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.
Last month, October 2015, was a great month for my portfolio. Stocks somehow started to recover from the August sell-off.
I did not make any major changes in my dividend portfolios. I just made some purchases using the dividend income I received in October.
The changes made in Canadian portfolio in October 2015.
- purchased 15 shares of PWF at $31.44 – added some insurance companies to hedge against raising rate.
- purchased 6 units of XRE (REITs ETF) in multiple occasions at average price of $15
The changes made in U.S dividend portfolio in October 2015.
- Initiated position in EMR – purchased 10 shares at $46.75
I will update the portfolio pages with these changes in coming days.
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% | 83.40% up from last update |
| U.S stocks | 50% | 14.96% down from last update |
| International stocks | 10% | 1.64% |
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% | 0.73% |
| Finance | 10% | 20.79% |
| Industrials & Infrastructure | 5% | 7.71% |
| Consumer Staples | 10% | 7.34% |
| Energy & Materials | 5% | 5.61% |
| Utilities | 5% | 14.23% |
| Pipelines | 5% | 14.34% |
| Consumer Discretionary | 5% | 2.18 |
| Health care | 5% | 0.0% |
| Information technology | 5% | 0.09% |
| Telecommunications | 5% | 7.69% |
| Real-estate | 5% | 4.23% |
| Miscellaneous & Preferred shares | 5% | 5.84% |
| Transportations | 5% | 7.58% |
| International & Diversified ETFs | 10% | 1.64% |
From the above table, you could easily see my poor portfolio diversification. Finance, pipelines and utilities are almost 50% of my total value. Risky! Very risk approach!.
It is a big mistake I made in the past.
I was focusing to acquire more units and collecting dividends, but forgot 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?
Nice addition with EMR. A couple months ago it was a great buy along with other industrial names CAT, MMM and DOV. Nothing wrong with having a strong Canadian stock presence either. There are many fine dividend paying companies in Canada and I have been very partial to the large Canadian banks as of late too. Names like TD, BNS and RY among ENB, POT and more. Thanks for sharing your update with us.
Thank you DH for stopping by,
I have a great number of Canadian dividend paying stocks, and now am slowing moving into U.S market. U.S market is more diversified than Canadian market. Looking to add more U.S stocks in the coming months.
Cheers,
Cheers,
Hi,
thanks for sharing. I also bought EMR recently along with few other blue chip big names. You have some great companies in your portfolio. I was just wondering how long it took for you to buy all those names?
Good investing,
Hello Lews,
Thank you for stopping by, EMR is one of the dividend king stock. I bought only 10 shares – very tiny position compare with my Canadian dividend stocks. I will add more shares if its price drop further down.
I have been investing in dividend stocks since March 2012. So, almost took more than 3.5 years to buy those stocks. I didn’t buy them from my own money, actually I am investing using borrowed money. 😀
Cheers,