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 experienced few large swings and ended almost flat last month. However, my dividend stock portfolios performed pretty well as some of my larger holdings hit new high.
Investors keep talking about next market correction, so I didn’t make any major purchases last month.
I just reinvested a tiny amount in my registered account and purchased 4 units of XRE.TO.
And, I am keeping a tiny amount of cash in my registered accounts, so I could make some purchase if I find any deals because of U.S election impact.
Also, I paid-down some margin loans using the dividends I received last month in my non-registered accounts. I will be keep focusing on debts payments if markets stay flat or move to new high.
My portfolio is quite big for me (over $200K now) when I compare my financial situation few years ago.
Now let’s see the recent changes in my dividend portfolios in September 2016.
The information posted on this website are the opinion of my own and should not be considered as professional financial advice. I am not a financial professional, and I can buy, sell, or hold any investment at anytime.
Any transactions I publish are not recommendations to buy or sell any securities or investments.
Please consult with your financial professional before even considering using the information obtained from this website.
The changes made in Canadian portfolio in September 2016.
- added 4 units XRE at average price of $15.90
There are no changes made in U.S dividend portfolio in September 2016.
With the new assets purchase and recent dividend growth announcements, my estimated yearly passive income has increased to $7370.
Currently I don’t have any health care stocks in my portfolio. I am watching XLV (US health-care sector ETF), and may start to accumulate XLV in my registered account in the coming months.
Also, I will be keep purchasing XRE.TO in my TFSA account until the number of units reach to 200 (and if the unit price stays below $17).
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 will 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. Now I stopped adding Canadian stocks in my portfolio. I am planning to concentrade in adding U.S stocks in my portfolio.
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% | 4.33% up from last update |
| Canadian stocks | 40% | 80.73% down from last update |
| U.S stocks | 35% | 13.47% up from last update |
| International stocks | 5% | 1.48% |
My Canadian portion of my investments have increased a bit from my last update due to recent rally in my Canadian holdings.
My fixed income portions have been keep improving for last 15 months because of my pension plan contributions.
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.
You should consider create your own diversification strategy (if you don't have one) to minimize investment related risks in your portfolios.
| Sector | Target asset allocation | Current asset allocation |
| Fixed income (bonds & Employer Pension) | 20% | 4.33% |
| Finance | 10% | 19.02% |
| Industrials & Infrastructure | 5% | 8.80% |
| Consumer Staples | 10% | 7.13% |
| Energy & Materials | 5% | 3.70% |
| Utilities | 5% | 13.70% |
| Pipelines | 5% | 13.18% |
| Consumer Discretionary | 5% | 3.35% |
| Health care | 5% | 0.0% |
| Information technology | 5% | 0.17% |
| Telecommunications | 5% | 6.30% |
| Real-estate | 5% | 7.86% |
| Miscellaneous & Preferred shares | 5% | 4.56% |
| Transportations | 5% | 6.38% |
| International & Diversified ETFs | 5% | 1.48% |
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.
Please share your thoughts about my holdings and recent purchases. Also, do you have any portfolio diversification strategy? And how often do you balance your portfolio?
Hi Finance Journey,
Is there a post specifically talking about which stocks are located where, i.e. non-registered, registered (TFSA, RRSP, etc..)?
Thanks,
Hello Brandon,
I keep more than 90% of U.S stocks in RRSP, most of Limited partnership units, REITs, ETFs are in TFSA and rest of the Canadian dividends stocks in my non-registered accounts. I just try to minimize tax burden..
Best Regards,
Given the issue of buying US stocks with a lower CDN dollar, you could buy a Vanguard ETF that is a Canadian holding. You get the US exposure in Canadian dollars. And the management fees for Vanguard are the lowest in the business.
EJ-Mac.
Hello EJ,
Thank you for sharing the ideas. I have a Vanguard ETF (VGG) in my TFSA, I think the exchange rate is already reflecting in the price. If I don’t find any way to purchase U.S stocks in next few months, then I will start adding Vanguard ETFs in my TFSA.
Thanks again,
Best Regards,
Hi FinanceJourney! It is bold of you to disclose all your holdings. Kudos! More people should do it to promote ‘do it yourself’ investment. I agree with you that you may want diversification outside of Canadian markets. You could purchase a Canadian Vanguard ETF that tracks foreign markets. That gets around the currency difference: USD –> CDN…
But I had a separate question for you: how do you decide what to put in your registered accounts (that is TFSA & RRSP) and what to leave in a non-registered account. I’m guessing that most of your assets are in non-registered account. I’m currently dealing with that decision and would appreciate any insight.
Thanks, EJ-Mac.
Hello EJ,
Thank you for stopping by,
Non-registered accounts: Currently I hold all Canadian dividend paying stocks in my non-registered accounts.
TFSA: REITs, mortgage-backed securities (FC), Limited partnership unites (BIP.UN, BEP.UN, etc) and bond ETFs and U.K based stocks in my TFSA accounts, There are no tax in any form if you hold Canadian stocks, REITs, bonds, MIC in your TFSA, but if you hold US/foreign stocks in TFSA (except UK stocks) you will need to pay withholding tax range from 15%-35% the distribution you receive.
There are no withholding tax for U.K based stocks for Canadian, but the dividend received would be fully taxed as there is no dividend tax credit for foreign dividends.
RRSP: Because of the tax treaty between Canada and the US, there is no withholding tax on dividends received on RRSP, so I keep most my U.S stocks in my RRSP accounts.
All I try to do minimize tax burden in my investments.
Best Regards,
Hey, have you ever consider to invest in Cannabis/ marijuana sector? As legalization getting closer in Canada, I think it is a great opportunity to invest in them.
Hello Jason,
Thank you for stopping by,
For now, I don’t have a plan to add Marijuana sector in my portfolio. Actually I don’t have good knowledge about the sector, so I wouldn’t get into it until I get a clear understanding about it.
Best Regards,
I also use Google sheets for tracking the portfolio. It is a great tool.XRE seems to be good to have. I am looking on that one.
Hello Pellrider,
Thank you for stopping by,
Actually Google sheets reduced my tracking time. It is one of the great free tool available for investors.
Best Regards,
Hey Finance Journey! Very well thought out and thorough diversification strategy here, one thing I’m curious about is the international section? Is there any reason why you keep it such a lower percentage?
Hello MrSLM,
Thank you for stopping by,
Actually, I like to have some international stocks in my portfolio, but due to the unfavorable currency exchange rate (from CAD to USD) I stopped move money into US and international stocks for now. I will start accumulate international stocks once Canadian dollar get recovered.
Cheers,