Investing has changed from the 80’s and 90’s. It’s more accessible and young investors can cause grief to hedge fund managers …
With that said, the biggest difference is interest rates. They have a massive impact on bonds, GICs and retirement portfolios. The rules of investing written in books today don’t work anymore and retirees have to work harder and take more risks.
It’s unfortunate as the literacy is quickly out of date and it still represents the primary way for DIY investors to learn. You can’t expect a new investor without the basic knowledge to be in a position to argue with the written wisdom. It takes experience and time.
With that said, as you get more involved in your portfolio make sure you have rules. I have recently updated my rules and put together 31 Simple Investment Rules you can use as a framework. There is supporting data and a homework section to help you out.
Stock Trades
When you look at my trades, please note that I am optimizing returns and not dividend income during the accumulation phase. I am not retired and living from my income so my goal is to have the biggest portfolio I can build.
Switching to dividend income is easy when I reach my number.
I still focus on dividend growth stocks as I find them to be the easiest to navigate with respect to metrics and potential. I am not a value investor as outlined in my investment rules.
- I reduced my position in Emera and added the proceeds to XQQ – Nasdaq 100 ETF.
- I added some Alimentation Couche-Tard from accumulated dividends in one account.
- I added to VFV (S&P 500 Index) form accumulated dividends in another account.
It’s mostly all pocket change transactions in the big portfolio picture.
No new money added since the $6,000 contribution to my TFSA. Next is contributing to my spouse’s TFSA.
By the way, yield on cost is a completely useless number. It’s a feel-good number.
It doesn’t matter if you bought your darling dividend stock 20 years ago or today. If I match your total value today, and buy the same number of shares, I will receive the same dividend income.
Instead, you should focus on the annualized rate of return.
Portfolio Management
I have 25 stocks in my portfolio which includes Telus and TC Pipeline that I am working on selling from Computershare (it takes time with Computershare). In fact, it’s less than 1% of my portfolio.
My USD vs CAD ratios are the same as month. My USD vs CAD is now 55 / 45.
Nothing wrong with that. Many shy away from investing directly in US stocks, and that’s understandable since there is a currency conversion needed. That’s why I also have Vanguard’s VFV ETF (S&P 500 Index ETF).
Since VFV and XQQ is transacted in CAD, I track it as a CAD currency but its underlying assets are in USD. If I took that into account, my USD vs CAD holdings is 62 / 38.
As you know, I went from covering most of the sectors to only covering 6 (from 11 to 6) and that’s perfectly fine as I am well-diversified when you look at my industry coverage.
| 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 July 2021 dividend income is $729. That’s the lowest month in a while but it’s mostly because some holdings that would have normally paid in late July, have paid in early August.
With my portfolio tracker, I use the exact transaction date to track the monthly dividend income. It highlights that you cannot rely on the income from month to month to cover bills. You need a better plan than that in retirement.
My total annual yield is 1.75% at the time of writing. It’s a dividend growth portfolio for total returns and not a dividend income portfolio for retirement (not yet). Since I have barely made any changes to my portfolio, the shift to a lower yield is primarily due to the value growth.
The formula for my yield is the expected total annual dividend income divided by my total portfolio value.
Part of my success is focusing on companies that operate like Tollbooth. While dividend income is not the priority, dividend growth is! You can see from the graph that it’s a compound growth graph and not a linear graph and that’s the goal.