Diversified Dividend Portfolio

I spoke a little bit about the power of a diversified portfolio in my post about cryptocurrencies (again I do not own any, they do not meet my risk threshold.)

My investment strategy has changed over the years.  When I was younger I took a larger speculative approach (like many are doing now) and had a couple quick wins, however, unfortunately fell in to the same trap as many.

Thinking we are better when we were just lucky

Following university, Finance major, but more importantly after some real market education, I subscribed to a more balanced investing strategy. If you are a frequent reader of my blog you will know that I strive to provide real tangable information and examples vs just comments and theory. Below is my philosophy, right or wrong, love to engage in conversation in the comments below or if you have more confidential question through email.

Disclaimer: The below is used for illustrative purposes of my portfolio.  It does not constitute financial advice nor a recommendation. Please consult your own independent advisor. (There, that’s out of the way)

My Portfolio

As discussed previously there is room in a diversified portfolio for speculative stocks, it varies depending on your risk tolerance, investment horizon, etc.

My Portfolio:

  • 5% Cash
  • 25% Mixture of diversified domestic and international mutual funds ranging from broad market to industry specific, such as resources.
  • 65% Diversified Dividend Focused Portfolio, I’ll shorten to “DDFP”
  • 5% Speculative investments

Cash: Underweight cash due to long time horizon and confidence in DDFP and its ability to balance returns per the long term. Keep on reading below in regards to buy and hold vs timing approach to market.

Mutual Funds: More favour ETF’s now than mutual funds for the fees, however, still a foundation of the portfolio. Some are for the convenience of monthly savings, some are left over from my first investments where mutual funds were an excellent way to diversify when it was not realistic and too costly to have enough funds to properly diversity with individual stock.

Diversified Dividend Focused Portfolio: From above and also presented below in detail a portfolio which works to balance individual stock diversification, along with industry and international exposure through ETF’s. Focus is mainly on high market cap dividend stocks.

Speculative Stocks: Yes, there is a small place, though not highlighted below, but as you can see a smaller portion due to risk tolerance.  I will not highlight which industry as not important as individually they are higher risk/return regardless.

Buy and Hold

I am predominately a buy and hold investor, again because of the structure of being diversified, prefer to work through the ups and downs of the economy and as some stocks are better in different parts of the business cycle I expect to balance out returns more so than trying to time market changes. (plus no time to watch the market daily)

When thinking of Buy and Hold vs Market Timing also think about the tax implications.  Depending on your tax bracket, the tax on capital gains could unduly punish your investment vs a small annual decline in market value.

DRIP

The portfolio is set up for DRIP (dividend reinvestment). I do what is called a synthetic DRIP through the online brokerage for simplicity vs signing up direct with organizations.  Dividends are reinvested back in the stock, the difference being no partial stock can be own.

Best of all worlds, reinvestment, cost based averaging, as well as cash accumulation.

For example. A stock is $30, the dividends received are $41 dollars, $30 gets reinvested in the stock, the remaining $11 gets deposited in to the account as cash.

Diversifed Dividend Focused Portfolio

Below I share my DDFP, a diversified mix of ETF’s in markets I am not able to properly diverify with individual stocks with a focus on high market cap dividend stocks.

Dividend Yield = 2.9%

StockEnter PriceCurrent PricePercent ReturnPortfolio WeightIndustry
Weighted Return50%
AAPL108.95300.35176%7.2%IT
BRKB177.68183.273%1.1%Financials
CSX48.6473.1950%1.8%Industrials
GOOG928.901,367.3747%1.6%IT
JNJ126145.9716%1.8%Health Care
KSU105.34155.4548%1.9%Industrials
TSE:BCE56.2459.6651%0.9%Telecom
TSE:BIP-UN38.4465.2370%0.9%Utilities
TSE:BTE43.761.88-96%0.1%Energy
TSE:CFW6.371.14-82%0.6%Energy
TSE:CM90.57108.2319%4.7%Financials
TSE:CNQ41.7341.23-13%1.9%Energy
TSE:CNR47.65119.17150%33.9%Industrials
TSE:CP229.90335.1846%6.3%Industrials
TSE:CPG42.795.83-86%0.2%Energy
TSE:CVE21.1313.17-38%0.4%Energy
TSE:ENB60.2051.56-14%2.4%Energy
TSE:NA44.6271.6261%0.7%Financials
TSE:PSK24.5415.02-39%0.3%Energy
TSE:RY77.19103.5534%7.5%Financials
TSE:SU33.2142.5628%5.3%Energy
TSE:T38.9550.4129%1.6%Telecom
TSE:TD49.1073.4250%5.4%Financials
TSE:TRP51.6068.4533%0.6%Energy
TSE:VSP37.8155.9048%1.3%INTL Diversity
TSE:ZEA17.5619.4511%0.6%INTL Diversity
TSE:ZLD21.8425.9719%0.7%INTL Diversity
TSE:ZEQ19.5024.0723%0.7%INTL Diversity
TSE:ZBK17.5729.2266%1.8%INTL Diversity
TSE:ZUD18.2325.8742%1.2%INTL Diversity
URI96.15168.6575%2%Industrials
XHS65.9272.3010%0.4%Health Care
XLP50.3062.4824%0.8%Consumer Staples
XPH57.7045.55-21%1.1%Health Care

The table is updated daily with the closing price. As you can see, certain investments better than others.  A couple key stocks of the larger negative return are more a placement holder in my portfolio until capital loses are required.

Historical Rates of Return:

  • 2017: +15%
  • 2016: +22%
    • Following the negative decline of 2015, portfolio weights were adjusted to increase diversification away from energy more in line with what is reflected today
  • 2015: (-11%)
    • Portfolio was predominately energy weighed, wth the downturn the portfolio took a larger than market decline as a result.  Energy stocks were paying large dividends but the industry overweight did not do well and many energy companies cut their dividends.

Final Thoughts

A portfolio has to start somewhere, for me started with mutual funds until had enough to properly purchase and diversify with individual stocks.  I still use ETF’s and mutual funds to ensure broad market exposure.

More importantly, portfolio started with a balanced Personal Budget where I always focused on allocating money to savings.

As always, love to hear your comments and engage in positive discussion.

Happy Investing

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