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 283 - ALWAYS REVIEW CURRENT AND HISTORICAL OPERATING MARGINS?
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Welcome to Safe Dividend Investing’s Podcast # 283 on July 11th of 2026.
Many years ago, I was responsible for building a national commercial risk database of over 2,000,000 businesses to warn banks, insurance companies and trade suppliers of serious financial problems that their commercial customers were encountering. Every business that offers the incentive of credit terms to their customers to make a sale is gambling their repayment terms will be met. If not, it can lead to not only destroying their profits but can lead to business failure.
In this podcast, I share a few insights about the birth and death of businesses that I learned from building this commercial risk database. It can help you to achieve the decades of financial independence from your stock portfolio that I have achieved.
One of the most critical things I have learned in choosing stocks and monitoring the stocks in my portfolios is to pay close attention to a company's operating margin. Today I explain this in detail with particular attention to recently listed penny stocks and how to separate fact from fiction in a stock promoters rhetoric. If you do some very basic research you too can build a strong, safe portfolio.
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
dcast 283
July 11, 2026
Greetings to investors all around the world. Welcome to Safe Dividend Investing’s Podcast #283, recorded on July 11th of 2026. My name is Ian Duncan MacDonald. I am the author of seven investment books.
To learn more about my investment books, visit www.amazon.com 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 seven books.
The intent in my writing, my investment books and my podcasts is to protect investors from investing in stocks whose chances of becoming viable, growing businesses are low to non-existent. In my previous life, over many years I was responsible for the building of a national commercial risk computer database. That grew to over two million businesses.
As soon as a new business purchased anything on credit from a trade supplier it was soon listed in my database. If that business ever took out a secured loan, got placed for collection, got sued, ceased operating or went bankrupt. subscribers with access to the risk database were made aware of it. To acquire the public record information for the files I had to have a system to retrieve public court filings from every court in the country weekly. To identify the formation of new companies I needed thousands of businesses feeding their new account receivable informationy to me
What did I lean about the life and death of businesses? Less than 20% of all the newly formed businesses would still be operating five years after they first entered the database.
Most who failed ended their days as limited corporations-out-of-business without seizible assets. This meant that for the creditors who were owed money when the company ceased operations that there was not enough money left to even consider legal action to recover their loss from the debtor company.
I also saw that those companies who survived and prospered for more than five years built their sales at a steady pace by establishing a loyal customer base. They carefully watched their expenses and made sure they were under control.
Within a few years these new companies were generating profits which were invested in business growth. A few of these companies, after many years of experience, grew large enough to become public companies selling their shares on a stock exchange.
It is relevant to this podcast that I also mention that I grew up in one of the largest mining cities in North America. My father was a miner. I paid my way through university with the money I made working as a miner. Thus, my credibility antenna warns me when I come across something like the following promotion for a mining company. It will remain anonymous, but for convenience I will call it XX Phosphate Corporation).
The promotion read, “Florida, Access Newswire, May 6, 2026…will host an investor webinar on May 12 with XX Phosphate Corporation.
Attendees would gain insight into XX phosphate’s strategy to become a leading North American supplier of high-purity phosphate for the rapidly expanding lithium Iron phosphate battery market global battery demand is accelerating. The President will also highlight XX Phosphate’s vertically integrated mine-to-market approach, as well as key partnerships, non-dilutive government funding, and potential financing pathways…”
At the presentation they pushed even harder to sell their shares, with the following plain language:
“Folks, I'm going to be blunt with you. Every once in a while, an opportunity comes up with all the ingredients for success. XX Phosphate Corp isn't some pie-in-the-sky speculative play. This is a company sitting on a world-class phosphate deposit in Canada.
LFP batteries just overtook nickel-based chemistries in 2025 for the first time EVER, growing 48% year-over-year to occupy almost ¾ of total battery chemistry on the planet. Tesla, BYD, Ford, Volkswagen, Stellantis — every major automaker is pivoting to LFP. Why? Because they're 30% cheaper, safer, and don't depend on sketchy cobalt supply chains.
In November 2025, the U.S. government added phosphate to the Critical Minerals List.. Right now, China controls the entire LFP supply chain. it's NATIONAL SECURITY.
On any new stock I always do a basic credibility test. I checked this company name and the names of the president and chairman in a simple Google search using wording like the following “What legals and complaints are registered against XX Phosphate and its president and Chairman”.
