April was a quiet month in the markets with the earning seasons showing many companies hitting their targets and more. However, my perception is that we are having the calm before the storm.
Why? There is no way the markets can keep on going up they way they have been and the lack of bounce after the earnings beat is showing that it’s all priced in.
Now more than ever you need to know your investing strategy and be strong to stay the course. You are sailing the ocean in unchartered waters…
The unchartered waters in my opinion are the following economic situations we face at various scales. Everyone is investing and adding money which is fueling prices on many stocks but the interest rate is going to be the pivotal factor.
Stock Trades
No trades. Nada.
I am working on selling my Computershare holdings and it’s hard. Some of it is easy but not all the shares. I have to get on the phone to understand how to make it happen now.
Portfolio Management
The currency exchange is having an impact on my portfolio but that’s par for the course. It’s pretty much offseting the growth from my US holdings … One point to note, most investors ignore hard-to-quantify growth potential over the quantifiable currency exchange.
In fact, with the currency exchange, TD is now my biggest holding and Apple and Microsoft move to second and third.
We all start with sector allocations but I have realized that sector allocations is too broad and that’s why I switched to industry allocation. When you look at my sectors, you think I am overweight in finances but when you break it down by industries, it’s not too bad.
Now the Canadian banks are my foundation upon which I build the rest of my portfolio. It’s one of my weakest performing holdings but still a known quantity.
I don’t pay much attention to my sector allocation below. I used to but not anymore.
Most books and articles refer to sector but after looking at the businesses by industries, it became clear that industries within a sector do not always overlap. The issue with literature is that they try to simplify everything so it’s easier to review your investments against 10 sectors than to review it against 100 industries…
They are wrong to simplify it as it does a diservice to investors. Look, I invest in 8 sectors (not counting energy) but I am invested in 15 industries. Am I diversified? You tell me!
| wdt_ID | Dividend | No Growth | < 6% Growth | > 6% Growth | > 10% Growth |
|---|---|---|---|---|---|
| 2 | None | 7.10 | 0.00 | 0.00 | 0.00 |
| 3 | Yield < 2% | 3.28 | 0.00 | 12.06 | 36.75 |
| 4 | Yield > 2% | 0.00 | 0.00 | 3.70 | 5.43 |
| 5 | Yield > 4% | 0.00 | 0.00 | 26.45 | 0.00 |
| 7 | Yield > 6% | 0.00 | 0.00 | 4.93 | 0.00 |
Dividend Income
My April 2021 dividend income is $1,853. My total annual yield is approximately 2.00%. It’s a dividend growth portfolio for total returns and not a dividend income portfolio for retirement.
It’s an important distinction as with a dividend growth portfolio, I get over 12% return annually as opposed to 8% return annually with a dividend income portfolio. The 4% difference makes a huge difference in 10 years!
I am going to repeat that balancing the income per month is not important. When you retire, you SHOULD NOT be living month to month from the income. That’s just plain bad personal finance. You SHOULD be having at least 1 year of cash to pay for the monthly bills and your monthly dividends replanishes your cash so you have 1 year of cash at any time.