If you’ve spent your career running your business, building up your client base, growing your cash flows and are thinking about retiring, you can rest assured that we speak the same language at Cardinal Capital Management.
We both understand what makes a business successful, we know the importance of a company’s fundamentals and we’re laser-focused on providing a growing stream of income.
We don’t need to teach you how to think like a business owner—because you are one—but we can help you invest like a business owner.
You’ve always been focused on the long-run and you’ve likely had the majority of your net worth tied up in a single great company for most, if not all, of your career.
What if you could spread out that net worth among some of the best companies in the entire world, such as the Royal Bank, CN Rail, Sony, Merck and Canadian Tire?
Some entrepreneurs are uncomfortable with the stock market and we get that. It can be volatile and risky.
But what does risk really mean to you? You effectively put all of your eggs in a single basket while you grew your business. Why were you comfortable with one business then instead of a diversified portfolio of outstanding businesses?
Well, for starters, you were in control. You saw the cash flows and as long as they were moving in the right direction, you felt comfortable.
You knew that if you doubled your income over the last eight years that your business had doubled in value over that same time period.
Well, we’re constantly trying to double the dividend income from our investment portfolios, too. And if we’re successful, the stock market will reflect that.
“Our philosophy of buying quality, looking for value and making sure that the businesses pay us a growing dividend, business owners understand that,” says Terry Wong, portfolio manager at Cardinal. “They also understand if they can get more cash or dividends from a company year after year, the value of that company is worth more over the long term.”
Evan Mancer, Cardinal’s president, agrees.
“We certainly can’t control where the stock market goes every year but we have a 30-year history of growing our clients’ income through growing dividends. That income ultimately drives the share prices of the companies in which we invest,” he says.
And while you’re not at the helm of those companies, we bet the vast majority of them are household names, you know what they do and you know their importance to the economy.
We have helped our entrepreneurial clients across a whole range of industries, including construction, agriculture, pharmacies, real estate, railways and funeral homes, make the transition from being a single business owner to having a diversified portfolio of great companies. That’s a great long-term approach. Investing in businesses in which you can earn income translates into a great retirement portfolio, too.”
We have long been guided by our 12 Cardinal Rules of investing and four of them apply here.
Use Common Sense. An overreliance on a single company is risky when you’re nearing retirement and soon needing income to fund your lifestyle. Spreading your capital out among some of the best companies in the world minimizes the risk in your portfolio.
- Buy Quality. A great example in our portfolios is the Royal Bank, an absolute giant of a company that has dominated the financial sector for more than a century. We don’t see that changing any time soon.
- Don’t Overdiversify. Investing in most mutual funds means micro-ownership stakes in hundreds, if not thousands, of companies. It’s impossible to understand all of them and know what they do. Instead, we recommend putting your money in a few dozen well-known and industry-leading companies.
- Avoid Market Timing. We want to own companies over the long term and through the market cycles. As Warren Buffett says, if you buy good companies over time, they’re going to be fine 10, 20 and 30 years from now.