Comments on: Canadian Dividend Stocks Are Flexing Muscles Too

By: Canadian Capitalist

Canadian Capitalist — Wed, 16 Apr 2008 14:44:48 +0000

I think this research is worth pursuing, especially in our market which is dominated by a handful of companies. I’ll point to one obvious problem that I have no idea how to correct: the returns should be adjusted for survivorship bias because some of the poorly performing funds might have been merged with other funds and their results don’t show up in the Globe database.

By: Financial Jungle Guy

Financial Jungle Guy — Wed, 16 Apr 2008 16:50:30 +0000

That’s a valid point. Here’s my take on it.

Unlike the US, Canada has very few opportunities for creativity in the dividend investing space. Since there are only a handful of stocks in the pool, funds tend to mirror each other somewhat, so if one dividend fund managed to survive 15 years, no reason why the rest wouldn’t.

Canada has only 5 big banks plus one giant mutual fund company (Investors’.) As we saw, all their flagship dividend funds made the list: TD, Royal Bank, Scotiabank, CIBC and Investors’. BMO Dividend missed the list by one year; it’s only 14 year old, but its 10-year record is 9.49% versus TSX’ 7.81% despite MER. In fact, BMO is one of the better performing dividend funds around, so its addition next year will help boost the overall lead.

To answer your concern, I have no data to refute survivorship bias. But judging from what I know of the Canadian market and what’s on that list, survivorship bias has a minimal impact (if at all) on the conclusion.

By: Dillon

Dillon — Thu, 17 Apr 2008 04:05:15 +0000

2.87% MER on the Investors Dividend Fund - that is just nasty.

By: squawkfox

squawkfox — Thu, 17 Apr 2008 15:39:38 +0000

I’m in complete agreement with you on emulating these mutual funds and avoiding the MERs. Most people buy mutual funds though due to (probably) disinterest in DIY and the ease of hiring a sales person “cough” financial advisor to invest.

Saying this, I started DYI with PHN and now feel more confidant in buying stocks. But yeah, some of those MERs are crazy terrible.

By: Weekly Dividend Investing Roundup - April 18, 2008 » The Dividend Guy Blog

Weekly Dividend Investing Roundup - April 18, 2008 » The Dividend Guy Blog — Fri, 18 Apr 2008 12:41:09 +0000

[…] Financial Jungle had a look at Canadian dividend fund performance. […]

By: Ryan

Ryan — Fri, 18 Apr 2008 13:41:15 +0000

Interesting post. I wonder why growth stocks get so much hype? Is it due to the fact that it more interesting to have a home run hitter n your team then a line drive hitter?

By: Financial Jungle Guy

Financial Jungle Guy — Fri, 18 Apr 2008 18:03:42 +0000

Financial industry has the incentive to give more press time to growth stocks due to the underwriting business.

You don’t hear about wonderful dividend stocks like Leon’s Funiture because these companies have been buying back shares for the past 10 years.