Be an owner

When it comes to dividend investing, I rely on a simple strategy – be an owner. Basically, I want to be the owner of a business that produces and sells products that people use every day. The more reliant people are on these products, the better. 

Furthermore, I want to be an owner of a company where people complain about its high product pricing all the time yet have a hard time switching to something else. This tells me that the company has key advantages over its competitors, a wide moat, or switching is simply not possible (the best kind!).

What does this mean? Consider your daily routines, what are some things you use on a daily basis? Take me for example, when I wake up in the morning I usually go take a hot shower. I rely on water and natural gas for a nice hot shower. We use Fortis for natural gas. While there are other independent natural gas suppliers available in BC, most of them use Fortis as the supplier. So we invest in Fortis. 

After a shower, the whole family sits down to have breakfast together. Breakfast items are usually purchased at either Costco, Superstore, or local grocery stores, whichever provides the cheaper pricing. While the grocery sector is highly competitive, it makes sense to invest in a few of them, like Costco, Walmart, and Metro. We rely on Visa and Mastercard on these grocery purchases and most purchases, so we invest in Visa. 

Many of the products that we use on a daily basis are produced by the likes of Procter & Gamble and Unilever, so I want to be an owner of these highly profitable companies. 

We bank with TD and a local credit union. Although TD charges high monthly and trading fees, I have stuck with them since I was a teenager. Why? Because the other big Canadian banks charge just as much in terms of fees. Hence, I invest in Canadian banks rather than one of the Canadian bank ETFs.

When I work, especially working remotely for the last 18 months, I need the internet and a cellphone to do my job. Since Canada has one of the highest internet and cellphone costs in the world and people complain about the prices all the time (including me), investing in Canadian telecommunication companies like Telus, Rogers, BCE, and Shaw makes a lot of sense to me.

When I am out and about, I see maybe people using Apple iPhones and have heard people moving away from iPhones and switching back a few months later. It seems many people prefer Apple’s ecosystem and have a hard time switching to Android and/or Windows. So we invest in Apple.

Do you see how simple and effective this strategy is? 

No wonder many of the best Canadian dividend stocks I picked out are companies that produce or sell products that Canadians rely on on a daily basis. 

Be an owner

While this simple strategy applies to owning stocks, I think it can be generalized to the following statement:

To improve your financial well-being and build and increase your wealth, you need to be an owner. You need to own income-producing assets that appreciate value over time.

What do I mean by income-producing assets? Here are some examples:

  • Stocks
  • Real estate
  • Businesses
  • GICs
  • Bonds
  • Franchises
  • Royalties

For most people, it is easier to buy these assets, like stocks, real estate, bonds, and GICs. Some of these income-producing assets require time and energy to build up, like businesses, franchises, and royalties (I suppose you can buy businesses and franchises too but both will require some time and energy to manage). 

The key thing in building wealth is to stick to a few of these income-producing assets as your core investing strategy rather than trying to own them all. Don’t get impatient and start switching back and forth between these income-producing assets. It’s important to get in line and stay in line.  

Teaching kids about being an owner

As Baby T1.0 and Baby T2.0 get older, Mrs. T and I are teaching them this simple concept. Both kids enjoy watching Disney movies, buying toys from Walmart, playing LEGO, etc. Shortly after Baby T1.0 was born, we created a dividend portfolio for him by selecting 15 dividend-paying stocks using ShareOwners. After Baby T2.0 was born, we decided that this portfolio would be split evenly between the two kids.

Unfortunately, ShareOwner was purchased and closed by WealthSimple, resulting in this kids’ dividend portfolio disappearing. We still wanted to teach both kids about this important concept of being an owner, so we set up their investment account with WealthSimple Trade (under Mrs. T’s name). Both kids would put in equal amounts of money from their gift money to buy stocks.  

Rather than buying individual dividend stocks in this new WealthSimple Trade account and having to manage things for the two kids, we decided to go with a passive route by investing in XEQT, one of the all equity ETFs available in Canada. We also didn’t want to purchase individual dividend paying stocks because WealthSimple Trade currently doesn’t support dividend reinvestment plans.

