As normal starts to surface in various place and the vaccination rate increases, inflation and interest rate become a topic of conversation. We know today that no increases have happened yet but I do believe it’s coming.
Does it mean changing my strategy? Nope. I carry on as is with one exception. If interest rates go up, money will shift from high growth stocks into other areas. It’s a cyclical process as they call it.
My portfolio had almost 10% in non-dividend stocks with Disney representing near 5% and I want to reduce my exposure to millionair makers. However, no changes to my dividend investing strategy.
I sold Amazon. It was a short trade since I only picked it up this last December and I sold half of Twilio. Nothing wrong with the companies. Just a reduction in exposure and focusing on Shopify, Disney and Facebook as my non-dividend payers.
I used the funds from the sell of Amazon in my TFSA to purchase Microsoft and Costco. Yes, I will pay a tiny 15% tax on the dividend but I will make a killing on the stock!!! This is a case where you want to look at the forest and not the trees.
I am focusing on saving for my TFSA contributions for 2021. Not many activities otherwise.
I am not selling my winners. That’s a new rule I am following, and in fact, I added to my winners by adding to Microsoft.
It’s one of the learnings I have that selling your winners and adding to your losers just to re-balance is leaving money on the table. It’s not like balancing between equity and fixed income.
What I want to point out is to understand the Canadian stock market weaknesses to build a strong portfolio. When you look at my portfolio, you can see that my US holdings outperforms my Canadian holdings. Below, you can see the sector and industry coverage by US and Canadian stocks.
All the graphs are easily put together for a clear view of my portfolio at all times. You too can build a tracker. See how to make yours step by step.
|wdt_ID||Dividend||No Growth||< 6% Growth||> 6% Growth||> 10% Growth||Total|
|3||Low Yield (< 2%)||8.23||0.00||0.00||38.98||47.21|
|4||Medium Yield (> 2%)||0.00||1.35||9.51||10.39||21.25|
|5||High Yield (> 4%)||0.00||0.00||21.62||0.00||21.62|
|7||Aggressive Yield (> 6%)||0.00||1.67||3.13||0.00||4.80|
My May 2021 dividend income is $3,460. 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.
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.