All posts by Pat McKeough

7 ways to tell if a stock pays a solid Dividend and will keep doing so

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We believe investors will profit most, and do so with the least risk, by buying shares of well-established, dividend-paying stocks with strong business prospects.

That then raises the question, how to tell if a stock pays a solid dividend? How to find out if a stock pays dividends is an important skill for investors.

The best companies to invest in for dividends have strong positions in healthy industries. They also incorporate strong management that makes the right moves to remain competitive in changing marketplaces.

How to tell if a stock pays a sustainable dividend?

These types of stocks give investors an additional measure of safety in today’s volatile markets. And the best ones offer an attractive combination of moderate p/e’s (the ratio of a stock’s price to its per-share earnings), steady or rising dividend yields (annual dividend divided by the share price), and promising growth prospects.

Today we’re going to look at how to tell if a stock pays a dividend and — more important — if it’s likely to keep paying it. You’ll want to recognize these stocks when they are available. Learning how to find out if a stock pays dividends can help you make informed investment decisions.

But first, let’s quickly recap the value of dividends and dividend-paying stocks by looking at some reasons for investing in them.

Why invest in dividend stocks?

1.) Growth and income. The best dividend-paying stocks offer both capital-gains growth potential and regular income from dividend payments.

2.) Dividends can grow. Stock prices rise and fall, so capital losses can follow capital gains, at least temporarily. Interest on a bond or GIC holds steady, at best. But top-quality dividend-paying stocks like to ratchet their dividends upward: hold them steady in a bad year, raise them in a good one. That gives you a hedge against inflation.

3.) Dividends are a sign of investment quality. Some good companies reinvest profit to spur growth instead of paying dividends. But fraudulent and failing companies are hardly ever dividend-paying stocks. So if you only buy stocks that pay dividends, you’ll automatically stay out of almost all the market’s worst stocks.
For a true measure of stability, focus on those companies that have maintained or raised their dividends during a recession or stock-market downturn. That’s because these firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they also provide an attractive mix of safety, income and growth.

4.) Dividend income gets favourable tax treatment. Taxpayers who hold Canadian dividend-paying stocks get an additional bonus. Their dividends are eligible for the dividend tax credit in Canada. This means that dividend income will be taxed at a lower rate than the same amount of interest income (investors in the highest tax bracket pay tax of about 25% on dividends, compared to about 54% on interest income). Investors in the highest tax bracket will now pay tax on capital gains at a rate of roughly 27%.

The 7 suggestions

1.)  How to tell if a stock pays a dividend? Look for companies with long-term success. These companies are the most likely to keep paying and increasing their dividends. Continue Reading…

5 Key Factors that Influence Investment Decisions every Investor should know

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Understand the factors that affect investment decisions so you maximize your portfolio returns

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It’s generally a waste of time to obsess about a short-term downward movement in the economy, stock market or both.

These downward movements can occur for a wide variety of reasons, at any time: even outside the kind of significant downturn caused by COVID-19 or, more recently, higher inflation and the Russian invasion of Ukraine, or the current U.S./Israel attack on Iran.

Still, for every “real” short-term downturn, you can spot a dozen fake-outs: situations where the market or economy looked like it was going into a tailspin but pulled out of the drop and began rising at the last minute.

On the other hand, it does pay to obsess about factors that affect investment decisions like portfolio diversification, investment quality, and the extent to which your portfolio suits your personal goals and temperament.

1.) What is the appropriate asset allocation for my portfolio?

A diversified investment portfolio should be spread across multiple asset classes for risk management and potential growth. The main components typically include:

Stocks provide growth potential and can help protect against inflation over the long term. They tend to be more volatile but historically offer higher returns.

Bonds offer steady income and help reduce overall portfolio risk. They generally provide more stability than stocks but lower potential returns.

Cash equivalents, like money market funds or GICs, offer safety and liquidity but usually provide the lowest returns.

The specific percentage allocated to each depends on your personal circumstances, but maintaining this basic diversification helps balance risk and return potential.

