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.
I was away for last few weeks due to an unexpected family health issue; however, I was monitoring my stock portfolio using my smart phone, even made few purchases during the market sell-off.
On August 24, some people called ‘Black Monday’, my portfolio dropped more than $4000, and it was my biggest lost in a single day in last 3 years of my journey. That huge dropped really tested my risk tolerance in bear market.
Most of other days in last two months, my portfolio moved up and down by more than $1000 per day. I really feel like I am sitting in a roller coaster.
Honestly, I am really enjoying the experience 😀 .
I guess I can handle these types of stock market volatilities pretty easily because my focus is on dividend income rather than stock price movements.
As I mentioned earlier, I took advantage of the recent volatilities and made some stock purchases at discount price.
The changes made in Canadian portfolio in August 2015 and September 2015.
- purchased 10 shares of TRP at $47.41, and later averaged down by purchasing another 15 shares at $42.82
- purchased 25 shares of TD at $51.15
- purchased 10 units of BIP.UN at $49.66
- purchased 25 shares of ENB at $52.69, and later averaged down by purchasing another 25 shares at $48.75
- purchased 38 units of XRE (REITs ETF) in multiple occasions at average price of $14.85
The changes made in U.S dividend portfolio in August 2015 and September 2015.
- purchased 5 shares of CSCO at $25.70 – this is the first technology sector stock in my portfolio
- purchased 10 shares of HCP at $37.20
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 assert allocation | Current assert allocation |
| Canadian stocks | 40% | 84.14% up from last update |
| U.S stocks | 50% | 14.23% down from last update |
| International stocks | 10% | 1.63% |
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 assert allocation | Current assert allocation |
| Bonds | 15% | 0.77% |
| Finance | 10% | 20.56% |
| Industrials & Infrastructure | 5% | 7.00% |
| Consumer Staples | 10% | 7.25% |
| Energy & Materials | 5% | 5.09% |
| Utilities | 5% | 15.27% |
| Pipelines | 5% | 14.62% |
| Consumer Discretionary | 5% | 2.32% |
| Health care | 5% | 0.0% |
| Information technology | 5% | 0.09% |
| Telecommunications | 5% | 7.89% |
| Real-estate | 5% | 4.39% |
| Miscellaneous & Preferred shares | 5% | 6.03% |
| Transportations | 5% | 7.08% |
| International & Diversified ETFs | 10% | 1.63% |
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?
Hello
Great blog, thank you for sharing your idea and your portfolio updates.
I ‘am a newbie in a stock investing, i read some about dividend investing, can you tell me your opinion in these high yield stocks FFN.TO, EFN.TO, DF.TO , LFE.TO, i wonder with a dividend yield about 15% it seams interesting to get them in a portfolio.
Hello Hassen,
Thank you for your stopping by,
I don’t follow those high yield stocks, thus I can’t comments about them. But you must know that high yield means greater risk. There is high chance for dividend cut or dividend elimination. In that case, you may loose all your capital. Beware!
I initially invested in high yield stocks and learned some lessons in a hard way and moved into high quality dividend investing.
I would suggest you to understand the companies fundamentals, learn about how they make money to pay dividends, and get some ideas about future growth. If you feel comfortable, then invest into those companies.
Cheers,
Hi I am again, I love your diversification strategy. I am thinking to use it for my investment. Low risky approach.
Hi Again,
Don’t make me fun of it 😀 . It is my own diversification strategy. It makes sense to me, but doesn’t make any sense for professional fund managers.
I am so glad that you like the strategy. Even, you could create your own strategy to minimize your investment risk.
Cheers,
You did a good job by average down the ENB. The stock is moving up. Do you have any plan to sell any stocks any time soon?
Thanks for sharing
Hey Keeran,
Thank you for stopping by,
Yes, ENB moved up more than $7 after I made the purchase. Honestly, I did not expect this return in a short period of time. But, I am a long term investor and my main target is dividend income (dividend growth) than capital gain. I don’t get too excited about short term capital gain.
Even, I would be happy if price drop than price gain because I could purchase more units for low price.
Cheers,
Hey, just wondering what type of software do you use to calculate the numbers you use for your dividend profolio updates (such as projection of annual dividend income)? Do you just use excel sheets?
Hello Shunang-Yi,
Thank you for stopping by,
I use Google sheet (similar to MS Excel) to calculate the numbers. For example, =GoogleFinance(“ENB.TO”, “price”) to get the current price of Enbridge stock. For U.S stocks, use the following code =GoogleFinance(“MCD”, “price”) (without .TO).
Please let me know if you need any help. I so glad to help you!
Cheers,