Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

Mastering the Art of Podcast Production: A Director’s Guide

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Image courtesy Canada’s Podcast/unsplash royalty free

By Philip Bliss

Special to Financial Independence Hub

As a podcast Director, your role is pivotal in ensuring the seamless production of engaging and high-quality content.

With more than 750+ Podcasts Canada’s Podcast delivers Digital Multi-Channel Marketing the new influencer medium.

From planning and recording to editing and promotion, the success of your podcast hinges on a well-executed strategy.

In this comprehensive guide, we break down the essential tasks, timelines, and guest information you need to produce a podcast that captivates your audience.

 

Pre-production Planning

a) Define Your Podcast’s Concept (2 Weeks Before Recording):

Before diving into production, spend time refining your podcast’s concept. Define your target audience, choose a niche, and outline the overall theme of your show. This clarity will guide your content creation and resonate with your audience.

b) Identify Potential Guests (4 Weeks Before Recording):

If your podcast includes guest interviews, start identifying potential guests early. Research individuals who align with your podcast’s theme and have insights to share. Reach out to them, presenting your podcast concept and gauging their interest.

c) Develop Episode Outlines (3 Weeks Before Recording):

Work on detailed episode outlines for the first few episodes. This includes segment breakdowns, key talking points, and potential questions for guests. Share these outlines with your team to ensure everyone is on the same page.

Guest Information and Coordination

a) Guest Invitations and Confirmations (3-4 Weeks Before Recording):

Reach out to potential guests with a formal invitation, explaining your podcast’s concept and the value their participation brings. Once confirmed, share detailed information about the recording process, timeline, and any technical requirements.

b) Coordinate Recording Schedule (2-3 Weeks Before Recording):

Work with guests to coordinate recording dates and times that align with everyone’s schedules. Use scheduling tools like Calendly or Doodle to streamline the process. Ensure guests are aware of any pre-recording preparations, such as technical checks.

c) Provide Information Package (1 Week Before Recording):

Send guests an information package a week before recording. Include details about the podcast, the recording platform you’ll use, technical requirements, and any specific guidelines or expectations. This ensures a smooth recording experience for both you and your guests.

Recording Process

a) Technical Checks (On Recording Day):

Conduct technical checks before each recording session to avoid last-minute hiccups. Ensure microphones, headphones, and recording software are functioning correctly. Confirm that your internet connection is stable, minimizing the risk of disruptions.

b) Set Up Recording Environment (On Recording Day):

Create a comfortable and quiet recording environment. Remind guests to choose a quiet space with minimal background noise. Encourage the use of headphones to enhance audio quality.

c) Conduct Interviews (During Recording):

During the recording, focus on creating a relaxed and conversational atmosphere. Stick to the episode outline but allow for spontaneity. Make guests feel comfortable, prompting them to share insightful and engaging stories.

Post-production Editing

a) Initial Editing Pass (1-2 Days After Recording):

Immediately after recording, perform an initial edit to address any major issues or glitches. This can include removing background noise, adjusting audio levels, and trimming unnecessary segments.

b) Final Editing and Enhancements (3-5 Days After Recording):

Take the time for a thorough final edit. Enhance audio quality, add music or sound effects if desired, and make any necessary adjustments. Ensure the episode flows smoothly and meets your podcast’s standards. Continue Reading…

Dividend ETFs: Finding Stability and Growth in Income Investments

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Discover the Keys to Identifying Dividend ETFs that offer Consistency, Quality, and Long-Term Growth

Image from Pexels/Anna Nekrashevich

Higher interest rates mean dividend-paying stocks must increasingly compete with fixed-income investments for investor interest. However, sustainable dividends still offer an
attractive and growing income stream for investors.

