In early 2015 I sold our U.S. Dividend Achievers index ETF and bought (skimmed) 15 of the largest cap holdings. The goal of investment strategy is greater portfolio stability with the potential of outperformance. The index insists on at least 10 years of dividend growth, it also applies financial health screens. The index ETF (ticker VIG) delivered better risk adjusted returns through the financial crisis (2008-2009), but has not outperformed the market from inception of late 2006. The index was and is light on the high-growth technology sector. That said, the index methodology did find a small basket of tech stocks that outperformed. We’re finding dividend growth tech stocks on the Sunday Reads.
For background, please have a read of our U.S. stock portfolio.
While the Dividend Achievers ETF is light on tech, it did find a few very good names when I skimmed the index in early 2015. Included in the mix of 15 Achievers was Microsoft (MSFT), Texas Instruments (TXN) and Qualcomm (QCOM). Here’s the dividend growth tech basket, in equal weight fashion vs VIG.
The rate of return is double that of the index from 2015, at 24% annual vs 12% annual. Not only that, the dividend growth tech basket beats the tech-heavy, growth-oriented Nasdaq 100 (QQQ) index. The Nasdaq is under 20% annual for the period.
Mixing in some Apple
I’ve also held Apple (AAPL) from early 2014 as a stock pick. From 2015, Apple has greatly outperformed the tech basket. The annual returns are a head-turning 27.9%. Yes, our tech basket offers a wonderful growth kicker. The mix has offered less drawdown (decline) in most of the corrections over the last several years (compared to the Nasdaq Index)
I recently wrote about taking a more defensive portfolio stance. But as I stated in that post, I have not abandonded our wonderful tech and other growth holdings. Even for a retiree it is important to have all of the bases (sectors) covered. That said, as a self-directed investor we can shape the portfolio risk profile by way of individual stocks and sector ETFs.
And back to the subject of dividend growth tech, I am not surprised that the index found that level of stability and outperformance. I will look through the index to see if I can find any other current tech gems.
Keep in mind that you don’t have to hold individual stocks in retirement. A simple but effective ETF retirement portfolio might do the trick. You’ll find those Dividend Achievers within that retirement ETF portfolio idea for consideration.
I like the idea of a well-balanced core portfolio with an inflation-fighting bolt-on.
You’ll find many retirement posts on this blog.
The Sunday Reads
On MoneySense, I had a look at Budget 2022 in Canada. Lots of goodies, but how are we going to pay for it all, might be the burning question. On the investment front, the gov went after the banks. From that post …
You can bet that government agencies will follow or chase the money from individuals and profitable sectors. When Willie Sutton was asked why he robs banks, he replied, “Because that’s where the money is.”
Also on MoneySense, here’s a very solid post on the Bank of Canada and the rising rate cycle. Borrowers and investors might prepare for the higher rate environment.
Banker on Wheels rolls in with the state of the markets for the first quarter. Of course, Canadian markets have ruled in 2022. 🙂 (not shown).
On My Own Advisor, Mark looks at how much you might need to retire with $5000 per month. That’s a good read.
At the Findependence Hub Robb Engen looks at a simple but telling RRSP vs TFSA comparison. On the TFSA vs RRSP question, many will suggest that if your income is $40,000 or below, use the TFSA. As your income grows over time, your situation and optimal investment plan will change. At some point, you might check in with a fee-for-service advisor.
On All About The Dividends Matt offers his March dividend income report.
And on the portfolio check-in front, let’s head over to MoneyMaaster for the March numbers.
The Sunday tweets
And on twitter you can check out some portfolio (dividend) reports.
Here’s a tweet and link courtesy of Deane Hennigar, why it’s hard to spend money in retirement.
And here’s the weekly wrap courtesy of Dividend Hawk.
For those on the hunt for greater risk and greater returns, here’s 6 penny stocks in Canada that might take off in 2022.
I missed this post from March, but let’s journey back and have a look – is dividend investing evidence based? That’s on dividendstrategy.ca.
Thanks for reading. Happy Easter.
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