Dividends4Life: A ‘blazingly simple,' must-have portfolio

A ‘blazingly simple,' must-have portfolio

Posted by D4L | Friday, November 26, 2010 | | 0 comments »

About 10 years ago, retired political science professor Mike Henderson singled out these companies for the essential roles they play in the Canadian economy. He then invested in each of them for the core of the retirement savings he and his wife would rely on. The cumulative average 10-year total return on these stocks (that’s share-price gains plus dividends) was 305 per cent, far better than the 72-per-cent gain for the S&P/TSX composite index.

“The idea just came to me, and it was blazingly simple,” he said from his Toronto home. “I basically sat down and thought, what is absolutely essential to our society, and who provides those essentials?” Don’t confuse what we’ll call the Essentials Portfolio with companies that are “too big to fail,” an idea that proved faulty after the global financial crisis took down the likes of Lehman Brothers and Merrill Lynch. Mr. Henderson’s focus is on the function of a company, not its size. The first step in building the portfolio was to set a rule that all stocks had to pay a dividend. As a retiree, dividend income is essential to Mr. Henderson.

Source: Globe and Mail

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