Companies that pay regular and growing dividends have performed very well over the long run when compared to the broad market indices. For example, a simple strategy such as selecting stocks with an extended history of uninterrupted dividend growth, such as represented by the S&P 500 Dividend Aristocrats, has added 11.5% per year over the past 30 years. This compares to the 10.0% annual gain for the S&P 500 Index. And not only did the dividend payers beat the overall market, but they were also less volatile.

The superior long-term performance of the dividend growth companies can be attributed to a combination of several factors: Companies with long histories of regular and growing dividend payments generally have sound competitive business models and growing profits; these are also companies with experienced managements that make disciplined capital allocation decisions, strive for lower debt levels, and operate firms more profitable than their peers.

Notably, though, the Dividend Aristocrats’ performance lagged over the past 5 years against the S&P 500 index.

Most of this underperformance came over the last year and a half, as higher interest rates made fixed-income investments, such as GICs, more attractive for income-seeking investors when compared to dividend-paying equities.

The dividend sweet spot

Income-seeking investors who decide to take on the risk of the stock markets are faced with a wide range of options including “yield enhanced” dividend-paying ETFs, moderate-yielding companies with average growth rates, and low-yielding but fast-growing companies. Then there is also the group of companies that have very high dividend yields and may seem attractive but, unfortunately, come with elevated risk.

In many cases, a high yield may be a warning sign that all is not well with a company and that future dividend payments are at risk of being cut.

As well, a dividend cut, or even an outright dividend suspension, is often accompanied by a steep decline in the share price, as income investors dump their former dividend favourites.

A 2016 study by a group of U.S.-based academics provides some statistical guidelines for sensible dividend-based investing.

In reviewing the performance of almost 4,000 U.S. companies over 50 years, they found that dividend-paying stocks beat non-dividend payers.

In particular, the middle group of dividend yielders (i.e., those with an average yield of 4.3%) surpassed both the low yielders and the high yielders in terms of total return. Equally important, this superior performance was achieved with lower risk, as measured by the standard deviation of returns.

Based on this long-term study, it makes sense to avoid the highest-yielding stocks and rather look for companies with moderate yields and sound growth prospects. This safety-first approach will result in a lower yield but likely provide a better total return (dividends plus capital) at lower risk.

How to spot dividend ETFs worth investing in

When investing in dividend-paying companies through an ETF, here are key factors to consider: Continue Reading…

Pros and cons of investing only in Canada

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By Mark Seed, myownadvisor

Special to Financial Independence Hub

Image courtesy of MyOwnAdvisor/Pexels

There are certainly pros and a few cons when investing in just Canada…

Given it’s “tax season” and tax refund season for some, I shared my ideas related to managing your tax refund this year.

Thanks to Rob Carrick The Globe and Mail,  who mentioned my post in his column: Look what’s happened to the cities with average $1-million home prices (subscription).

“Housing has definitely come down in cost since 2022. The average price of a resale home in February 2024 was $685,809, 16 per cent below the peak average of $816,720 in February 2022. Still, prices in several of the million-dollar cities have held up well.”

Rob mentioned this post: where to put your cash right now.

For the most part, if you’re not earning at least 4% on most of your cash these days you’re falling behind…

Weekend Reading – Pros and cons of investing in just Canada

As a follow-up to this Weekend Reading edition, highlighting where I personally believe our TSX and some key stocks that drive it could rebound in 2024…I stumbled upon this article this week from 5i Research – partners of my site and work:

Pros and cons of investing in the Canadian vs. U.S. stock market.

I’ll let you read that 5i post for more insights but the punchline from Chris White’s article is something that resonated with me (and always has):

“The US stock market is home to an extensive array of publicly listed companies, and with thousands of stocks available, navigating this vast landscape can be overwhelming. Investors must decide which companies to research, analyze, and potentially invest in. The sheer volume of options can lead to decision paralysis. It is vital that investors understand a company’s financials, growth prospects, and management quality.”

The U.S. market is a challenging space to pick stocks, if your goal is to beat the market.

