For those of you new to this website, in this post, I discuss the recent changes I made in my dividend portfolios and also discuss about my portfolio diversification strategies.
Canadian and U.S stock markets continue to be volatile in November 2015 as investors fear about interest rate hike in December and the global economic conditions.
I like the stock market volatile because I am still in stock accumulation stage, so the lower stock price means high yield, and I could purchase more units for same amount of money which translates into more dividend income.
Nowadays, I am more interested to buy U.S dividend growth stocks over Canadian market in order to diversify my portfolios.
But, the main issue is the unfavorable currency exchange rate now. Thus, I am adding very limited amount of stocks in my U.S portfolio.
Now let’s see the recent changes in my dividend portfolios.
Last month, I added tiny positions in my U.S portfolio, and there was no big change in my Canadian portfolio.
The changes made in Canadian portfolio in November 2015.
- purchased 5 units of XRE (REITs ETF) in multiple occasions at average price of $14.87
The changes made in U.S dividend portfolio in November 2015.
- Initiated tiny position in UNP – purchased 10 shares at $88.95
Price dropped further after I initiated the position. I will continue to add more UNP shares if price drop below $75. - Initiated tiny position in ADM – purchased 15 shares at $36.70
- Averaged down OHI by adding 4 units with existing my positions.
I have updated the portfolio pages with these changes.
Now, let’s look my portfolio diversification.
Portfolio diversification
Again and again, I will be the first to admit that a significant portion of my portfolio is built with Canadian dividend paying companies – most of the companies and their services I use or experience in my daily life.
But, when it comes to diversification I’ll be the also the first to admit that my portfolio is very poorly diversified – geographic wise and sectors wise.
More than 80% of my investments are in Canadian based companies.
So, I have created a diversification strategic for my portfolios to minimize the investment risks.
Portfolio Geographical Diversification
| Country | Target asset allocation | Current asset allocation |
| Canadian stocks | 40% | 82.68% up from last update |
| U.S stocks | 50% | 15.66% down from last update |
| International stocks | 10% | 1.66% |
My Canadian portion of my investments have increased a bit from my last update due to the recent purchases I made.
Portfolio diversification – sectors & fixed income
Actually, I guess there are only 10 sectors, but I have divided my dream portfolio by 15 sectors including fixed income/bonds.
Please note this is not the way professional fund managers or experts diversify their funds. This is my own diversification strategy.
| Sector | Target asset allocation | Current asset allocation |
| Bonds | 15% | 0.74% |
| Finance | 10% | 21.12% |
| Industrials & Infrastructure | 5% | 8.06% |
| Consumer Staples | 10% | 7.71% |
| Energy & Materials | 5% | 5.21% |
| Utilities | 5% | 13.74% |
| Pipelines | 5% | 13.73% |
| Consumer Discretionary | 5% | 2.24% |
| Health care | 5% | 0.0% |
| Information technology | 5% | 0.09% |
| Telecommunications | 5% | 7.90% |
| Real-estate | 5% | 4.32% |
| Miscellaneous & Preferred shares | 5% | 5.93% |
| Transportations | 5% | 7.55% |
| International & Diversified ETFs | 10% | 1.66% |
From the above table, you could easily see my poor portfolio diversification. Finance, pipelines and utilities are almost 50% of my total value. It is very risk approach!.
It is a big mistake I made in the past. Now, I am trying correct the mistakes by adding other sectors.
I was focusing to acquire more units and collecting dividends, but missed to diversify my portfolio.
However, I won’t sell holdings from over weighted sector and buy in under weighted sectors. But, I will try to balance my holdings by adding new stocks/bonds in the under weighted sectors.
So, in the coming weeks, months and years my stocks purchases will be focusing on to meet the targeted assert allocations.
This is the first strategy I developed for my portfolio diversification. It will evolve over time with the world economic conditions and my risk tolerance.
I will update my progress every month under the portfolio updates category.
Do you have any diversification strategy? And how often you balance your portfolio?
I used to Live bets sports, but Betfair banned Canadians. So i turned to stocks in Feb to get my fix..lol. Only bought and sold a handful of stocks so far. But your site has inspired me to bring it to the next level. I just finished creating a 3 month Net Worth excel file. From Jan to Feb -1.7%, from Feb to Mar +9.6% thats the month I traded, looks like Im on my way….lol.. I’m excited to see your progress as well, it like a reality show without the TV…;)
Hello Chris,
Thank you for stopping by, I am so glad you like this little blog. I don’t trade stocks. It seems like you are very high risk taker.. lol
I only invest in blue-chip dividend paying stocks for long time. It is really working well for me. Good luck in your success.
