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 287 - STRONG STOCKS A SAFE EASY INCOME
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Welcome to Safe Dividend Investing’s Podcast #287 on August 8th of 2026.
Who determines if the stocks in a mutual fund, ETF or Index fund are safe? Could it be that fund managers deliberately bundle hundreds of stocks together to create an illusion of safety that they can hide behind?
After my mutual fund lost $300,000 in three years. I sold that mutual fund and set out to learn how to be a successful self-directed investor, relying on my common sense and the wealth of free information that is available on every stock traded on every stock exchange,
That was 25 years ago. The portfolio of a few hundred thousand dollars I started with, in my fifties, grew by many multiples. The annual dividend income it generates, which I live on, has grown well into the six figures and is still growing every year. This growth keeps my income well ahead of inflation. I now have zero fear of ever being left penniless.
It was not difficult to realize this growth and security. This podcast gives you an over view of how it can be accomplished. You do not have to be a financial genius but you do have to be patient and careful. Once your portfolio of 20 financially strong, high dividend paying stocks is created, you can go for years without ever having a need to make any changes to it.
My other 286 podcasts and my books will develop your investment confidence.
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
SAFE DIVIDEND INVESTING
STRONG STOCKS A SAFE EASY INCOME
Podcast 287
August 8, 2026
Greetings to investors all around the world. Welcome to Save Dividend Investing’s Podcast #287, recorded on August 8th 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 books. More information is also available at my website, www.informus.ca.
I am sure you will be surprised to learn that salespeople are not your friends. They are employees being paid to generate income by convincing you to transfer a portion of your wealth to their employer. Their job is to convince you that by making such a transfer you will realize a great benefit. The important word here is “will” because It immediately establishes that any benefit you will realize will be some time in the fuzzy future - which may be just short of never.
When you buy a car or a house, you can almost determine immediately if you have realized a benefit. However, when you are investing with the purpose of realizing a comfortable retirement it may be decades before the benefit of parting with your money is evident. Investors blindly accept the honeyed words of their professional investment advisor. This is someone trained to establish a rapport with you who can superficially answer your questions while taking your money. He assures you that the investments he recommends will remove all your worries about future income when you are too old and feeble to work.
In my fifties, I entrusted an investment advisor, who I foolishly thought was a friend, with my life savings. Within three years, the safe mutual funds he had recommended had lost $300,000 of my life savings. He had assured me they would provide me with a comfortable retirement even if lived to be ninety. Now it looked as if I would be penniless by seventy.
I had had no idea what I was invested in, other than it was a fund that supposedly contained safe stocks. I never questioned who and how they determined the stocks in the fund were safe. No one had ever told me that every fund must make a prospectus available that supposedly identified what the fund was invested in.
With my loss, I realized that my silver-haired, experienced investment advisor, who loved to flaunt his great wealth, was a parasite feeding off ignorant investors like me. I was unknowingly paying for all the entertainment and gifts he provided.
I have never met an investment advisor who saw their job as one of educating investors on being able to identify good, safe stocks or encouraging them to look closely at their investments. The typical investor only looks at the total in their monthly billing. They pay no attention to the small fees which add up to thousands of dollars in a year.
My advisor was correct when he said, after I asked him how much his charge would be for managing my portfolio, that it would be so small I would not even notice it. The typical investor is paying out somewhere between 2% and 4% of the value of their portfolio every year to advisors whether it makes or loses money. On a million dollar portfolio 2% is $20,000 for a few hours of their time each year. If you are not getting a dividend yield of 5% or more from a stock picked by an investment advisor, then you are lucky to realize a gain of 1% or 2% in annual dividend income after the advisor fees are subtracted.
With my $300,000 loss I realized that I was an ignorant investor. I sold those mutual funds, took my loss, and set out to learn how to become a successful self-directed investor with the money that was left. Now, I was totally relying on my own common sense and my understanding of the wealth information that is available on every stock traded on every stock exchange.
What an education it has been over these last twenty-five years. My initial investment of a few hundred thousand dollars is now many multiples higher and constantly growing. The dividend income it generates which is what I live on, is well into the six figures and grows every year. This growth keeps my income well ahead of inflation. My fear of being left penniless in my nineties has totally disappeared.
The purpose of my podcasts, investment books and stock scoring software is to show you that you too can be a successful self-directed investor. I show you what investment advisors have no inclination to teach you. They know if you understand how to safely invest on your own, then you no longer need their expensive services.
