28.4%
Tech stocks have been on fire in recent months and they have carried our Growth Portfolio to a record return as a result.
This portfolio was launched in August 2012 with an initial value of $10,000, so we now have eight years of history with which to work. The results are impressive.
But don’t focus only on the big gains. Keep in mind this is a high-risk portfolio. It is 100% exposed to the stock market, with a focus on momentum plays. So, it should only be used by readers with higher risk tolerance. The target annual compound rate of return was initially set at 12%.
Here are the stocks that make up the current portfolio, with an update on how they have performed since our last review in early April. Prices are as of the close of trading on Aug. 26.
Waste Connections (NYSE: WCN). Collecting waste isn’t an exciting business, but it’s always in demand. The shares reached a high of US$105.17 before the market collapsed, then fell to $70.87. They have since bounced back and are up to $101.73, a gain of $15.02 since our last review. We received two dividends totalling US$0.37 per share.
Alimentation Couche-Tard (TSX: ATD.B, OTC: ANCUF). We saw a nice bounce-back here, with the shares up $8.47 since the last review. Because of timing, we received just one quarterly dividend of $0.07.
WSP Global Inc. (TSX: WSP, OTC: WSPOF). This international engineering and technology firm has been mentioned as one of the companies that could benefit if Joe Biden wins the U.S. election and implements his promised infrastructure plan. The stock is up a modest $4.05 since the last review, still well below its all-time high. We received two dividends totaling $0.75 per share.
Shopify (TSX, NYSE: SHOP). Ottawa-based Shopify creates eCommerce platforms for businesses of all sizes. Its growth has been astounding but the pandemic and the shift to on-line buying sent the stock price into the stratosphere. It has more than doubled since the last review and is now trading near its all-time high. This stock does not pay a dividend but with a performance like this, who cares?
Pfizer (NYSE: PFE). We added this pharmaceutical giant to the portfolio at the time of our last review. This is normally not seen as a growth stock, but Pfizer’s strong position in the race for a coronavirus vaccine could be the catalyst to push the stock higher. So far, we have a gain of almost 10%, including dividends of US$0.38 per quarter.
Amazon.com (NDQ: AMZN). Amazon was a powerhouse before the pandemic hit. Now it’s a goliath. We added two shares of the stock in early April when it was trading at just over $2,000. It’s up 68% since. Yes, it’s expensive. But as I’ve been saying since I originally recommended it, it will likely be pricier next year.
Apple Inc. (NDQ: AAPL). Tech stocks have reached a level where we are bound to see a correction at some stage. Apple is a case in point. The stock has almost doubled since our last review, even though the company has not made any dramatic moves. The p/e ratio is about 38, high for this company. We’ll take the gain gladly but watch for a tech pullback and consolidation. We received two dividends for a total of US$1.64 per share.
United Parcel Service (NYSE: UPS). This is the world’s largest package delivery company and is on the leading edge of new delivery technologies, especially in the healthcare sector. We added it to the portfolio in September 2019 at US$118.85 and the shares went as high as US$125.31 before pulling back in the March meltdown. But the stock has rallied strongly since and is up almost US$60 per share since the last review. As a bonus, we received two quarterly dividends of US$1.01 each.
Cash. We received interest of $17.85 on our cash holdings at Motive Financial.
Here is how the portfolio stood at the close of trading on Aug. 26. Commissions are not considered. The U.S. and Canadian dollars are treated as being at par but obviously gains (or losses) on the American securities are increased due to the significant exchange rate differential.