Remember that regular rebalancing helps maintain your target allocation as market values change over time.

Spread your money out across most if not all of the five main economic sectors (Finance, Utilities, Manufacturing, Resources, and the Consumer sector). The proportions should depend on your objectives and the risk you can accept. The Finance and Utilities sectors generally involve below-average risk. Manufacturing and Resources tend to be riskier, and the Consumer sector is in the middle.

As well, balance aggressive and conservative investments in your portfolio, in line with your investment objectives and the market outlook. Above all, avoid the urge to become more aggressive as prices rise and more conservative as prices fall.

Discover more about properly diversifying your portfolio.

2.) How do I find quality investments?

Quality investments can be identified by examining key financial metrics such as consistent revenue growth, stable profit margins, low debt levels, strong cash flows, and competitive advantages within their industry.

The best blue-chip stocks offer strong investment quality. When the market suffers a significant downturn like that prompted by the emergence of the coronavirus pandemic, these stocks generally keep paying their dividends, and they are among the first to recover when conditions improve.

In keeping with the Successful Investor philosophy, we feel stocks that have been paying dividends for five years or more are some of the safest investments you can have. Dividends are a sign of quality and a company’s financial health. Canadian banks and utilities are among the income-paying stocks that we consider to be safer investments.

Learn more about developing a long-term strategy focused on stocks with high investment quality.

3.) Why is it important to have a disciplined savings plan?

A disciplined savings plan creates financial stability by building wealth consistently, protecting against emergencies, and helping achieve long-term goals through the power of compound growth.

If there is one piece of personal wealth management advice you should immediately implement, it’s to have a disciplined plan for saving during your working years. This, above all things, can set you up for optimal investment gains. We talk more about this in 9 Secrets of Successful Wealth Management, which is free for you to download.

Many of our wealth management clients live off their investments. From time to time, they need to sell some of their holdings to supplement their dividend income. But rather than trying to predict price changes or spot highs and lows, we ensure that decisions affecting the client’s portfolio are tailored to his or her circumstances and temperament.

4.) How can I find hidden assets on a company’s balance sheet?)

A company’s hidden assets can be uncovered by analyzing the footnotes in financial statements, examining goodwill valuations, reviewing off-balance sheet items like operating leases or joint ventures, and investigating intangible assets like patents, brand value, and customer relationships. Continue Reading…

Tips for picking Stocks from the TSX index

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Financial, safety, and survival factors are important to consider when looking for stocks on the TSX

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The TSX is the abbreviated name for the Toronto Stock Exchange. You will often see our stock recommendations on TSINetwork accompanied by a TSX index symbol. When we’re looking for the best investments to recommend in 2025 (ones you might consider as buy and hold), we start, as we traditionally do, by putting all the important information we know about a company into perspective. This is the case for making investments from the TSX index.

What is the TSX index?

The TSX is the largest stock exchange in Canada and the third largest in North America, representing approximately 95% of the Canadian equity market with roughly 3,417 listed issuers across various sectors of the Canadian economy.

Of note is that the Toronto Stock Exchange has more oil and gas companies listed on it than any other stock exchange in the world. That’s also reflected in the S&P/TSX Composite Index, commonly called the TSX index. The Toronto Exchange started on October 25, 1861. The TMX Group operates a number of stock and commodity exchanges, including the TSX.

Like most other major stock exchanges, the TSX index is highly regulated. The Toronto Stock Exchange lists common shares of companies, but also index securities like ETFs.

What are the different sectors of the TSX index?

The main sectors of the TSX (Toronto Stock Exchange) index include:

  • Financial Services – banks, insurance companies, and investment firms
  • Energy – oil, gas, and renewable energy companies
  • Materials – mining, forestry, and chemical companies
  • Industrials – manufacturing, transportation, and construction
  • Information Technology – software and hardware companies
  • Utilities – electricity, water, and gas providers
  • Consumer Discretionary – retail, entertainment, and automotive companies
  • Consumer Staples – food, beverage, and household products
  • Communication Services – telecommunications and media companies
  • Healthcare – pharmaceutical companies, healthcare providers
  • Real Estate – property management and development companies

How does the TSX index compare to the S&P 500?

