she lived on. She pushed me to write a book that taught others what I had taught her.
I wrote that first book “Income and Wealth from Self-Directed Investing”. That book not only lays out the strategy but also describes how investment advisors employed at two major banks took advantage of her ignorance and innocence. She had put investment advisors on the same pedestal as her priest.
This is a long preamble to my verifying that simple, easy scoring and analyzing of stocks can help anyone build a safe stock portfolio that will protect them for the rest of their lives. In one of my subsequent books “American High Dividend Handbook” released in October of 2021, there is a chapter that sorts the financially strongest stocks paying the highest dividends by their score. All the stocks are listed in descending order by score.
I heard that some readers created stock portfolios by investing equally in each of the first twenty stocks in this list. Four years have passed. I was curious as to how well this simple selection for a portfolio would have worked. I had doubts because often high scoring stocks do not pay the highest dividends. There are many lower scoring stocks, while still strong, whose dividends can be in the 8% to 10% range which can generate a better income.
The first question I had is how many of these outstanding stocks showed up again in my latest book, “Achieving Financial Independence Safely? Only 5 of the 20 qualified for the latest book. One of the five was Canadian Natural Resources (stock symbol CNQ) that now had a score of 67 out of 100 compared to a slightly higher score of 69 four years ago. Its dividend yield percent now was 4.46% compared to the previous 4.70%. The big difference was in its share price. It had climbed from $33.62 up to its current $52.65. That is about a 60% increase.
A share price increase was present in 12 of the 20 stocks from 2021. Some of the more outstanding share price increases were AbbVie Inc (stock symbol ABBV) which climbed from $119 up to $217.11. Newmont Corporation climbed from $58.19 up to $116.85.
Of the 7 shares that had seen a decline in their share price the greatest decline was a $15 decline for Lyondell Basel (Stock Symbol LYB). All the declines in share price were more than covered by the gains in the other stocks.
Two stocks, Bonanza Creek Energy (BCEI) and MGM Growth Properties (MGP) seemed to have disappeared over the four years. Further investigation disclosed that Bonanza had merged with Civitas Resources in 2021 only to be merged again with SM Energy company on January 30 of 2026. It appears in both cases that if shareholders held onto their shares they would have done well.
The stock with the greatest gain in dividend yield over the four years was Vale SA (stock symbol VALE) it went from a dividend yield of 4.70% to 8.15% even though its share price dropped from $19.44 down to $ 17.03.
It is not surprising that 15 stocks, from the 2021 book companies, did not appear in the latest book. In the 2021 book, eight of the top 20 by score had dividend yields below 5%. In latest book released this month only two of the 28 stocks scoring 65 or higher had dividend yields of less than 5%. Does this mean that stocks are getting stronger? Is it easier to build a portfolio of financially strong high dividend stocks in 2026?
The 2021 book, and my other books, are time capsules. They can give you insights and reassurance in the stocks you are choosing. Just as I can go back and look at the data in these books so can you.
When you are patient and careful in your selection of your 20 strong high dividend stocks, it should take only days to build your portfolio, not weeks. Twenty stocks give you sufficient diversification to weather the unexpected. Once your portfolio is established the amount of monitoring required is a few minutes every few days. You can go for years without seeing any need to add new stocks or delete stocks from your portfolio. Before you retire you can see the compounding benefit of investing your dividend income into your portfolio.
Being a self-directed investor is not the frightening difficult thing that investment advisors want you to believe it is. They desperately want you to be dependent on them because you are their source of income. If, once you establish your portfolio which will go for years generating a reliable high income along with good growth in your portfolio, why would you pay tens of thousands of dollars every year to an investment advisor? My experience has been that investment advisors know little about dividend investing other than it is a threat to their income.
Share prices become almost irrelevant other than indicators of size and trend. It is the dividend payouts that are most meaningful. This income often rises much faster than share prices and dividends are constant proof of a company’s strength and its ability to survive.
END