IWB Growth Portfolio (a/o Aug. 26/20)
| Symbol | Weight
% |
Total
Shares |
Average
Price |
Book
Value |
Current
Price |
Market
Value |
Dividends
Retained |
Gain/
Loss % |
| WCN-N | 6.3 | 45 | $84.48 | $3,801.60 | $101.73 | $4,577.85 | $47.70 | +21.7 |
| ATD.B | 8.6 | 140 | $8.32 | $1,164.10 | $44.62 | $6,246.80 | $155.91 | +450.0 |
| WSP | 10.4 | 85 | $21.94 | $1,988.49 | $88.36 | $7,510.60 | $503.41 | +303.0 |
| SHOP-T | 29.7 | 15 | $78.71 | $1,180.65 | $1,434.81 | $21,522.15 | 0 | +1,722.09 |
| PFE | 9.5 | 180 | $35.38 | $6,368.40 | $38.05 | $6,849.00 | $136.80 | + 9.7 |
| AMZN | 9.5 | 2 | $2,042,76 | $4,085.52 | $3,441.85 | $6,883.70 | 0 | +68.5 |
| AAPL | 14.1 | 20 | $121.70 | $2,434.07 | $506.09 | $10,221.80 | $269.64 | +331.0 |
| UPS | 11.0 | 50 | $118.45 | $5,922.50 | $158.90 | $7,945.00 | $199.50 | +37.5 |
| Cash | 0.9 | $671.16 | $689.01 | |||||
| Total | 100.0 | $27,616.49 | $72,445.91 | $1,312.96 | +167.1 | |||
| Inception | $10,000.00 | +637.6 |
Comments: This may seem impossible to believe but this portfolio gained 55% in a little less than five months. The total portfolio value in April was $47,575.64, including retained dividends. It is now $73,758.87.
Two things made this possible. The first was timing – the last update was just after the March sell-off and share prices were still depressed. The second was our heavy weighting in technology stocks. Shopify, Apple, and Amazon all posted huge gains, and were the main drivers of this phenomenal growth.
I do not expect to ever see anything like this again, so let’s enjoy it while we can.
The total gain over eight years stands at 637.6%. That’s an average annual compound growth rate of 28.37%. That’s well ahead of our target.
Changes: Never mess with success, they say. The portfolio is performing well, and all our stocks gained ground in the latest period. But good portfolio management dictates that we have to reduce our overexposure to Shopify, which now accounts for almost 30% of total assets. Accordingly, we will sell five shares for a total of $7,174.05.
We will add a new stock to the portfolio, one which is also doing well in the COVID era. It’s Costco (NDQ: COST), which closed on Aug. 26 at US$344.27. See Shawn Allen’s update on the stock elsewhere in this issue for more details. We’ll buy 20 shares for an outlay of $6,885.40. The rest of the money ($288.65) will be added to our cash account.
We will also buy another five shares of WSP Global for a cost of $441.80. That will bring our position to 90 shares and reduce our retained dividends to $61.61.
With retained dividends, our total cash is now $1,848.82. We will keep the money at Motive Financial, which now pays 1.75% on its Savvy Savings Account.
Here is the revised portfolio. I will review it again in February.
IWB Growth Portfolio (revised Aug. 26/20)
| Symbol | Weight
% |
Total
Shares |
Average
Price |
Book
Value |
Current
Price |
Market
Value |
Dividends
Retained |
| WCN-N | 6.3 | 45 | $84.48 | $3,801.60 | $101.73 | $4,577.85 | $47.70 |
| ATD.B | 8.6 | 140 | $8.32 | $1,164.10 | $44.62 | $6,246.80 | $155.91 |
| WSP | 10.9 | 90 | $27.00 | $2,430.29 | $88.36 | $7,952.40 | $61.61 |
| SHOP-T | 19.7 | 10 | $78.71 | $787.10 | $1,434.81 | $14,348.10 | 0 |
| PFE | 9.4 | 180 | $35.38 | $6,368.40 | $38.05 | $6,849.00 | $136.80 |
| AMZN | 9.4 | 2 | $2,042,76 | $4,085.52 | $3,441.85 | $6,883.70 | 0 |
| AAPL | 14.0 | 20 | $121.70 | $2,434.07 | $506.09 | $10,221.80 | $269.64 |
| COST | 9.4 | 20 | $344.27 | $6,885.40 | $344.27 | $6,885.40 | 0 |
| UPS | 11.0 | 50 | $118.45 | $5,922.50 | $158.90 | $7,945.00 | $199.50 |
| Cash | 1.3 | $977.66 | $977.66 | ||||
| Total | 100.0 | $34,856.64 | $72,887.71 | $871.16 | |||
| Inception | $10,000.00 |
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