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.
Stock markets continue to be volatile in January 2016 as investors cencern about the global economic growths and slow down in China.
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.
I am very much interested to buy U.S dividend growth stocks over Canadian market in order to diversify my portfolios. But, Due to the unfavorable exchange rate U.S stocks are very expensive for Canadian investors (average 1 USD = 1.4 CAD in January 2016). Thus, I am keep adding Canadian blue-chip stocks as they look very cheap now and waiting for a rebound in Canadian dollar.
Now let’s see the recent changes in my dividend portfolios.
December 2015
The changes made in Canadian portfolio in December 2015.
- added 25 shares of ENB at $43.06 – shares price dropped further down after I made the purchases, then rebounded above $48 in late January.
And, no changes have been made in U.S dividend portfolio in December 2015.
January 2016
The changes made in Canadian portfolio in January 2016.
- purchased 3 units of XRE (REITs ETF) in multiple occasions at average price of $14.00
- added 15 shares of RY at $67.57
- added 32 units of BIP.UN at $46.99
The changes made in U.S dividend portfolio in January 2016.
- Initiated tiny position in TROW – purchased 10 shares at $69.38
Price dropped further after I initiated the position. I will continue add more if price drop further and I have enough U.S dollar in my account. - Averaged down KMI by adding 9 shares at $13.50 with existing positions. Now I have 50 shares of KMI and no plan to add more shares in my portfolio.
- Added 1 unit of IDV (International dividend ETF) at $26.98
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 am still keep 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.
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/employer pension.
Please note this is not the way professional fund managers or experts diversify their funds. This is my own diversification strategy.
Since 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.
| Sector | Target asset allocation | Current asset allocation |
| Fixed income (bonds & Employer Pension) | 15% | 2.76% |
| Finance | 10% | 20.12% |
| Industrials & Infrastructure | 5% | 8.42% |
| Consumer Staples | 10% | 7.51% |
| Energy & Materials | 5% | 4.36% |
| Utilities | 5% | 15.14% |
| Pipelines | 5% | 13.36% |
| Consumer Discretionary | 5% | 3.10% |
| Health care | 5% | 0.0% |
| Information technology | 5% | 0.08% |
| Telecommunications | 5% | 7.39% |
| Real-estate | 5% | 3.92% |
| Miscellaneous & Preferred shares | 5% | 5.39 |
| Transportations | 5% | 6.96% |
| International & Diversified ETFs | 10% | 1.49% |
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 couldn’t move my Canadian dollars into U.S market 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 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.
Do you have any diversification strategy? And how often you balance your portfolio?
Which broker do you use? Just curious because some of your stock buys a a handful of shares. Do you have a broker with no or low fees?
Hello IH,
Thank you for stopping by, I use Questrade and TD direct investing. For small purchases and ETFs, I use Questrade because you purchase ETFs for FREE 😀 .
Please let me know if you need more details.
Cheers,
It’d be ideal to have more US and international exposure in our dividend portfolio as well but it’s hard not to be heavy in your own country (Canada). TROW looks like an interesting buy, have been looking at this stock for a while now.
Hello Tawcan,
Thank you for stopping by,
I would like to have good exposure in U.S stocks, but the currency exchange rate is pretty nasty. I am simply waiting to see some improvement. I love TROW, I just initiated a tiny position and will add more if price drop further.
Happy investing!
Cheers,
Good buys, dividend investing is the way to get financial freedom with minimum risk.
I am following your blog for a while. I would like to see some regular updates to motivate myself to stay in my own financial freedom journey.
Please keep inspiring and motivating people like me by posting regularly.
Thank you so much
Thank you Ali for stopping by,
I am glad that my posts are motivating you 😀 .Thank you so much for your kind feedback. I like to make regular post, but I am now a dad for a cute baby boy. With full time job and a 1 year old boy, it is bit hard to make regular post.
Will try 🙂
Cheers,
Thank you for this information. I have just started my journey on dividend stock investing and I am learning a lot from the info you share. To your success 🙂
Hello Martin,
Thank you for stopping by,
I am glad you find some valuable information in my blog. Keep learning and understand the risks and rewards before make decision in any investments.
Wish you all the best!
Best Regards,