We ended up with XEQT because of the lower MER fee compared to VEQT. Furthermore, both kids liked the idea that they “own” all the stocks rather than having to handpick 10 or 15 of them.

Kids being kids, we have to keep reminding them that stock prices will go up and down in the short term, but over the long term, the price should increase. In addition to teaching them about the concept of being an owner, we’re also teaching them about time in the market.

So far, they seem to understand the ideas and want to put more money in their account whenever they receive gift money. 

On a related side note, since LEGO remains a private company, both kids were extremely disappointed that they aren’t part owners of LEGO. If LEGO ever goes public one day, we definitely will invest money in it. 

Summary – Be an owner

Investing and building wealth doesn’t have to be complicated. Find good businesses that make products that people use and depend on. Remember, invest for the long term. Investing is like a bar of soap. The more you touch and handle it, the smaller it gets.

Be an owner! 

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17 thoughts on “Be an owner”

  1. Quite a good and straightforward strategy!

    I am wondering if there’s any risk of over-correlating our own personal preferences for consumption to whether or not the business is a success?

    For example the scenario of me really liking a company and buying their products, but since my preferences for that particular thing is unlike most others in the market, the business goes bust and I need to find another service/product that does a similar thing. In this case, if I had stock invested in the company, it could be worth $0. I am wondering how to mitigate this risk, or if there’s guidelines for diversification on this?

    As an example, I used to have PG&E (public utility stock with high dividends) and they’ve basically got a monopoly on California gas/electricity. I use it, and it doesn’t seem like they’re ever going to go away so I invested money into it. But I think late 2010s there were huge fires and they got sued and their stock plummeted and now their dividends are non-existent.

    On the flip side, other things I consume, like Nike and Starbucks stocks though have done well.

    • A very good point, that’s why once you determine the businesses that you use regularly, you need to determine whether other people use products from the same businesses.

    • I believe PG&E was to blame for some of those fires and got sued big time. They apparently didn’t maintain their lines. This also happened more recently. IMHO I think this type of company failure would be very hard to determine in advance without insider information.

  2. I use the same strategy. Be the owner, not the consumer. Well, we have to consume too, but the goal is to own more than consume. That way, other consumers will help fund your retirement. 😉

  3. I think we all forget at times that we are all partial owners of real businesses when it comes to holding dividend growth stocks. As partial owners we have vested interests in making sure our holdings are operating to their full potential. Bars of soap do need some attention every now and then. True you don’t want to “handle” your stocks too often but you have to navigate perils of inflation too and deal with that other shrinking asset value… fiat currency. Sometimes handing is required.

  4. Thank you Mr. T for all the great ideas. I started my quest to protect savings from inflation by trading on TD WebBroker in December 2021. Our pensions are reasonable for our lifestyle so savings are more for the frills. At 77 years, I find investing an interesting pastime. Like you, I look around at what we use and buy stock related. (examples:T,SJR.B,BPF.UN). However, I do take risks. I am too old to wait 20 years for growth! I do a lot of research on a stock and look for higher dividends before buying (examples: LIF,RNW,DBM). Collective investments with good returns include (and risk) DFN,FFN,FTN. Needless to say, timing is everything. I have stuck with Canadian stocks to date until coming across GOGL and DSX. I couldn’t resist. My dividends now exceed $17,000/year on the original $200,000 invested. I am very happy! Again, thank you Mr. T for your down to earth advice! It has been very helpful.

  5. I really love readying your blog! I am 30 years old, married, own a business and just starting investing in securities in January. I really enjoy reaching your blog for insights and information that give me some direction on companies I would like to research more. I really like this idea of starting a account for your kid. I am going to look into this further! Than you!

    • Not sure what you mean. There are many different types of royalty stocks out there. For example, KEG Royalties, A&W Royalties, Boston Pizza Royalties just to name a few.

      Most of these royalty funds have high yields but offer very little in price and dividend growth.


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