Here are some basic rules that I learned:
(1) If you cannot easily measure the risk and the potential in an investment, do not invest in it. This eliminates investing in mutual funds, ETFs and Index funds. I have often wondered do fund managers deliberately bundle hundreds of stocks together to make it impossible to determine the fund’s investment strength while promoting the safety of it.
(2) If you choose to invest in financially strong companies whose share prices have increased steadily for decades and whose high dividend payouts have also increased steadily, you can expect such share prices and dividend payouts to continue to grow. Experienced executives are managing these strong companies. They have learned how to maintain a close, growing relationship with their customers and you are benefiting from it.
You can confirm that these are strong companies by easily scoring the stock. A simple calculation measures the strength ou of a stock out of a possible 100 points.
The scoring system rates 8 facts that are easily available on every public company. The facts are: the current share price, the share price four years ago, the stock’s book value, the number of stock analysts rating the stock a buy and the number rating it a strong buy, the stock’s dividend yield percent, the operating margin percent, the volume of shares traded daily and the stock’s Price-to-Earnings ratio.
(3) A diversification of stocks in your portfolio by industry and location is critical. Investing equally in the 20 strongest, highest dividend stocks is the ideal.
You might ask why 20 stocks why not 2 or 200. Neither you nor anyone else can accurately predict future share prices, pandemics or the date of the next stock market crash. Thus, 20 stocks limits your risk in any one stock to only 5% of the value of your portfolio. When the number of stocks exceeds 20 it also becomes harder to manage them.
You could invest in just 2 stocks however this concentrates 50% of your wealth in each of the stocks . This is taking an unnecessary risk with your life savings if a one-in-a-thousand disaster should ever occur.
No matter how much you may love a stock, safe diversification limits your risk. Over the years you will find that some your stock’s share prices will quadruple in value. As the total value of your portfolio increases, some of the stocks with slower growth will shrink from being 5% of your portfolio to perhaps 2% of its value, while still being strong and paying high dividends.
While 200 stocks in your portfolio could reduce your risk down to a fraction of a percent on any one stock, you will find that it is almost impossible to find 200 good stocks paying dividend yields of 5% or more. Settling for lower paying, weaker stocks, produces mediocre portfolio growth. It would also take days to create your portfolio.
(4) One of the hardest lessons to be learned is doing nothing when a market crash occurs. Your portfolio can lose half its value very rapidly. Not because the profits or operating margin of the companies have declined but because nervous speculators have sold their stocks fearing the value of their shares would drop to zero.
While financially strong stocks paying high dividends may dip in value, their dividend payouts will continue to be paid through the crash. Interestingly, these shrinking share prices will increase the dividend yield percentages.
Research over the last 100 years shows the average recession lasts nine months and the average gap between recessions is 50 months. The stock market has always recovered to new heights.
Was I surprised to see how strong companies survived and continued to pay their high dividends for decades? I was not.
For decades I had been busy building a commercial risk database of over 2,200,000 businesses. This required thousands of companies to constantly feed their aged trial balances into that database. This allowed me to see how many new businesses were created and many disappeared from it. I saw that only 20% of new businesses survived five years. Thus, you will never find in my portfolio a company who has not paid a steady high dividend for five or years in my portfolio. The odds of a new stock listing surviving the first five years are slim. It is even more unlikely that such a company would be paying a high dividend in its first five years. Be wary of that new stock that is going make you instantly wealthy.
In addition to payment habits of businesses, I set up systems to gather all commercial writs and judgments from every court house in the country plus commercial collection claims placed with collection agencies. From this negative data I learned that poorly run companies fail to generate enough revenue to offset their expenses this causes them to become slower and slower in paying their suppliers. Soon, a impatient supplier places the account with a collection agency. This is followed by suppliers are suing to collect what they are owed. Litigation is the last effort before the well runs dry and there is nothing left.
Most failed businesses do not go formally bankrupt. They just close their doors and become limited companies, out-of–business without seizible assets.
Only a few thousand companies out of the 14,000 stocks traded on North American stock exchanges pay dividends and of these only about 200 are high dividend payers. To acquire stocks in 20 of these 200 will cost your $10 or less per company, no matter whether you are buying 100 or 10,000 of their shares.
Since you would only be buying stocks that you intend to hold forever, the total cost to build your strong portfolio would be a one-time administration cost of about $200 plus the price per share. This is a small fraction of the thousands a financial advisor would charge you each year for a few hours of their time.
You too can achieve financial independence and a lifetime of security if you are patient and disciplined. You do not have to be a financial genius. Successful safe investing, the way I teach it, is not difficult.
Ian Duncan MacDonald