Conversely, Canada tends to run on oligopolies — a few moaty stocks in some key sectors more than not.

  • You have our big-6 banks.
  • You have a few major telcos. You know the names.
  • You have a few major utility companies. You can count them on two hands.

The list goes on.

Beating the TSX (BTSX) can happen but it’s certainly not guaranteed nor consistent owning higher-yielding stocks.

Investing in our oligopolies, in theory, is the concept behind the 6-Pack (or 12-Pack) Canadian Portfolio which can work well at times:

  1. Own a few Canadian large-cap stocks from key sectors for growth and income.
  2. Own such companies for a long period of time because they enjoy a competitive advantage in Canada: since all things being equal, a moaty firm should offer shareholders a higher, sustainable, competitive advantage than companies with smaller moats or no moats at all; scrambling for market share.

In recent years, for the latter, I’m eating more of my own cooking.

Thank goodness, since many Canadian blue-chip stocks are suffering while the U.S. market has been thriving.

via GIPHY

When it comes to the U.S. selections, I’ve sold off many U.S. dividend kings in my portfolio like JNJ and instead used the proceeds to buy other U.S. stocks or low-cost ETFs that I believed (at the time) could deliver more value.

So far, I’ve been right…including with BRK.B and QQQ but the financial future is always very cloudy.

I mean, it’s only been a year or so since I’ve sold all JNJ stock and added to those existing names I’ve held for a few years….that’s hardly a successful career change.

Every stock or ETF seems like a great idea until it’s not. 

And not all ETFs are created equal…far from it.

I read in October 2023, in just that month alone, the Canadian market experienced a notable surge in new ETFs: 37 of them coming to market.

37??

Here are some examples:

  • Should you invest in the Dynamic Active Global Equity Income ETF (DXGE-T)?
  • What about owning some Purpose Active Conservative Fund (PACF-T)?
  • There is also the Hamilton Technology Yield Maximizer ETF (QMAX-T)…and let’s not forget,
  • The BMO US Equity Accelerator Hedged to CAD (ZUEA-NE) that uses 2x leverage on an equally weighted bank strategy and hedged S&P 500, respectively.

Oh boy. 

Long gone are the days (??) from March 1990, when the Toronto Stock Exchange listed the Toronto 35 Index Participation Fund. The fund tracked the TSX 35 index under the ticker symbol “TIPs.”

You might know this ETF better today as: iShares S&P/TSX 60 Index ETF (XIU).

Thankfully, XIU is still around and doing well overall as long as you have a long-term time horizon. 

Since the launch of TIPs, the Canadian ETF market has seen remarkable growth with over 1,000 ETF available to retail investors today. Source: my friends at https://cetfa.ca/. @cetfassn

While some niche ETFs can offer (and have delivered) great returns, the majority of them are not worth owning IMO. Investing risk taken doesn’t always translate to rate of return rewards.

Pros and cons of investing in just Canada

Give or take, Canada’s economy makes up just 3-4% of the world’s investing markets – so putting all your investing eggs into just Canada immediately eliminates most of the investing world on purpose. In doing so, you are shrinking your investing universe. Especially on the growth side. Continue Reading…

How much do you need to invest to become a Millionaire?

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By Dale Roberts

Special to Financial Independence Hub

There was a time when becoming a millionaire was a big deal. That meant that you were “rich.” These days, becoming a millionaire might be commonplace for an investor with modest or reasonable free cash flow to invest. Most of us should become “rich.”

But of course, a million dollars ain’t what it used to be. The Bank of Canada inflation calculator suggests that in 2024 you’d need $1.87 million to have the spending power equivalent of $1 million in 1994. That said, stocks historically beat inflation over longer periods, and that is the path to wealth creation. How much do you need to invest to reach your financial goals?

Canadian rock band The Barenaked Ladies had a massive hit with their song – If I had a million dollars. I don’t think they adjust for inflation to now sing: If I had $1.87 million dollars.

