Most investors focus on the value of their portfolio—what it is worth today, how it has performed, and how it compares to the market. But there is another way to think about wealth that is often more practical. Consider a pension: people rarely focus on its total value. Instead, they focus on what it pays each month.
What matters is the income—and whether that income is growing.
*Based on a hypothetical $1,000,000 investment with a starting yield of 3.5% and annual dividend growth matching Canadian Equity model rates. Both calculations are based on the model portfolio and are not representative of any specific client account. Source:
At Cardinal, we view portfolios through a similar lens. While market values fluctuate day to day, the businesses we own generate earnings and often distribute them as dividends. Over time, what matters most is not short-term price movement, but the growth of that income stream. This perspective shifts the experience of investing: instead of reacting to daily moves in the markets, investors can focus on something more stable—a rising stream of income.
CANADIAN EQUITY INCOME GROWTH
Annual Dividend Income on a $1,000,000 Investment
Starting yield of 3.5% (January 2017), based on Canadian Equity dividend growth rates
Income Detail 2017 2018 2019 2020 2021 2022 2023 2024 2025 Div Growth Implied Cumulative Income Annual Income $35,000 $38,675 $42,619 $44,798 $52,024 $57,486 $60,878 $65,443 $70,483 Cumulative $35,000 $73,675 $116,294 $161,091 $213,116 $270,602 $331,480 $396,923 $467,405 Div Growth (%) 9.00% 10.50% 10.20% 5.11% 16.13% 10.50% 5.90% 7.50% 7.70% 9.19% 42.76% *Based on a hypothetical $1,000,000 investment with a starting yield of 3.5% and annual dividend growth matching Canadian Equity model rates. Both calculations are based on the model portfolio and are not representative of any specific client account. Source: Cardinal Research
Income that grows year after year has the potential to transform a portfolio into a dependable, pension-like asset.
The impact of dividend growth over time is powerful. A portfolio generating $35,000 of annual income can grow to more than $70,000 in less than a decade—without requiring additional capital. Over that same period, cumulative income can exceed $400,000. This growth does not depend on predicting markets; it reflects the underlying strength of the businesses themselves.
Inflation is one of the greatest risks to long-term investors. A fixed income stream loses purchasing power over time, but dividend growth provides a natural hedge. When companies increase their dividends, income can rise alongside the cost of living—and often faster. In our portfolios, dividend growth has exceeded Canadian inflation in every year measured.
Emphasis on Dividends
Canada Plus Dividend Growth vs. Canada CPI Inflation
Canada Plus Model vs. Consumer Price Index (Annual)
| Annual Rate | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|
| Canada Plus | 10.1% | 12.1% | 11.2% | 3.8% | 14.2% | 10.1% | 7.6% | 8.2% | 8.2% |
| Canada CPI | 1.6% | 2.3% | 1.9% | 0.7% | 3.2% | 6.8% | 3.9% | 2.4% | 2.1% |
*Canada Plus dividend growth is based on equal-weighted average increases of holdings. CPI data sourced from Statistics Canada. Dividend growth consistently exceeded inflation in every year measured. Source: Cardinal Research, Statistics Canada
This distinction is critical. A portfolio with stagnant income may preserve capital, but one with growing income helps protect—and enhance—purchasing power. Growing dividends doesn’t just keep pace with inflation; it can outpace it.
Markets will always experience periods of volatility, with some years strong and others not. Yet in our portfolios, dividend growth has remained positive even in years when market returns were negative. This reflects the strength of the underlying businesses. Companies that raise their dividends are signaling confidence in earnings and their long-term outlook—often a more reliable indicator than short-term market prices.
Over time, dividend growth is not just a source of income, it is also a driver of long-term returns. Earnings growth supports dividend growth, and both can translate into higher portfolio values. As Warren Buffett has noted, “If a business does well, the stock eventually follows.” This is why we focus on owning high-quality businesses that can grow earnings—and dividends—over time.
For us, dividend growth is not simply a feature of our strategy—it is a cornerstone. We believe companies with a proven ability to grow dividends tend to be financially strong, well managed, and positioned for long-term success. By building portfolios around these businesses, we aim to deliver growing income, resilience through market cycles, and long-term capital appreciation.
Ultimately, investing is about what your portfolio provides, not just what it’s worth.
A portfolio built on growing dividend income offers something investors truly need: a steadily rising stream of income they can depend on, decade after decade.
Company Focus: TC Energy
TC Energy is one of North America’s most important natural gas infrastructure companies. Its value does not come from drilling for gas or making a direct bet on commodity prices. It comes from owning pipelines and storage assets that connect low-cost gas supply to where demand is growing fastest.
The company has performed well as investors recognize that TC’s assets are irreplaceable strategic infrastructure, critical to the North American economy. TC sits in the middle of three powerful trends: rising electricity demand, expanding liquefied natural gas (LNG) exports, and renewed concern over energy security. In other words, boring can be exciting.
The LNG story has become more urgent because of the Iran war. Conflict in the Middle East has reminded global buyers that energy routes can be fragile and politically exposed. North American gas is not immune to volatility, but it offers a secure supply option for countries trying to diversify away from riskier regions. TC’s pipeline network is poised to benefit as more gas moves toward export terminals serving global markets.
The second growth driver is data centers. AI and cloud computing require enormous amounts of dependable power, and many regions cannot wait years for new renewable, nuclear, or transmission capacity. Gas-fired power is often the fastest firm-power solution, increasing the need for pipeline capacity into major power markets. TC’s U.S. Midwest and Appalachian footprint is well-positioned to connect prolific gas basins with fast-growing electricity demand.
| Company | Increase |
|---|---|
| Canadian Pacific Kansas City Railway | +17.5% |
