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Tom Connolly shut down his investing newsletter a year ago after a run of close to 40 years, but he’s still managing his own portfolio and sharing the details.

Mr. Connolly’s focus has always been dividend growth, which means focusing less on yield and more on a company’s record for consistently increasing its cash payouts to shareholders over the years. Long-term dividend growth pays off in two ways - rising income over the years and, very often, a rising share price. Higher dividends are an incentive for investors to want to own a stock.

Mr. Connolly tallied the dividend growth in his model portfolio for 2019 through to Dec. 19 and came up with an average increase of 8.9 per cent over 2018. That compares with an inflation rate of 2.2 per cent in November on a year-over-year basis. Look no further, retirees, for a way to help your investment income keep pace with inflation.

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There are 31 stocks in the model portfolio. Mr. Connolly divides them into four categories: Telecom, utilities, financials and lower-yield with higher dividend growth and financials. The lower dividend, higher growth stocks come from sectors such as industrials and consumer staples.

Here are the 2019 dividend growth stars in each of the four categories:

Telecom: Telus Corp.’s dividend was up 7.1 per cent, as tracked by Mr. Connolly. BCE Inc. came in second at 5 per cent.

Utilities: Canadian Utilities Ltd. and Atco Ltd. were both up around 7.5 per cent, with Fortis Inc. up 6.1 per cent.

Financials: Toronto-Dominion Bank was up 10.4 per cent, followed by Manulife Financial Corp. at 9.9 per cent.

Lower yield with higher dividend growth: Canadian National Railway Co. topped the group with a dividend increase of 18.1 per cent, while Imperial Oil Ltd. was up 15.8 per cent.

The dividend growth stocks in the model portfolio with the highest dividend yields: Enbridge Inc., BCE and Canadian Imperial Bank of Commerce, each with yields between 5 and 6 per cent as of late December, 2019.

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Asked if there were any good values from the model portfolio in late 2019, Mr. Connolly said no.

“Everything is so expensive,” he said by e-mail. “I am telling my people to wait."

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