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 stocks rebounded sharply up in March.
I got little excited as my net worth went up sharply along with stock market, but didn’t get complete excitement as an asset accumulator because the prices were high to accumulate assets.
So, what I did last month?
As I did in the past, I started preparing for another market correction/crash.
Yes, I paid down little bit of my debts using the dividends from my non-registered accounts and the saving from my day job.
Basically, I was busy in sharpening up my buying power, so I could jump-in and buy assets when I find any bargains.
Also, I sold one energy stock to reduce volatility in my portfolio. I want stocks in price fixer, not in price taker.
Now let’s see the recent changes in my dividend portfolios in March 2016.
Please note this is not an investment recommendation website and I am not your financial Advisor. I am just sharing my personal financial journey with this website readers. I strongly recommend you to discuss with a financial professional before make any investment decision.
The changes made in Canadian portfolio in March 2016.
- SOLD CNQ with a tiny profit. I bought these shares in November 2012 at $29.69 and sold at $36 on March 14. I am a buy and hold investor. I rarely sell stocks if I own them. But sometimes we need to make some difficult decisions.
And, no changes have been made in U.S dividend portfolio in March 2016.
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. I was kept adding more Canadian stocks to take advantage of recent market drops.
I have created a diversification strategic for my portfolios to minimize the investment risks, but I am not following my own strategic as I am still in asset accumulation stage 🙂 .
Recent changes in my diversification strategic
In March 2016, increased my fixed income target asset allocation to 20% and reduced International stocks target asset allocation to 5%.
January 2016 – I have included my employer pension into fixed income category. The contribution I make into ,my employer pension plan is part of my assets, and it will definitely fit into the fixed income category.
Portfolio Geographical Diversification
| Country | Target asset allocation | Current asset allocation |
| Fixed income (bonds and pension) | 20% | 2.72% |
| Canadian stocks | 40% | 81.51% down from last update |
| U.S stocks | 35% | 14.09% up from last update |
| International stocks | 5% | 1.41% |
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/employer pension.
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 |
| Fixed income (bonds & Employer Pension) | 20% | 2.99% |
| Finance | 10% | 19.43% |
| Industrials & Infrastructure | 5% | 8.20% |
| Consumer Staples | 10% | 7.10% |
| Energy & Materials | 5% | 3.90% |
| Utilities | 5% | 14.38% |
| Pipelines | 5% | 12.92% |
| Consumer Discretionary | 5% | 3.00% |
| Health care | 5% | 0.0% |
| Information technology | 5% | 0.08% |
| Telecommunications | 5% | 6.84% |
| Real-estate | 5% | 8.33% |
| Miscellaneous & Preferred shares | 5% | 4.93% |
| Transportations | 5% | 6.49% |
| International & Diversified ETFs | 5% | 1.41% |
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 make now. But I have no choice as I am unable to move my Canadian dollars into U.S market to diversify due to the currency exchange rate.
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 units in the under weighted sectors.
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.
Many readers asked me which tools I use for all these calculations.
Actually, I use Google Sheet which is available in the Google drive. It is free. All you need is a Google account.
Google Sheet is very similar to MS Excel but you could pull the stock market data from Google Finance to do all the calculations you need.
Do you have any diversification strategy? And how often you balance your portfolio?
Hi, I started my self directed income (dividend) growth adventure 10 years ago. I now live off my portfolio income. Just retired (48) no mortgage and debt free in Oakville Ont.
Here are some of the lessons I learned along the way:
Price only matters when you buy or sell. Buy when yield is relatively high and hold for dividend growth compounding to really kick in.
Watch to ensure increased annual revenue, earnings and dividend growth. Red flag if any of these slips then find out why before selling.
Income does not grow with bonds or preffereds. Fixed income is just that…fixed. No growth. Bond prices are just as volatile as equities over time.
Buy companies rated BBB+ or better.
No cyclicals! Lumpy revenues, EPS, and dividend growth.
Buy companies with good management with skin in the game. They must have an Equity position in the company.
I Stick to Canada and US. Lot of good income producing companies and you don’t have to worry much about tax treaties and currency issues.
Be patient! I still hold many of the securities I purchased 10 years ago! Yield on cost of 14% for my best dividend growers. Average dividend growth of over 10% per year, every year. That’s compounding income working for you!
Good luck and have fun with dividend paying companies. It works!
Kirk
Hello Kirk,
I am so glad to hear that you are living off from your portfolio income. It is many of us dream. Thank for you sharing such an inspirational story and valuable tips. We would like to hear more from you.
Best Regards,
HI I am new to investing and am curious where you keep your passive income holdings. Right now I have alot of disposable income and virtually no debt.
Right now my rrsp is all TD mutual funds(I’m not happy about this) in addition I have a company pension plan.
My TFSA is mostly oil/gas and I am slowly divesting that into cash so I can diversify when I am ready.
I currently have no Non registered accounts.
Where do you hold the vast majority of your Canadian div stocks? RRSP? TFSA? Non regi?
I would like to set myself up for $12k a year in passive income that I can use if/when I return to school from the oil/gas sector. I am very conscious of my tax burden and would like to lessen it if I can.
Hello Andrew,
Thank you for stopping by,
I hold most of the Canadian dividend stocks in my non-registered account, REITs, bonds ETFs and master limited partnership holdings are in my TFSA and U.S dividend stocks are in my RRSP.
I hope this helps, please do not hesitate to contact me if you need further details.
Cheers,
Thanks for sharing your portfolio allocations. I still like the Canadian banks going forward even though they have come up quite a bit from their recent lows. They still offer solid and safe dividends.
Hi DH,
Thank you for stopping by,
I love Canadian banks as a shareholder. But, financial sector is too big in my portfolio. I’m looking to add stocks in other sectors, especially in U.S companies.
Cheers,
Hi, good decision to reduce oil related holdings. I’m doing same thing too.
Hello Marc,
Thank you for stopping by, yes, I like more stability. I would own pipelines stocks instead of oil producers.
Cheers,
Hi I recently found this website and like your investing ideas. I am 75 have lost most of my inviualestments in a bad real estate deal, that being said I still have a few dollars I would like to get out of mutuals…presently looking at dividend stocks..like riocan, Boston pizza and keg royalty income to name a few..I know you are not an adviser but do you think I’m on the right track?? Presently I have $7000. To invest..not sure how to split this up..any comments??
.
Hello Larry,
I’m very sorry to hear about the bad real-estate deal. As you said, I am not a licensed financial advisor and I don’t recommend stocks for readers. I just share my own financial journey.
If I were you, I wouldn’t take risk at your age in investing my money into high-yield stocks you mentioned. I would look for more safer investments like bonds and blue-chip dividend growth stocks like Fortis, CN rail, TD, etc. As I always say, diversification is the key concept for investing.
Please note above is not my recommendation stocks. Please discuss with a qualify financial advisor and make a good decision.
Best Regards,