Before the pandemic, we started reading about how the markets were overvalued and we are now making new stock market highs … Market movements shouldn’t dictate how you invest and this is a very big emotional task. In fact, you need to know why you hold each of your holdings, and it needs to relate to the business, not the sector, PE, or yield. I call this a portfolio stress test.
Now, more than ever, you need to know your investment strategy and be strong to stay on course. You are sailing across the ocean in uncharted waters …
The uncharted waters are, in my opinion, the following economic situations that we face on various scales.
Economies are not open everywhere, and while some industries are doing well, others are not. Improvements will shift the balance and allocation of money. That means some investors will switch from some stocks to others. DIY investors tend to be the last …
Interest rates are still very low so businesses can borrow to grow. When interest rates rise, the pattern changes. At the family and individual level, this will also have a significant impact (ie on the housing market).
At some point, all government free money will have to be paid back, and purchasing power will likely decline as inflation persists. How will the spending be done? Are you invested in companies that benefit from companies? or consumer? Is it a high profit margin or a low profit margin? Remember, I focus on toll booths to avoid the low profit margin business.
I’ve made a few small trades, but it will seem like HUGE trades to many.
I’ve sold all of my Enbridge stock. At first I didn’t have much. My holdings in TSE: ENB accounted for 0.77% of my portfolio. It felt like pocket money and I wondered why I should keep it. Well, it was for the dividend and not for growth. So if you’re retired and need the income, keep it. It’s good for income.
However, I want my money to work for me over 15% annually. I use my portfolio tracker to track my performance and my goal is an annual ROR of 15% on my Canadian holdings. While the yield is high I don’t see any growth but the dividend is safe. As Enbridge moves from the oil game to renewables and natural gas, it will be some time and I am not sitting and waiting. Not for pocket money.
Peak oil happened in 2019, according to Bloomberg. While Canada was an exporter to the US and the pipeline was good, the US is now an exporter and doesn’t need the Canadian oil. With many automakers focusing on electric vehicles and the expected cost of battery production to decrease over the next few years, electricity will be in demand. Guess who imports electricity from Canada? Yes, the US does. Finding the best supply stocks or the best renewable energy stock will be more important. How they both converge over time.
With that in mind, I am selling my TC Energy shares for the reasons stated above. I had even less pocket money with me TSE: TRP This corresponds to 0.38% of my portfolio.
My next step is to leave the telecommunications room completely. That means selling Telus. I had a little more pocket money, but still pocket money at 1.89% of my portfolio.
The desire to purchase Shaw Communications from Rogers Communications made me realize that:
- Telecommunications can’t really grow the cellular and internet businesses to make higher profits.
- Governments are capping profit margins so they don’t erode consumers, which makes sense.
- 5G presents telecommunications with a huge investment challenge that Telus has even issued shares to fund it.
The impact of the trades mean I will get a lower annual dividend income compared to last year until I invest more money. Again, I’m not retired and when the time comes I can move the portfolio for income instead of dividend growth.
Overall, I prefer banks and utilities for long-term growth. If you look at my portfolio you will see that I now have 12 Canadian holdings and it’s 9 Canadian dividend stocks if you exclude 2 US index ETFs and Shopify as a millionaire maker.
If you look at your portfolio and my portfolio, you will find that I have 9 Canadian dividend stocks that represent over $ 400,000. So if you have 20 stocks with $ 100,000 coverage, you may be over-diversified. This is where it is important to build confidence in your investment.
One mistake in portfolio management that I’ve noticed over the past few years is that selling your winners is a mistake. It is a mistake to take profits from your winners. My winners have been Apple, Microsoft, Costco, Visa, and Canadian National Railway, and I’ve taken profits from time to time and I shouldn’t have. I have more money now.
A reader once told me that they invested in BAM 20 years ago and their investment has grown to over $ 1.6 million, and that is exactly what patience does. Once you have a winner, stop playing around with it until you reach your goals.
Building a portfolio is like building a pyramid. Try dividing your stocks into layers like a foundation, structure, and then the chic finish. If you go up the pyramid, you should see higher returns.
We all start with sector allocations, but I’ve found that the sector allocations are too broad, so I switched to industry allocations. If you look at my sectors you think I’m overweight financially, but if you break it down by industry it’s not bad.
My dividend yield for March 2021 is $ 1,982.
I will repeat that it is not important to balance monthly income. When you retire, you SHOULD NOT Live on income month after month. This is just bad personal finance. they SHOULD You must have at least 1 year of cash to pay the monthly bills and your monthly dividends replenish your cash so you have 1 year of cash anytime.
My return on the entire portfolio is 2.04%. With a long-term dividend growth portfolio, this is perfectly acceptable. While it generates less than $ 30,000 in annual dividend, I could generate an annual dividend of $ 60,000 if I converted it into dividend income and doubled the yield for simple calculations.
My magic number is $ 80,000 or a portfolio value of $ 1,777,777. Get closer to financial independence. The closer I get, the freer I feel.