I learned from this search that the president of XX Phosphate was a lawyer which is probably why the follower legalese appeared at the end of the search data, “These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements, including but not limited to: the Company's inability to produce high purity phosphate materials at full ESG standard under a low carbon footprint; the Company's inability to integrate directly into the functions of certain major North American LFP Battery producers; the Company's inability to develop its land claims in, Canada; and the Company's inability to announce the drilling results for property.
These are not statements of historical fact. They are forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend" or the negative of these terms and similar expressions. Forward-looking statements include statements relating to: the Company's commitment to producing high purity phosphate materials at full ESG standard under a low carbon footprint; the Company's plans to integrate directly into the functions of certain major North American LFP Battery producers; the Company's proposed development of its land claims in, Canada; and the Company's expected announcement of the drilling results for the property. “
In other words, you have now been told that everything you have read or heard about XX Phosphate Corporation is not factual. This disclaimer makes it difficult to sue XX Phosphate for lying. I doubt that this disclaimer was presented to those in attendance at its promotion meeting in Florida.
How many in Florida who attended the promotion spent just a few minutes determining the reality of what the promoters were trying to sell them?
I decided to further investigate and also score XX Phosphate using the IDM stock scoring software. Within a few minutes I learned that the stock was listed in June of 2023 in the US on the Over-The-Counter stock market and in Canada on the small Canadian Stock Exchange. (These are inexpensive investment markets for penny stocks of struggling new corporations)>
I could see that XX Phosphate was first listed on the exchanges at 36 cents in 2023 and a year later in 2024 it was at 14 cents. By 2025 it was 32 cents and it was only in June of 2026 after significant promotion that it rose to $1.20.
The IDM stock scoring software scored it at 9 out of 100. I only consider buying a stock if a stock scores over 50. Out of thousands of stocks I have scored I can only remember one that scored lower than a 9. XX Phosphate’s current book value is 14 cents.
While its current share price is $1.48, one analyst projected it would go to $3.16. How he sees it going to do that, with an operating margin of zero and a price-to earnings ratio of zero, puzzles me. It usually takes about ten years to bring a mine into production. This property is still being explored.
What I also wondered was who had bought and sold the 780,897 shares traded that day. Could they be speculators? The kind of investor who thinks it is clever to buy 100,000 shares of a stock at 32 cents a share in 2025 (for a total investment of $32,000) and sell the 100,000 shares at $1.20 cents a share in 2026 giving a profit of $88,000. Perhaps such a speculator would then regret not buying 200,000 shares in 2025.
Investors are now being played by the stock’s promoters. Perhaps, someday XX Phosphate Corporation may be a profitable enterprise and a great investment. However, I am not a speculator or gambler. I see no reason to gamble on the potential of what a corporation might become if long established, profitable companies with years of ever rising share prices and dividend payouts are available.
Dividends are paid from a company’s operating margin. In considering the purchase of a stock the first thing I often consider is the stock’s operating margin. Since dividends are paid from the operating margin and I only invest in stocks paying dividends then presence of dividends is a confirmation that the company is making a profit.
This is important because within the next few years we will again go through another market crash where share prices could drop by 50% but interestingly dividend payouts almost always continue to be paid.
Speculators panic and sell shares in a downturn even though the operating margins and profits of the stocks are not impacted by the falling share prices.
An Operating margin represents that proportion of a company's revenue that remains after paying for all their production expenses and raw materials. It does not include paying the interest on loans, tax obligations and dividends paid to shareholders. The operating margin is a good indicator that the company’s executive run an efficient business operations.
In trying to decide which stock to buy, comparing operating margin is only useful if the companies are in the same industry. For example, software companies can have margins in the 20% to 35% range while consumer goods with higher production costs can be in 10% to 15% range.
Also, looking at several years of operating margins of a company can be a good way to judge if the company’s performance is improving or declining. If it is not improving, then management must make changes in their marketing and sales to increase revenues. At the same time, they also must reduce and tighten expenses. Constant vigilance is necessary to maintain profits and stay ahead of competitors and inflation.
My hope is that next time you are considering a stock purchase that you will take those few minutes to thoroughly calculate the risk you are taking on. Look close at that stock’s operating margin.
That’s all for this week, folks.