Keep inflation in mind. To compensate you will increase contributions as your income increases and as you eliminate debt.

Here’s a chart shown on BNN. I took a pic and posted on Twitter / X.

Find that free cash flow

You’ll need to find the money to invest on a regular schedule. That takes a free cash flow plan, and that would usually include a personal and family budget. We need to know how much we’re spending and where. In the end we need to spend much less than we make. The financial planning basics would include paying off high interest debt and keeping your spending in check. You’ll see in that post that I found $888,000 in your takeout coffee (and other discretionary spending).

And here’s a good post on financial planning basics from Get Smarter About Money.

Those incredible stock markets Continue Reading…

Can Savvy Stock-picking outperform Investment Funds?

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By Ian Duncan MacDonald

Special to the Findependence Hub

Why spend days building a stock portfolio when you can almost instantly invest the same amount of money in the units of a popular mutual fund or Exchange Traded Fund [ETF]?

One of the most popular are the Standard and Poor’s  500 Index Exchange Traded Funds and Mutual Funds that are sold by probably hundreds of banks and investment dealers. The rise and fall of the S&P index has become a standard by which the success of all portfolios are often measured against.

The Standard and Poor’s 500 Index is a compilation of stocks selected by a committee called the S&P Dow Jones Indices. It is managed by S&P Global Inc., which sells financial information and analytics. This company is an evolution of the century old McGraw-Hill publishing company.

The S&P 500 tracks the 500 largest American companies selected by their stock market capitalization, which is the value of all the shares held by investors in a company. Fund management companies selling units in their S&P 500 mutual funds and ETFs are quick to brag that just nine of the 500 companies account for 31% of the market capitalization of all 500 companies. These nine are Apple, Microsoft, Amazon, Nvidia, Alphabet, Meta, Tesla, Berkshire Hathaway, and JP Morgan Chase. The sales pitch for buying fund units is, how you can lose with such well known, successful companies in your S&P 500 fund.

These very high-profile companies are the bait to distract you from considering the hundreds of mediocre, but large low-profile stocks in the S&P 500.

I have described the “Magnificent Seven,” which are included in the above nine, as being overvalued when you compare such things as their very high share prices to their much lower book values. For example, Apple’s book value was $4.00 compared to its share price at the time, which was $185. Book values are calculated by professional auditors subtracting what is owed by a company from their assets. The net figure is then divided by the number of outstanding shares to arrive at the stock’s book value. A book value’s logical calculation is far removed from the chaos of optimistic and pessimistic speculators bidding daily for millions of Apple shares in a stock market influenced by media hype, greed, and fear.

Many Investors seek safe stocks that will provide them with a reliable income to support them in their retirement. They look for companies that have demonstrated for years that they share the company profits with the company owners, who are the shareholders. This sharing is done through significant regular dividends.

Only 2 Mag 7 stocks pay dividends

Only two of the Magnificent Seven pay dividends. Their dividends are so small you wonder why they bother. Nvidia is paying a token dividend yield of 0.03% and Microsoft is paying 0.71%.

There are about 25 million companies in the United States. Surely “owning” shares in the 500 largest stocks must be a good investment? However, that very much depends on what your definition of a “good investment” is? My definition of a good, strong, safe stock investment has nothing to do with high market capitalization, which is the primary qualification for being classified as an S&P 500 company.

To me a good stock investment primarily includes:

  • A share price that has steadily increased over the last 20 years.
  • A high operating margin percent that is calculated from the percentage of the amount remaining after you have subtracted the expenses to generate the revenues from the revenues.
  • A company that shares its profits with its shareholders by paying ever-increasing annual dividends yields of at least 5% over the last 20 years.  These would include even the market crash years of 2000, 2008 and 2020.
  • The profitability of a company as reflected in a price-to-earnings ratio that would be below 20.
  • A book value for the company that would be close to or even higher than the share price.

