Summer time is a great time for investor to take a moment as it marks a relative pause in the stock market. The stock market continues to go up and down but we all have more time to think about our investments as vacations approach. I also like to take a look at my portfolio after 6 months to verify my performance and see where I’m going and if I’m aligned with my investing goals.
My Investing Goals for 2013
I had 3 simple but straightforward goals for my portfolio in 2013:
#1 Buy more consumer stocks
#2 Set up DRIPs to increase my positions
#3 Buy a US ETF (following the S&P 500)
I previously mentioned that my asset allocation was too concentrated in techno stocks. At one point, I held Seagate Technology (STX), Intel (INTC), Apple (AAPL) and Telus (T). I sold STX to increase my position in consumer stocks in order to meet my first investing goal and reduce my portfolio volatility. With this money, I added 2 great consumer stocks with McDonald’s (MCD) and Walt Disney (DIS). I also updated my dividend holdings and this is what my asset allocation look like right now:
As you can see, I’m still heavily invested in techno stocks but I increased considerably my position in consumer stocks since my last asset allocation update back in 2011. With such movements within my portfolio, I wanted to build a solid core where stock values would be more stable and provide strong dividends. Companies such as Coca-cola (KO), Johnson & Johnson (JNJ) and McDonald’s (MCD) are keepers for several years if not for life. The key is also to buy diversified sub-sectors. For example, KO and MCD are in the food industry but DIS and JNJ are far from it. It should bring great stability and strengthen my asset allocation.
I included Telus (T) in my techno stocks but I could have put it in telecoms as well since their business is mostly related to mobile services. Techno stocks were great to me as I had made over 60% on my trade with STX and both Telus and Intel give pay dividends and show value appreciation at the same time. I took a mid-term bet on Apple since I believe the company will continue to grow its dividend and looks like Microsoft (MSFT) in term of sales growth and liquidity management in the upcoming years.
My position in financials has also dropped greatly and this is because I fear a Canadian housing bubble burst. I now hold only two positions in ScotiaBank (BNS) and National Bank (NA) and I don’t expect to add any financials for the moment. I might look at some US banks now that they have cleaned up their balance sheets though…
Energy and resources are still an important part of my portfolio since Chevron’s (CVX) value has greatly increased since I bought it. 5N Plus (VNP), my only non-paying dividend stock, has come back slightly due to a dispute settlement and better financial results. The company is still not doing as well as expected but recent news is opening the door for hope in this case.
I have failed so far to start DRIPs on my main holdings and this was due to pure procrastination. I guess this is probably one of the most common investor flaws; not acting right away when they establish investing rules for themselves.
It’s the same thing with my ETF goal. However, I’ve ran through several ETFs tracking the S&P 500 and I’ll likely go with the biggest ETF of all, SPY. Due to its size, management fees linked to it are minimal. I will eventually sell my position in the Altamira US index fund and use this money along with cash in my account to purchase the ETF. This should be done during summer time.
How Were My Predictions for 2013?
As you know, I am tracking my best dividend stocks for 2013 at the beginning of each month. In my latest update, I beat the US market by almost 9% and I’m slightly over the Canadian market by 0.70%. I believe this isn’t luck as I stuck to the US index and beat the Canadian index by over 6% in 2012 with my selections. This year, I’m looking at beating both markets. I’ve spent the past four years establishing a solid and easy-to-follow method to select dividend stocks and manage my asset allocation. I want to make money with my investments but I’m like you, I don’t have all day to spend in front my computer to make it happen!
These stock selections were made based on strategies detailed in my book; Dividend Growth; Freedom Through Passive Income and from The Successful Investor newsletter, a very effective investing newsletter covering Canadian stocks.
How’s Your Portfolio so Far?
Have you made any chances in your asset allocation lately, any interesting trades?
Last year I received a fairly decent inheritance which allowed me the privilege of doing some bulk buying (as vs dollar cost averaging based on my pay cheque). So in doing a ton of research, including buying your book I settled on David Stanely’s Beating the TSX which buys stocks from the index but excluding former income trusts based on dividend yield. It’s a very simple system with a 25 year track record. Problem is a lot of investors don’t like it as it’s a purely a mechanical system.
Anyways long story short being new at investing I thought I tweet the system a bit. So first mistake buying Penngrowth (not part of the index) second one marketing timing, missed out on a 60% gain on Manulife. Overall I’m up around 8-10% vs David’s 25% for the year. Inspite of that I learned some great lessons.
Rob
So speaking of interesting trades Gold is back in after years of being away and since I rebalance about a month after David’s list comes out I got I Am Gold and Barrick at better prices than him.
That looks like an interesting asset allocation. I have about 1.30% total allocation to the five largest Canadian Banks, which look more intriguing than US banks. Is the Canadian Real estate market softening that much?
This morning I was pleasantly surprised by +26% on my Shoppers Drugmart holding, due to take over bid.
These take over bids happen a lot for my picks. I think it is because I select stock on low-debt and low-PE criteria. These kinds of companies are of interest to competitors as well.
Mike, I think your allocation looks good to me. You are now equally distributed in my opinion.
My account is still in consolidation so my results aren’t as good as yours. But I believe I am on the right track.
Hey DGI,
The Canadian Real Estate market isn’t slowing down that fast yet but I’m expecting it. Considering salaries increase at the same rate of housing price and that the Canadian debt-to-income doesn’t stop growing, this is only pure math to say that the Real Estate market will go down at one point.
@Bram,
Talking about a great surprise! now it’s time to have an eye on Jean-Coutu 😉
@Martin,
I hear you, I’ve started to switch my portfolio to dividend paying stocks in 2010 and I started to get the benefits only in late 2012. However, things are going a lot better since then. Keep it up, it will pay!
For me personally I would be weary of investing in Disney and Mcdonalds. Disney because they are constantly losing money with the entertainment side of the business (Theme Parks / Movies) Mcdonald’s because I feel America is shifting towards eating heathier and it will hurt the long term revenue. (I still reconize they are well known for paying excellent dividends as a company for decades) For me I would fee more comfortable adding something like General mills or Proctor Gamble.
Hey Uncle El,
Disney has also highly lucrative business parts with ESPN and their movies. With Star Wars, I’m convinced they will make even more money.
It is true that there is a shift toward healthier food, but McDonald’s is entering into this market too. With their location (their whole business model is based on where their restaurants are located), they will only have to adjust their menu which they are currently doing. Most of their sales increase come from healthier choice on their menus.
I agree that GIS and PG are also 2 other great consumer stocks too 🙂