“You have a pair of pants. In the left pocket, you have $100. You take $1 out of the left pocket and put in the right pocket. You now have $101. There is no diminution of dollars in your left pocket. That is one magic pair of pants.”

MP Market Review – February 27, 2026

Last updated by BM on March 3, 2026

Summary

 

This is not a stock-picking newsletter.

It’s a behind-the-scenes look at how a dividend growth portfolio is built, maintained, and improved over time.

Welcome to this week’s MP Market Review. Each week, we track the Canadian dividend growth companies on The List, our curated watchlist of businesses designed to produce rising income. While we also publish a U.S. edition monthly, Canada remains our training ground.

Our objective is simple: grow dividend income by 7–10%+ annually while delivering capital appreciation that matches or exceeds the TSX Composite in Canada and the S&P 500 for our U.S. investors over a full market cycle.

What you’re about to read isn’t theory. It’s the real-time application of a dividend growth strategy using real money, with a clear objective: growing income first and letting capital growth follow.

Markets generate a lot of noise. We ignore most of it.

Instead, we track a small set of metrics that tell us whether our dividend growth strategy is working in real time. No forecasts. No opinions. Just results.

Here they are:

  • Dividend income from The List: +5.8% year-to-date
  • Capital value: +5.9% year-to-date
  • Dividend announcements last week: Three
  • Earnings reports last week: Seven
  • Earnings reports this week: One

DGI Clipboard

 

“Try not to notice the market itself or prices as much this year. Cash flow is wealth.”

– Tom Connolly

Intro

 

One of the most powerful ideas in long-term investing is simple: build your income stream before you need it. Dividend growth investing turns that idea into a disciplined, repeatable strategy. Rather than waiting until retirement to generate cash flow, you steadily accumulate ownership in high-quality businesses that raise their dividends year after year. Over time, that rising income becomes the engine that funds financial freedom.

In our recent Portfolio Letter, the Wealth-Builder Model Portfolio (CDN) demonstrates how this works in practice. Since inception in May 2022, annualized dividend income has increased every year, reaching $4,612 by January 31, 2026. This progress did not come from chasing high yield. It came from consistent investment in companies with durable earnings, strong balance sheets, and proven dividend growth. As dividends increased and new capital was deployed, the portfolio’s income stream compounded.

The Outcome

This is the core insight of dividend growth investing: income is not dependent on market prices on any given day. Once shares are owned, dividends continue to be paid and typically grow regardless of short-term volatility. Over time, the income stream becomes more predictable, more durable, and more valuable.

The budget-versus-actual comparison highlights another important principle: compounding progress. Portfolio value and dividends have tracked closely with the original plan, occasionally exceeding expectations. By early 2026, actual dividends of $4,612 were aligned with the projected path, while portfolio value reached $168,428 versus a planned $183,053. The modest shortfall is primarily timing related. Additional dividend growth in the coming quarters and the deployment of remaining capital should narrow this gap.

This distinction matters. Many investors focus on price returns and postpone income planning until retirement approaches. Dividend growth investing reverses that order. Income is built first and capital appreciation follows. As company earnings expand, dividends rise. As dividends rise, share prices tend to follow. Income growth and capital growth reinforce each other, creating a widening margin of safety on the original capital invested.

Starting early magnifies this effect. Each year of reinvested dividends and new contributions increases the base from which future income grows. By the time income is needed, the portfolio is already producing meaningful cash flow. Instead of selling assets to fund spending, investors can increasingly live off dividends alone. That transition from accumulation to self-funded income is the essence of financial independence.

Takeaway

 

Warren Buffett captured this idea perfectly: “If you don’t find a way to make money while you sleep, you will work until you die.” Dividend growth investing is exactly that. You build ownership in exceptional businesses that keep paying you more each year. Long before retirement arrives, your portfolio begins doing the work for you.

That is how freedom is funded. Not at retirement, but years before it.

The Magic Pants model portfolios (Canadian and American) are real-money dividend growth portfolios funded with actual capital and executed in live accounts. Every position shown is owned, sized, and tracked in real time using our disciplined DGI process.

Become a paid subscriber, and I’ll show you exactly how I do it. In addition, gain full access to this post and exclusive, subscriber-only content. We do the work; you stay in control.

DGI Scorecard

 

The Magic Pants 2026 list (The List) includes 26 Canadian dividend growth stocks and our new American watchlist (The List-USA) contains 28 companies. Here are the criteria to be considered a candidate on our watchlists:

  1. Dividend growth streak: 10 years or more.
  2. Market cap: Minimum one billion dollars.
  3. Diversification: Limit of five companies per sector, preferably two per industry.
  4. Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.

Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.

‘The List’ is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on ‘The List’. In other words, we might want to buy these companies when valuation looks attractive.

Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our Canadian dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.

Performance of ‘The List’

 

Dividend growth of The List was up last week with an average increase YTD of +5.8% (income).

The price of The List went up last week and now stands at +5.9% YTD (capital).

Top Performers Last Week: 

  • Thomson Reuters (TRI-Q), up +15.88%.
  • Franco Nevada (FNV-N), up +7.76%.
  • CCL Industries Inc. (CCL-B-T), up +7.62%.

Worst Performer Last Week: 

  • goeasy Ltd. (GSY-T), down -8.61%.

Note: Stocks ending in “-N or -Q” declare earnings and dividends in US dollars. To achieve currency consistency between dividends and share price for these stocks, we have shown dividends in US dollars and share price in US dollars (these stocks are listed on a US exchange). The dividends for their Canadian counterparts (-T) would be converted into CDN dollars and would fluctuate with the exchange rate.

PAID subscribers enjoy full access to our enhanced weekly newsletter, premium content, and easy-to-follow trade alerts so they can build DGI portfolios alongside ours. This service provides the resources to develop your DGI business plan confidently. We do the work; you stay in control!

It truly is the subscription that pays dividends!

The greatest investment you can make is in yourself. Are you ready to take that step? 

For more articles and the full newsletter, check us out on magicpants.substack.com.

We buy quality individual dividend growth stocks when they are sensibly priced and hold for the growing income.