Cheers,
Been following along your journey as I begin to embark on my own. When is your next update? =p
Thank you Lydia for following my journey! I am so glad that you I inspire you to start you own.
Honestly, I am having little hard time to update my journey on-time with my work and family life. I will try to post next update sooner than later.
Cheers,
Do you track your expenses on buying and selling stocks?
How much does it cost to you a year and is it beneficial than keeping them in a mutual fund or ETF?
I would be weary to keep such large exposure to Canadian stocks. Please do not take it personally. Commodities are down and it is going to effect the results by the end of the year.
Hi FI,
Thank you for stopping by and your feedback.
I don’t track the expenses for buying, and I rarely sell stocks. I invest for long term and my focus for collect raising dividend for life. Whenever I have some money, I put them to work right way without worry about trading fee which less than $5 per trade.
Regarding Mutual fund – my portfolio is worth more than $160 000 now. Lets say if have invested the money into mutual fund with MER of 2%, then I have to pay $3200 for commission for every single year. I am 100% sure that I am not paying $3200 for trading fees. Also, I use Questrade for ETF purchases (at no trading fee).
I am looking to diversify my investment outside of Canada, unfortunately the exchange rate is very high right now.
Best Regards,
I have a managed account with WoodGundy, but I’m not happy with the performance over the last several years. Thinking of opening a Quest Trade account and transferring over $100,000 to start the process. But have no idea what to buy in terms of holdings.
Like to be US focused and dividends are the very important, what number of holdings to have in the account for a balanced portfolio.
Would appreciate any feedback.
Hello Al,
Thank you for stopping by,
I don’t recommend stocks to buy. I just share my own journey with readers. I would say buy higher quality stocks with history of increasing dividend year-over-year. In a long run, your will get better return than buying low quality risky stocks with high yields.
In the current unfavorable exchange rate (I USD = 1.42 CAD), I wouldn’t exchange my Canadian dollar to U.S. I would first start building Canadian dividend growth stocks and move to U.S market later when the exchange rate is in our favor.
Best Regards,
I just shared my own sector diversification. Looks like you own a little bit of everything. More diverse than my own investments. I’m still lacking energy and tech in my portfolios but may one day initiate a position in those sectors. I’m not against owning anything in those sectors, it’s just that I like less volatile sectors like consumer staples much more. For now I’d like to build on what I currently have. Thanks for sharing.
Hello DH,
Thank you for stopping by,
I just created my own diversification strategy to minimize the risk in down turn. It may not right and may get evolved when I learn more about investing.
Cheers,
It is smart to take a look and continue to diversify your portfolio. I wouldn’t be shocked if most DGI have a similar diversification and are overweight in oil and gas plus utilities. If we are trying to find some nice yield, those are usually the first places we look. You have a plan to reach a diversified portfolio and you are slowly and surely making your way there. Buying ADM and UNP recently is a step in the right direction.
Great article and best of luck further diversifying in 2016.
Bert
Hello DD,
Thank you for stopping by,
Due to the unfavorable currency exchange rate, I temporary stopped moving my Canadian dollar into the U.S market. As a Canadian investor, my largest sector is Finance right now. I should reduce the percentage by adding stocks in other sectors.
Cheers,
I have read your blog for awhile and I am wondering about your fees. I notice that you make multiple10-25 share buys per month. When I did some quick checks, even at $4.95/trade you are spending 3-5% on transactions alone. I am wondering because I have been using drips to reduce transaction costs to reduce fees, but it has created some diversification risks because it has limited the number of companys I can buy.
Hi Brian,
Hello Brian,
Thank you for stopping by,
I use Questrade for small share and for ETFs purchases. At Questrade transaction cost is $4.95 per trade, but purchasing ETFs is free. I choose small transaction over DRIPs because I could allocate my money and dividend toward value stocks.
For example, I recently purchased 25 shares of Enbridge (TSX: ENB) at $41.95. I recovered the transaction cost of 20 cents per share when the its stock price hit $42.15.
DRIPs is always good idea, but I would like to collect the dividend as cash and move the money to purchase few bargain stocks.
Best Regards,