Perfect stocks meeting all these criteria rarely, if ever exist.  You thus are required to make compromises based on how close you can come to your ideal stock.

Creating stock-scoring software

To make such compromises easier, I invented for myself stock scoring software that calculates an objective number from zero to 100. This number allows the sorting of stocks from the most to least desirable. The higher the number the more desirable the stock. Having scored thousands of stocks, the lowest I have ever calculated was an 8 and the highest was a 78. I avoid stocks scoring under 50.

For safe diversification and to avoid disastrous surprises you should aim at investing equally in 20 carefully chosen stocks. Your expectation from historical trends of strong companies is that most of your dividend payouts and your share prices will increase steadily.  This will keep your dividend income well ahead of inflation.

There are about 16,000 stocks available in North America to choose from. Sorting through these thousands of stocks for your “best” 20 is not difficult once you are shown how to do it. It can be done in hours, not days.

When I reviewed all the stocks that make up the S&P 500, I found only 5 stocks that would qualify for consideration in my portfolio. 113 of the S&P 500 had been immediately eliminated for consideration because they pay no dividend. Even some of the very largest companies in the S&P 500 like Amazon, Alphabet, Tesla, Berkshire Hathaway, Facebook, and Disney pay no dividends. A further 288 of the S&P 500 stocks only paid dividends between 3.5% and 1%.

Why would a 3.5% minimum dividend yield be important? For the last 100 years the average inflation rate is reported to have averaged 3.5%. If you had bought a share that never increased or decreased in value but paid out a steady 3.5% in dividends your stock would theoretically have stayed ahead of inflation if it were invested back into the portfolio.

Strong shares have histories of steadily rising share prices.

As share prices increase many companies steadily increase their dividend payouts out of pride and competitive reasons to at least maintain their traditional high dividend yield percents. Usually, the dividend payout increase percentages rise much faster than share prices. This can be easily observed.

Only 100 S&P500 stocks pay dividends higher than 3.49%

Within the 500 stocks you are left with only 100 that are paying dividends higher than 3.49%. To give you a reasonably generous income, the ideal is to realize an annual dividend income generating at least 6% of your portfolio’s value. On a million-dollar portfolio this would be $60,000.

There are only 12 of the S&P 500 companies paying a dividend greater than 5.97%. Two of the 12, AT&T and Altria Group, had return-on-expense percentages of zero or less which eliminated them from consideration. When the remaining 10 were scored it was found that 7 of them were now paying a dividend of less than 6% which eliminated them. Of the remaining three only one had an operating margin greater than zero. This left just one company, Verizon, out of all 500 that would meet my minimum requirements for inclusion in my portfolio. It had a good score of 62.

Verizon’s score was based on a share price of $40.48, a price 4 years previously of $58.22, a book value of $21.98, Ten analysts recommending it as a buy, a dividend yield percent of 6.57%, an operating margin of 16.57%, a daily trading volume of 12,645,534 shares and a price-to-earnings ratio of 14.7.

We still needed 19 more stocks to create a strong diversified portfolio.  Fortunately, there is a wide choice of companies with lower capitalization who are paying dividends of 6% and will have scores higher than 50. Some of these are foreign based companies traded on the New York Stock Exchange who were automatically excluded from being included in the American centric S&P 500. Some had high capitalizations that could have easily included them. Foreign stocks can give a portfolio a geographic diversification which strengthens it.

If you had $200,000 to invest, you could do far better investing the $200,000 in 20 carefully chosen, high-scoring, high-dividend stocks than investing that $200,000 in S&P 500 fund units. While the 20 stocks could generate a dividend income of $12,000, the dividend income  generated from the fund units of an S&P 500 fund would be a diluted 1.3% or an annual dividend return of $2,600. The total dividend income received from all 500 stocks becomes diluted when it is split among all those S&P 500 stocks paying little or no dividends. Continue Reading…