In the middle of 2010, I purchased this blog mainly because I wanted to switch my portfolio from an aggressive growth model to a dividend investing model. I took me about 6 months to trade my non dividend paying stocks in order to rebuild my portfolio. Since then, I’ve kept only one stock that doesn’t pay dividends (and it’s down sharply now). When I look at the rest of my portfolio (i.e. the dividend stocks), I can say that I’ve made some good trades. In a few weeks, I’ll add another $5,000 to my portfolio and now it’s time to set my dividend investing goals for the year.
Overall Look at my Dividend Investing Strategy
Building a dividend portfolio doesn’t happen overnight. At first, I was simply picking stocks that would fit my dividend investing model regardless of the sector. Since I had no dividend stocks at first, it was easy for me to simply pick any decent stock with good dividend growth potential. Throughout 2010 and 2011, I made most of the trades to build my core portfolio. I am now more diversified and gradually included sector diversification while moving forward with my dividend investing strategy.
I also made the choice of building a 100% stock portfolio with no bonds or other fixed income. I had previously written that I think a 100% dividend portfolio is a safe investing model and I still believe it today. Companies such as Coca-Cola (KO) and Johnson & Johnson (JNJ) are so diversified and well established that they are as safe as term deposits in my opinion. The low rate environment is the other factor why I don’t consider bonds for my investing approach. I don’t find it very appealing to buy a bond that pays less than inflation!
So far, I have focused a lot of my money into three sectors: financials (BNS, NA), resources (VNP, CVX, HSE) and techno (INTC, STX, T). I also wanted to build a solid core with the consumer sector with the addition of KO and JNJ. Since I acquired these stocks, each of them has increased their dividend regularly which is also interesting.
Dividend Investing Goals for 2013
Since I’m pretty happy with my portfolio, my main investing goal in 2013 will be to continue buying dividend growth stocks. Since I’m already taking some risk with techno stocks, I will look towards businesses with more “sustainable” model. I’ll definitely pick 1 or 2 stocks from my Best 2013 Dividend Stocks eBook. Since I beat the index last year with my 2012 picks, I think it will be a good idea to re in this short list of 30 stocks to improve my portfolio. I’m seriously thinking of buying McDonald’s (MCD).
I already know that I’ll be looking to sell STX later on as I’m not sure how long the company can continue in the techno environment. INTC will also be on my sell watch list for this year. I’ve noticed that techno stocks show strong metrics but their environment can change rapidly. In the meantime, I’m ready to take an extra risk as the short term potential growth is quite interesting.
My Next goal will be to increase the existing positions in my holdings. I will start looking into DRIPs to buy stocks and save on fees. Stocks like KO, T (Telus), BNS, NA, JNJ, CVX will be part of my portfolio for a very long time so I will definitely increase my position. I previously used their dividend to add more stocks to my portfolio as diversification was more important to me. Now that I’ve reached a better level of diversification, I can look into “boosting” my good picks.
My third goal will be to look into index investing. I’ve been doing some research lately about the mix of index investing through ETFs combined with dividend growth stocks. While the dividend growth stocks provide stability and regular yield in your portfolio, index investing can offer a more diversified and growth approach. This investing model seems very appealing to me right now and I’m doing some research to see how I can build a stronger portfolio with this approach.
Therefore, my next $5,000 may be divided into two parts: half in a new stock and the other stock in an index. I’ve recently bought a small US index fund with my dividend payouts. I will most probably sell this fund and buy a bigger part in a different index. I should start 2013 with roughly 10% of my portfolio invested in a US index.
Readers, What are Your Dividend Investing Goals?
I have set three major priorities for 2013:
#1 Adding a “stable” dividend growth stock (most likely from the consumer sector)
#2 Increase my existing positions through Dividend ReInvestment Plans (DRIP)
#3 Invest 10% of my portfolio in a US index ETF.
I believe my portfolio will be stronger and more diversified with these moves. I would like to know what have you done lately in your portfolio and what your dividend investing goals are for 2013? Are you moving away from dividends? Are you buying more or simply playing the Dripping game?
hey DG,
I’m doing something similar. Looking to buy a high dividend yielder like Empire and allocating 50% to XDV. Love the dividend angle on XDV. What do you think?
Hey Mike,
Great blog, I have been reading it for a while.
I am 28 and have a solid pension plan through my employer.
My portfolio looks like this:
11K in individual Canadian stocks (DRIP)
Sector: Financial, Energy, Telecommunication
RRSP: 37K in various ETFs Couch potato style
TFSF: 25.5K in various ETFs Couch potato style
Goal this year:
I want to buy an ETF (about 6k) that tracks the US market in a non-register account (I have no room anymore in my registered accounts) and start building a Couch Potato style investment in a non-register account.
I am also looking to increase my exposure to individual Canadian stocks and invest another 3k on top of the 11K I m already DRIP ing.
Best,
Mike,
I read your blog regularly and I think you do a fine job on this topic.
I have been around for a lot longer than you and I have another view on comment in today’s piece about a 100% dividend stock portfolio.
Asset classes ebb and flow over time and the “winners” cycle over time. The classic investment return quilt chart:
http://www.rbcwmfa.com/projectfiles/63f01bf6-9386-48c1-a6c3-67c85ba2b633.pdf
shows that over the long term, asset class and geographic diversification will provide protection against asset class, geographic and industry cycles.
