27.6%
The IWB Growth Portfolio was originally set up by retired contributing editor Tom Slee in August 2012. It is the riskiest of all IWB portfolios, with 100% exposure to the stock market. It also continues to be the most successful in terms of returns.
The portfolio was valued at $10,000 when it was created, with the assets distributed among eight stocks. Three were U.S. companies while the rest were Canadian. We have switched some of the stocks over the five and a half years and now have a mix of four Canadian and three U.S. securities. Our target average annual compound rate of return is in the 12% range.
Comments
Every stock but one (NFI Group) made gains in the latest period, some of them very substantial. Overall, the value of the portfolio now is $43,075.73, including cash and retained dividends. That’s a gain of 13.6% since the last review in February.
The total gain over six years is now 330.6% for an average annual compound rate of return of 27.56%. That”s way ahead of my expectation, which is for an annual gain in the 12% range. But we’ll take it, knowing that more difficult times will come eventually.
Changes
NFI has been a great contributor to the success of this portfolio but the growth potential going forward appears to be limited. So we will say good-bye to this winner, having reaped a profit of over 600% since we added it to the portfolio. Combined with retained dividends, that will give us $5,574.70 to invest.
I’m a little uncomfortable with having almost half our assets in the tech sector so we will lighten that a little by selling 12 shares of Shopify for $2,572.68. That leaves us with 25 shares with a market value of $5,359.75.
I considered several possibilities for a new stock for this portfolio and decided to divide the money between two companies. The first is a Canadian company, CGI Group (TSX: GIB.A, NYSE: GIB). It is the fifth largest independent information technology and business consulting services firm in the world. Its services include systems integration, IT outsourcing, data centres, cloud computing, Internet security, and more. The company employs about 74,000 professionals in offices and delivery centres across the Americas, Europe, and the Asia Pacific region. Annual revenues are $10.8 billion.
The stock has moved steadily higher this year and hit an all-time high of $87.22 in July. It is currently trading at $85.56. The shares do not pay a dividend.
We will buy 50 shares for a cost of $4,278.
My second choice is Nike (NYSE: NKE), the world’s leading manufacturer of sportswear. Although it’s a mature company, it continues to grow at an impressive rate. Moreover, the stock has been boosted in recent weeks by the controversial but apparently successful Colin Kaepernick promotion.
Less than one year ago, Nike shares were trading at about $50. They are now at $85.37. The stock pays a quarterly dividend of $0.20.
We will buy 45 shares of Nike for a cost of $3,841.65.
Those purchases will leave us with a small amount of cash ($27.73) from our sales. That will be added to our cash balance, which now totals $909.56, including retained dividends. We will keep that money in EQ Bank, still paying 2.3%.
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