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 274 - WHY I WILL NOT BE INVESTING IN NVIDIA AND OTHER AI STOCKS
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Welcome to Safe Dividend Investing’s Podcast # 274 on May 9th of 2026.
My name is Ian Duncan MacDonald, and I am the 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". For more information on all my books, stock scoring software and podcasts go to www.informus.ca
In this weeks episode I explain why the secret to achieving financial independence is learning how to measure the degree of risk in stocks so you can choose those with the greatest numerical chance to constantly grow your portfolio's share price annually by 10% while enjoying a dividend yield percent exceeding 6%. This objective immediately rules out investing in AI stocks like Nvidia, Microsoft, Alphabet, Amazon, Meta, Apple and Advanced Micro Devices.
The purpose of a company is to make a profit not to provide a gambling platform for speculators trying to time when shares will dramatically climb so they can quickly sell them at a huge profit and then repeat this game over and over again for the rest of their lives - or until all their investment money is lost.
IAN
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 274
Safe Dividend Investing
Greetings to investors all around the world. Welcome to Safe Dividend Investing’s Podcast #274, recorded on May 9th of 2026. My name is Ian Duncan MacDonald. I am the author of seven investment books.
My latest book delivered in January was “Achieving Financial Independence Safely – 200 NYSE Exchange Stocks Analyzed and Scored”. For those trading in Canadian stocks the prior book was Canadian High Dividend Investing – 215 Scored Stocks.
To learn more about how you can benefits from my investment books, visit either my website www.informus.ca or visit amazon.com’s website and do a search for "Ian Duncan MacDonald books”. At Amazon you can find sample chapters and reviews by investors who have benefited from the books. Soon, I will be releasing a booklet called “Decision Scoring” that shows how to easily reduce decisions down to mathematical evaluations.
In reading investment industry advice, I am often left with the impression that investors are taught to view publicly traded companies as inanimate blocks of wood that are swept to-and-fro by uncontrollable economic forces. They are told that the financial strength of a stock rests solely in the stock’s share price. To acquire great wealth quickly they believe they must predict which stocks will rise highest and fastest. This is often accompanied by the advice that they must bet every penny they have on this one stock which is bound to be a winner.
Companies whose shares are being traded are not blocks of wood. I have been an executive in public companies with shares traded on New York Stock Exchange. While I was not on the board of directors of the company, I did have responsibilities for controlling the revenues and expenses for my operation. It was made very clear to me that I was being paid to do was to reach my operation’s profit objectives.
The logical or perhaps illogical trading of our stock was controlled by hundreds of thousands of stockholders that we never had direct contact with. The stockholders and for that matter even the directors of the company had a limited understanding of how all the pieces in the company came together and profits were made.
Although I had stock options that would have richly rewarded me if the company’s share price increased over 12 months, share prices never entered the strategic thinking of me or my fellow executives. We were focused on finding ways to improve our product offerings so we could maintain and grow our market share. There was always the pressure that we were competing with other companies. They too would only grow and prosper if they succeeded in taking sales away from us.
Every month we would be measured on our customer gain or loss. We were expected to exceed our monthly revenue budgets while maintaining our normal expense ratios.
If a few months went by and the revenue figures were not being met, then we knew we would have to meet our profit objectives by reducing expenses. The quickest way to do this was by reducing the number of employees.
When you reduce your employee count you make it even harder to reach your revenue objectives. With fewer salesmen you reduce your contact with the existing and prospective customers who generate your revenue. With fewer staff to service your customers, your customers might look to your competitor to meet their expectations.
Profitably operating a business is difficult. It is not a game. Human emotions, ambitions, pride and fears are in play every day in a public company. Share prices are lost as a motivating factor in the effort to survive and grow profitably.
I cringe when I hear things like, “the market is at a high right now and I am not going to buy any more of their stock until the market crashes”. Such investors seem to be totally oblivious to the fact that the purpose of a company is to make a profit, not to give them a gambling platform to try to guess when share prices are going to go up or down. Even when objectives are being met by a company and profits are growing, such positives would be ignored by an investor hoping that a problem would develop that would reduce the share price of a company to give them a chance at quick riches. It is a competitive, greedy, short-sighted world out there.
