One thing I like about dividend income is that it keeps on coming regardless of the markets.
A month like January is when I am reminded that dividend investing is AWESOME!
I got many questions about whether I hold cash or what I buy these days. As it happens, I don’t pay much attention to cyclical or stock market patterns.
For now, I invest all of my cash in all my accounts. Why not hold some for an opportunity? It’s simple, I don’t look for opportunities that warrant holding cash. Holding too much cash also has the risk of missed opportunities from good holdings. Waiting for an opportunity is akin to timing the market and it’s not my strategy.
What do I buy? Well, I focus on my existing holdings and I use the Dividend Snapshot Screeners to pick my next holding to add to. In my taxable account, my tiebreaker decision is the yield. That account is now a retirement account. In the other accounts, it is a combination of factors between the yield (vs historical), PE, the Chowder Score and the dividend growth streak.
Unlike the stock market, my January trades were simply about deploying accumulated dividends.
- I added to Algonquin Power & Utilities Corp in my taxable account.
- I added to Apple in my RRSP account.
In my taxable account, I am currently focused on adding to Algonquin Power & Utilities Corp or Telus at the moment. This account, as you can see from my portfolio, is now a retirement account except for the US holdings.
While I don’t have any stocks with more than 10% weight in my portfolio, I have a couple just under 9%.
It wasn’t planned. It just happened and yes, I just added a little to one of them. That might freak out some people but I am good with it.
I have 24 holdings at the time of writing and the top 12 holdings cover 75% of my portfolio. I often debate with myself why I hold the others … but there are reasons.
When you look at the sector allocation, you are tempted to think it’s too risky but it’s not. That’s why sector allocation is not important in my opinion. It’s just more manageable for people to cover 10 sectors instead of hundreds of industries.
So, to the detriment of investors, the financial industry tells them to cover all the sectors when in fact, you should focus on covering certain industries.
The below graph shows the 3 banks I hold, the best bank stocks by the way, are overweight compared to my other holdings. The thing is, I am not usually adding to them and I expect to see the exposure go down over time (years down the road).
By the way, I am not advocating for equal ratios. The above is just a visualization of exposure. There is no need to apply math equations like 10% in each sector and so forth … If you want to follow mathematical equations, invest in an index ETF like the S&P 500.
My January 2022 dividend income is $2,175. The monthly pattern is pretty weird now. It’s very consolidated in the middle month of the quarter.