Rate of Return: 12.5%
Managing an investment portfolio can be time-consuming and frustrating for many people. That’s why many seek professional help in choosing their securities and asset allocation.
This portfolio was designed for those investors who prefer to do it themselves and save advisor fees. You don’t have to do much with it, just keep an eye on it to make sure one or more of your holdings doesn’t go rogue.
The portfolio was launched 14 years ago, in June 2012. The idea was to invest in high-quality stocks, with the intention of holding them through bull and bear markets. The core premise was that the long-term trend of the markets is up and if you own good stocks, they’ll move with it.
The portfolio consists mainly of Canadian and US blue-chip stocks that offer long-term growth potential. It also has a bond ETF holding. The original weighting was 10% for each stock with the bond ETF starting with a 20% position. That has now been reduced because equity increases have outpaced the bond market.
I used several criteria to choose the stocks. These included a superior long-term growth profile, industry leadership, a good balance sheet, a history of dividend increases, and relative strength in down markets.
The objective is to generate decent cash flow (all the stocks pay dividends), minimize downside potential, and provide slow but steady growth. The target rate of return was originally set at 8% annually.
Changes: This is a Buy and Hold Portfolio so we should always resist making changes. However, I am not happy with the performance or the prospects for BCE. Despite a huge dividend cut last year, the shares continue to stumble along in a range of $30-$35. BCE is not alone; most telecoms are trading at depressed prices, hit by high capital costs and the threat of disruptive new communications options like Starlink.
Accordingly, I have decided to say goodbye to BCE. We’ll sell our shares for $8,057.50. With retained earnings of $460.36, we have a total of $8,517.86 to reinvest.
We’ll use the money to buy 140 shares of Manulife Financial (TSX: MFC) at $61.06. The total cost is $8,548.40 so we will take $30.54 from cash to make up the difference.
We will also add to our position in Enbridge by buying 10 shares at $71.74 for an outlay of $717.40. We now own 260 shares and have $65.24 left in retained earnings.
And we will purchase another 20 units of XBB for $554.20. That gives us a total of 590 units and reduces retained earnings to $61.91.
The portfolio has cash and retained earnings of $5,042.52. We’ll move the money to Oaken Financial, which is offering a rate of 2.8% and has CDIC coverage.
The revised portfolio is displayed above. I will update it again in December.