While no one can accurately predict future share prices, it is not difficult to predict that a well-run company that has paid out ever increasing high dividend payouts for the last twenty years will again pay a high dividend this year. Dividend payouts are subtracted from profits. How much the executives of a company extract from profits is a human decision that is often motivated by pride in showing what they have achieved and to give them a competitive edge. You will often see companies paying out a dividend just slightly higher than their competitor. Dividend paying companies want their long-established customers to expect a dividend payout this year exceeding last year’s payout. The executives of the company know that if they fail to match or beat last year’s dividend payout shareholders would sell their shares and this would drive down the share price.
Their customers buy products because the supplying company is known to be reliable with fair prices. The customers do not choose their suppliers because the supplier’s share price is high or low.
Speculators intent on buying a stock at a low price and selling it at a much higher price often seem oblivious to the profits and reliability of the company they are investing in. Those companies that plod along issuing a 6% annual dividend yields year-after-year with s modest 10% annual increase in their share price are usually ignored by speculators.
A speculator wants to be able to brag about how they bought a hot AI stock like NVIDIA at $3 in 2016 and sold it in 2025 at $120 for a 3,900% profit. Unfortunately, some speculators would now feel cheated because Nvidia is now at $211. They could have realized a profit of 6,933%. They berate themselves now for having been so impulsive and short-sighted as to sell it before it reached its peak. They now vow that if the stock dips down to $205 they will buy it and hold it forever.
Unfortunately, in the competitive world we live in, incredible profits also attract incredible numbers of competitors who are willing to invest incredible amounts of money to develop products that will at some point be better, faster and cheaper than what Nvidia has created. No company’s monopoly status lasts forever. New technologies will eclipse today’s leading technologies.
With a high price to earnings ratio of 40.5 Nvidia’s current share price would be regarded by some analysts as being overpriced and likely to fall.
Nvidia does have a great operating margin of 60.1%. With such a high demand for its stock, it has no reason to pander to stockholders, thus paying meaningful dividends is the farthest thing from their mind. They do pay a dividend. It is a blistering of 0.02 of a percent. Over the year this $211 stock paid out a dividend of 4 cents. You would wonder is it just a token that allows them to say they pay a dividend? Their excuse for not paying a reasonable dividend is that they need all their profits for future development work.
Out of thousands of stocks whose share prices were between $1 and $5 in 2016 there is only one stock that has reached over $200 shares by 2026. That is Nvidia. What happened to the thousands of other penny stocks? Research shows they succumbed to bankruptcy, dilution of their shares, permanent stagnation, reverse splits and acquisition by stronger companies.
The seven largest AI stocks include
| NVIDIA Corporation
| Microsoft Corporation
| Alphabet Inc.
| Amazon.com, Inc.
| Meta Platforms, Inc.
| Apple Inc.
| Advanced Micro Devices, Inc.
|
Nvidia, with its operating margin of 60.1 lead the pack. Only Microsoft and Meta Platforms had operating margins that reached the forties.
Meta’s Price-to-Earnings ratio of 22.2 was the best of these seven AI stocks. At $617 it also had the highest share price . It was followed by Microsoft at $421.
. Microsoft was paid the highest dividend yield of all these 7 AI leaders. Their dividend was an unimpressive 0.84%. It did have a good Price to Earnings ration of 24.7. Microsoft is also the only one of these seven AI stock that has survived for 50 years.
For comparison, one of the most outstanding stock other than these seven AI stocks seems to be Tesla. In 2016 it was at $12.74 when Nvidia was $3. It is now at $411.78 compared to Nvidia’s $211. It pays no dividend. Tesla is a hot stock. It traded 64 million shares today.
I will not be investing in any of these seven AI stocks or Tesla. The 20 financially strong high dividend paying stocks I own generate a reliable steady income for me far exceeding my needs. Years have gone by since I have seen any need to add or delete stocks to my portfolios. Despite this the dividend income and the value of the portfolios keeps increasing. This reliable growth leaves me free to do exactly what I want to do every day. Every night I sleep well knowing even in market crashes my reliable dividend income will be there as it was in 2008 and 2020.
In my books I explain how scoring stocks removes procrastination and indecisiveness from investing. You are not waiting for the perfect safe investment and right economic conditions. If you intend to hold a strong stock for a lifetime, it does not matter when you buy it because it will increase over time.
The secret to achieving financial independence requires learning how to measure the degree of risk and choosing the stock with the greatest numerical chance to succeed. It is not difficult. My background, for decades, was in building commercial risk scoring systems for banks, manufacturers, wholesalers and insurance companies. I know scoring risk works.
That’s all for this week, folks.