For those of you new to this website, in this post, I will discuss the recent changes I made in my dividend portfolios and also discuss about my portfolio diversification strategies.
Another month passed by, it is the time to discuss about my last month stock purchases.
In the last post, I developed my own diversification strategy to minimize to the investment risks. And, I decided to make new stocks purchases to meet the targeted assert allocations.
In May 2015, I made the following purchases in my Canadian dividend portfolio.
- purchased 50 shares of BCE at $52.79
- purchased 50 shares of T at $40.92
- purchased 15 shares XTR at $12.05
- purchased 25 shares of CNR at $73.85
I averaged down the CNR purchases that I made last month. I will buy another 25 shares if the price drops below $68.
The Changes I made in U.S dividend portfolio
- Reinvested some distribution in my RRSP and purchased 2 IDV ETFs.
Now, let’s look my portfolio diversification.
Portfolio diversification
I’ll 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.
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% | 83.15% up from last update |
| U.S stocks | 50% | 15.35% down from last update |
| International stocks | 10% | 1.49% |
In May 2015, the Canadian portion 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% | 0.78% |
| Finance | 10% | 21.02% |
| Industrials & Infrastructure | 5% | 4.19% |
| Consumer Staples | 10% | 7.85% |
| Energy & Materials | 5% | 5.95% |
| Utilities | 5% | 14.85% |
| Pipelines | 5% | 16.93% |
| Consumer Discretionary | 5% | 2.58% |
| Health care | 5% | 0.0% |
| Information technology | 5% | 0.0% |
| Telecommunications | 5% | 8.17% |
| Real-estate | 5% | 2.78% |
| Miscellaneous & Preferred shares | 5% | 6.29% |
| Transportations | 5% | 7.12% |
| International & Diversified ETFs | 10% | 1.49% |
From the above table, you could easily see my poor portfolio diversification. Finance, pipelines and utilities are almost 53% of my total value. Risky! Very risk approach!. But, the percentage is bit down from the last update due to the recent purchases in other sectors.
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?
I’m wondering how you arrived at the your target asset allocations for each sector in your portfolio? I’ve just started dividend investing and proper diversification is huge a concern of mine as I try and plan what my model portfolio will look like (your blog is hugely helpful for this).
Hello NedFTW,
I am so glad that you find my is helpful.
I developed the asset allocation based risks in the sectors, my age and my risk tolerance. Some investors invest in 40% bonds and 60% stocks and some decide to keep 100% stocks. You will need to create your own asset allocations. If you are young and have enough time to retire, then allow at least 75% in stocks.
Cheers,