While the S&P 500 has historically outperformed the TSX due to its heavy technology weighting, the Canadian index could reverse this trend in 2025 due to more attractive valuations, higher dividend yields, and potentially investors moving away from tech stocks.

Factors for finding the best stocks to invest in on the TSX index 

a) Financial factors:

Start your search for “buy and hold stocks” by looking for companies that have a 5- to 10-year history of profits. Companies that make money regularly are safer than chronic or even occasional money losers. You’ll also want to look mostly for companies that have been paying dividends for at least 5 years. Ten years is even better. Companies can fake earnings, but dividends are cash outlays. If you only buy dividend-paying value stock picks, you’ll avoid most frauds. The last financial measure we like to see in a company is manageable debt. When bad times hit, debt-heavy companies often go broke first.

b) Safety factors:

At TSINetwork we continue to look for companies that have industry prominence if not dominance when we consider stock to buy and hold (and watch carefully). That’s the same in 2025 as it was in 2005. Major companies can influence legislation, industry trends and other business factors to suit themselves. Smaller firms, on the other hand, don’t have that ability.

The next safety factor we look at is geographical diversification. We tend to buy and hold strong companies that operate Canada-wide, but we think multinational corporations are even better. There’s extra risk in firms confined to one small geographical area. The last safety factor we consider is that the best stocks must be free of excess regulation, free of dependence on a single customer, and free from self-dealing insiders or parent companies.

c) Survival/growth factors:

We feel that the best stocks to buy and hold are the ones that are free from business cycles. Demand periodically dries up in “cyclical” businesses, such as resources and manufacturing. You can hold some of these stocks in your portfolio, but keep them to a reasonable part of a well-balanced portfolio.

We are also particularly keen on companies that have ownership of strong brand names and an impeccable reputation. Customers keep coming back to these businesses, and will in turn try their new products.

Factors we look at when picking stocks from the TSX index   

  • We insist on political stability. For example, mineral exploration is risky enough without the threat of expropriation or onerous taxes.
  • We look for well-financed stocks with no immediate need to sell shares at low prices, since that would dilute the interests of existing investors.
  • We like to see a strong balance sheet with low debt. For junior stocks, we like to see a major partner who can finance a mine, software and so on to production.
  • We want to see experienced management with proven ability to develop and finance a new business.
  • We avoid stocks trading over-the-counter where regulatory reporting and so on is lax.
  • We avoid stocks trading at unsustainably high prices due to broker hype or investor mania.
  • We compare the market cap of the stock with the estimated value of its reserves, future product sales and so on.

Our stock research is always focused on investment quality

Even if a stock looks like it might thrive, we may still refrain from recommending it for a number of reasons. Our stock research may lead us to conclude that it presents too much risk of heavy losses if it fails to thrive. Or we may feel that stocks we already recommend offer better alternatives for investors seeking quality stocks to buy and hold. Or we may simply prefer to hold off on a promising stock because we feel it has limited near-term potential. This can happen because it has been overhyped in the broker/media limelight, for instance.

In many cases, we watch the progress of these stocks-we-like-a-little. We may recommend buying them months or even years later, but only after seeing favourable developments and signs of progress.

How have your TSX-listed stocks performed compared to your U.S. investments?

 

Pat McKeough has been one of Canada’s most respected investment advisors for over three decades. He is the founder and senior editor of TSI Network and the founder of Successful Investor Wealth Management. He is also the author of several acclaimed investment books. This post was originally published in 2014 and is updated regularly, mostly recently on Oct. 23, 2025.  It is republished on Findependence Hub with permission.

What is Market Timing Theory?

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Market timing theory attempts to interpret and detect buy and sell signals in trading patterns and history

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Market timing theory is an investment strategy based on the belief that investors can identify optimal times to enter or exit financial markets by predicting future market movements using technical analysis, economic indicators, or other forecasting methods.