Dividend investing is very much in vogue now because interest rates are ridiculously low and a slow growth global economy is limiting the growth of many companies.
Over time this will change and diversified portfolios will benefit from whatever the next big thing is.
Take care.
Overall, I like the plan.
I actually stopped full DRIPs last year, since I had enough shares to run a full DRIP.
Going-forward, I will continue to use synthetic DRIPs to keep my stock portfolio growing and on auto-pilot; the strategy seems to be working since the dividend income is climbing month after month after month.
Since a big part of the CDN stock portfolio is set, other than a few missing payers I want to own, I will start indexing everything else.
That way, I have the best of both worlds.
In another 15 years, I figure a dividend portfolio of $500K and everything else indexed, I’ll be set.
I am not a big fan of DRIPs, mostly because when you own over 40 stocks like I do, keeping track of 40 different accounts would be a nightmare.
I am also not a big fan of index funds, unless they are in my 401K, and i get a match for my contributions. I also am not a big fan of Dividend ETF’s, because they own shares that might not make sense for me. Plus you pay 0.50% every year, which is too much.
I agree with you that being 100% invested in stocks is a safe strategy. If investing into good quality, large cap dividend paying stocks such as JNJ, ADP, KO, T, MCD, and many others, you most likely won’t lose money. The portfolio may be more volatile, but that can be well offset by dividends received. My goal for 2013 is to increase my account value to 10k and get 100/mo in dividends and 100/mo by selling options and increase my cash to 30% of my portfolio. Lot of work and lot of saving…
Hello Pete,
I’ve done a review of XDV a while ago:
https://thedividendguyblog.com/2010/08/04/tse-xdv-review-a-closer-look-at-a-dividend-etf/
I personally prefer buying dividend stocks and buying larger ETFs (such as US or CDN indexes).
Hey HD,
you seems to have a good strategy, I’m very interseted in investing in indexes right now!
Hello Dale,
Nice charts! I know them and I use them but I prefer using a 100% stock portfolio for my own investments. Keep in mind that I have a defined pension plan which is equal to a huge part of my investment stuck in a fixed income ;-).
Hey My Own Advisor,
sounds like a solid plan on your side too! a 500K portfolio will be awesome!
@ DGI,
do you feel that 40 stocks is a bit too much to handle sometimes?
TDG,
Not at all. I can easily cover 50 stocks. Most of my funds is in 30 or so stocks; the rest are in small positions i picked up when they were cheap, but never added as they went up too fast to add more. I would much rather be well-diversified and sleep well at night, than swing for the fences.
TDG,
Great goals for this year, and thanks again for the 2013 e-book. I have been watching CTY, as they always appeared on my TMX screens, and your mention made me look harder. Liquidity seems to be an issue, and I wonder about growth potential. That being said…
I am currently looking for one more “stable” consumer stock, but find that the choices in Canada seem limited. When you compare to the US market, we really are lacking. I currently hold MCD, JNJ, PG, KO, KRFT in my RRSP, but I’m running out of room in registered accounts (where I hold all my US stocks). My non-registered account is where I hold CDN stocks, but I can’t find anything in Canada that compares!
TDG,
I have no specific goals for 2013. I will be adding to my DRIPs and synthetic-DRIPs. The one specific goal I have made recently is by 2020 to be receiving at least $20,000 in dividends in all my accounts combined.
Mike,
I am following very similar approach to yours.
2013 goals
1. add one selection from your best stock ebook.
2. add growth mid-cap paying a dividend
3. Internation ETF with exposure to emerging markets.
A week ago I added CVX, AFL, NSC, and QCOR. I also have owned T and KO prior to that purchase and added more T on the recent dip. I DRIP all eligible stocks. My goal is to acquire shares in solid companies and build a rock solid base so that I am able to take calculated “risks” on some growth stocks like QCOR. QCOR may turn up to be a donkey, but that’s OK because my portfolio is supported by my giants. Being 33 I can afford to take some chances.
Standing pat on a very diversified account that continues to return dividends. Will likely only add to the smaller positions to help even the distributions across the sectors. I use some DRIPs but mostly take in the cash and purchase what I want when the time and price is good. I am currently waiting with half the dividend cash for a correction so that I can jump in one the stuff that is on sale. I love sales! Had a big buying spree back in late 08 and early 09. Loved it!
I have been working to get myself into all dividend payers. I have diversified, presently holding 18 positions. I have lately been working to build up monthly payer positions. These are mostly ETF’s and diversified them into Pref. stock funds and real estate funds. Have some common stocks mainly ATT(T), Frontier(FTR), Nisource(NI), Main St. Capital(MAIN), B&G Foods(BGS), Sinclair Broadcasting (SBGI), and Sturm Ruger (RGR). This allows me to receive decent dividends Monthly from the ETF’s and a couple of the common shares, and also quarterly dividends from the rest of the Portfolio.
My strategy is simple 🙂
1. Keep on adding to my DRIPs – mostly utilities and highly boring. I invest small amounts and it’s a slow process. At some point, they will be transfered in my stock accounts.
2. TFSA contribution will be towards a utility as I don’t have enough as part of my diversification target
3. RESP – income generating investments such as REITs
I have a good list of stocks for diversification at the moment.
I really liked your dividend investing strategy. I think investors should think to reach a 60% dividend income replacement ratio. By doing this, their dividend income would cover roughly 60% of their expenses in 2013.