Dividend investing is a popular strategy for Canadian investors seeking steady returns. The S&P/TSX Canadian Dividend Aristocrats Index, an index of companies that have consistently increased their dividends over the past five years, has shown impressive performance over the past 14.5 years, with a compound annual growth rate of 10.3%. However, the article delves deeper into the nuances of dividend investing, revealing that a focused high-yield portfolio, while attractive, may not be the best strategy. The author, Norman Rothery, PhD, CFA, explores various approaches to dividend investing, including starting with the 20 largest stocks in the index, focusing on low-volatility companies, and implementing a momentum twist. Rothery also emphasizes the importance of diversification and encourages investors to look beyond dividend growth stocks. He highlights the potential risks associated with high-yield stocks and suggests that a more diversified approach, such as the iShares Core S&P/TSX Capped Composite Index ETF, might be more suitable. Rothery's personal perspective is evident throughout the article, as he shares his own investments in many of the mentioned companies, while also providing valuable insights and analysis for investors looking to navigate the Canadian market.