The practice of market timing consists of coming up with and acting on a series of guesses (or estimates, or probability assessments) to use in your buying and selling decisions. The aim is the same in 2026 as it was in 1997 when the strategy gained prominence: to buy near a low and sell near a high. Market timing theory attempts to interpret and detect buy and sell signals in trading patterns and history. Some of the decisions you make with the help of market timing will bring you profits, and others will cost you money.

Many investors start out with an exaggerated idea of the value and importance of market timing. Most eventually become disillusioned with it, after they figure out that it’s costing them money.

Market timing can pay off sporadically, of course. Although the results are largely random, successes and failures are apt to come in spurts. The worst thing that can happen to you near the start of an investing career is that you make a series of successful timing decisions. This may lead you to believe that you have a natural talent for market timing, or that you’ve stumbled on a timing process that’s a guaranteed money-maker. Either of these conclusions can spur you to back your future timing decisions with growing amounts of money.

Good timing-based decisions often produce modest profits. They tend to be smaller than the losses you get from bad timing decisions. Needless to say, one of your future decisions is bound to turn out bad. If you’ve invested enough money in it, you could wind up losing much more than your accumulated winnings from prior timing-based decisions.

What are the key principles of market timing?

The key principles of market timing theory include:

  1. Market Predictability: The foundational belief that financial markets follow discernible patterns that can be identified and exploited through various analytical methods.
  2. Risk Management: The goal of reducing exposure during market downturns by moving to cash or defensive assets, potentially preserving capital that would otherwise be lost.
  3. Enhanced Returns: The aim to outperform buy-and-hold strategies by capturing market upswings while avoiding significant downswings.
  4. Signal Identification: Using technical indicators (like moving averages, MACD, RSI), fundamental data (economic indicators, interest rates), or sentiment measures to generate buy/sell signals.
  5. Pattern Recognition: Identifying recurring market behaviors such as support/resistance levels, trend formations, or historical cycles that might predict future price movements. Continue Reading…

What are ETFs? A guide to investing in exchange traded funds

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Continue reading to find out answers to these questions: What are ETFs? Are ETFs good investments? Should I make ETFs part of my diversified portfolio?

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Have you ever wondered, “what are ETFs?” and how can they impact my investment returns?

Exchange traded funds (ETFs) are set up to mirror the performance of a stock-market index or sub-index. They hold a more-or-less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index.

Exchange traded funds trade on stock exchanges, just like stocks. Investors can buy them on margin or sell them short. These funds have gained popularity among investors, mainly because many ETFs offer very low management fees.

What are ETFs: Reasons why investors like ETFs

The MERs (Management Expense Ratios) are generally much lower on ETFs than on conventional mutual funds. That’s because most ETFs take a much simpler approach to investing. Instead of actively managing clients’ investments, ETF providers invest so as to mirror the holdings and performance of a particular stock-market index.

ETFs practice this “passive” fund management, in contrast to the “active” management that conventional mutual funds provide at much higher costs. Traditional ETFs stick with this passive management: they follow the lead of the sponsor of the index (for example, Standard & Poors). Sponsors of stock indexes do from time to time change the stocks that make up the index, but generally only when the market weighting of stocks change. They don’t attempt to pick and choose which stocks they think have the best prospects.

This traditional, passive style also keeps turnover very low, and that in turn keeps trading costs for your ETF investment down.

What are ETFs: When to buy

Some investors decide when to buy an ETF with the help of technical analysis.

Technical analysis is a useful tool, but only if you recognize it as one of many tools. Before making any recommendations or transactions in client accounts, we always look at a chart. However, we don’t look at the chart for a prediction on what’s going to happen. We look to see if the pattern on the chart seems to support the view we’ve formed of the stock, based on its finances and other fundamental factors.

We find it encouraging if the two seem congruent, and they usually do. But sometimes one contradicts the other, and that’s when we know we have to dig deeper, and perhaps wait until the situation clarifies itself. Continue Reading…