In this post I’ll offer up charts on our U.S. stock portfolio and the Canadian stock portfolio. And I’ll put them together so that we can see how they work together. The total portfolio was designed to be retirement-ready. The fact that it beats the market benchmarks is a welcome surprise. At the core of the portfolio is wonderful Canadian dividend payers – the U.S. stocks fill in some portfolio holes. Let’s have a look at our U.S. and Canadian stock portfolio on the Sunday Reads.
First off, Happy Thanksgiving to Canadian readers. We are so happy to have a full house this Sunday, with family and pets. I hope you have much to be thankful for. It would be a long and generous list in our household.
I recently received requests to share our U.S. stock portfolio holdings. While I often track that portfolio on Seeking Alpha (the land of stock pickers) that’s not a regular event on this blog. I have certainly shared the Canadian Wide Moat Portfolio on Cut The Crap Investing.
On Seeking Alpha, here is our U.S. stock portfolio. The post may be paywalled for those who have exceeded the 3 free reads on Seeking Alpha. Again, that’s why I will share some details here. But keep in mind, this is not advice. But you may be on the receiving end of some ‘good’ lessons on building the simple stock portfolio.
Skimming the dividend achievers index
In early 2015 I skimmed 15 of the largest cap dividend achievers. What does skim mean? After extensive research into the portfolio “idea” I simply bought 15 of the largest cap dividend achievers. For more info on the index, have a look at the U.S. Dividend Apprecation Index ETF (VGG.TO) from Vanguard Canada. At the core is a meaningful dividend growth history working in concert with financial health screens. It leads to a high quality skew.
You will find that index ETF in the ETF portfolio for retirees post.
At Questrade you can buy ETFs for free.
I won’t get too deep into the methodology and how and why I constructed our portfolio in this post. I will offer more details in a post next week. Today, I will just get to the fun stuff – the holdings and the return charts and tables.
The U.S. Dividend Achievers
The 15 companies that I purchased in early 2015 are 3M (MMM), PepsiCo (PEP), CVS Health Corporation (CVS), Walmart (WMT), Johnson & Johnson (JNJ), Qualcomm (QCOM), United Technologies, Lowe’s (LOW), Walgreens Boots Alliance (WBA), Medtronic (MDT), Nike (NKE), Abbott Labs (ABT), Colgate-Palmolive (CL), Texas Instruments (TXN) and Microsoft (MSFT).
United Technologies merged with Raytheon (RTX) and then spun off Carrier Global Corporation (CARR) and Otis Worldwide (OTIS). We continue to hold all three and they have been wonderful additions to the portfolio.
Previous to 2015 we had three picks by way of Apple (AAPL), BlackRock (BLK) and Berkshire Hathaway (BRK.B). In total it is a portfolio of 20 U.S. stocks.
The returns from 2015
Here’s the total return history from 2015 to end of September 2022. All charts and tables are courtesy of portfoliovisualizer.com. That’s a very good free service.
I have included our seven Canadian Wide Moat stocks. While we are closer t0 a 60% U.S. to 40% Canadian weighting, I’ve split it down the middle at 50/50 for argument sake in this evaluation. The U.S. stock picks are overweight as well – double the weighting of the dividend achievers skims.
I have added Canadian high dividend stocks as a benchmark. For that I’ve used Vanguard High Dividend VDY. Looking at that benchmark, Canadian investors can get a sense of what they are giving up thanks to any Canadian home bias.
Related post: Living off the dividends? Don’t sell yourself short.
The annual returns table …
- For the period U.S. stocks (S&P 500) delivered 9.33% annual.
- Canadian stocks (XIC.TO) offered 6.12% annual.
Our U.S. stocks and Canadian stocks both beat the market. The total portfolio offered much less drawdown (decline) thanks to the all-weather portfolio construction. Also, our returns are much more favourable than shown as we have oil and gas stocks that have contributed greatly over the last year and more. Energy stocks are up over 60% over the last year. Those energy stocks are not included in the evaluation and charts.
All-weather stocks, less bonds
Thanks to the all-weather nature of the stock selection, one might consider using less bonds in retirement. Also, the defensive dividend payers (think telcos, utilities, pipelines, staples, healthcare) can work as bond proxies.
Given that I am in semi-retirement and my wife will likely retire within the next 5 years, we do hold bonds and cash. I will give more detail on that, in that post next week that will look at our asset allocation and how things might shape up and play out in retirement.
The Sunday Reads
On My Own Advisor, the Weekend Reads asks – to leverage or not to leverage?
Borrowing money today to invest in the future, for expected higher returns over time, is a legitimate strategy to build wealth.
But with leverage comes additional risks. Check it out.
For many reads and links we always check in with Dividend Hawk.
And here’s the greatest hits of the week from Banker on Fire.
High quality stocks are in on The Findependence Hub.
On stocktrades.ca Mat looks at REITs to consider in the Fall of 2022.
On the real esate front here is a very good podcast from Northland Wealth Management. There are some shocking figures in there – A Scotiabank study suggests that Canada needs 1.8 million homes built to reach G7 levels of housing needs. We’re currently at the 200,000 constructions per year level.
Investors are “allowed” to overcontribute $2,000 in their RRSP. That’s a safety buffer for those who make a minor error. Bob at Tawcan wonders if he should take advantage of that $2000 wiggle room.
Dividend update and survey says …
We have the September dividend update on GenYMoney.
Also from GenYMoney on Twitter …
That is more than interesting. Almost half of investors from that poll (perhaps unknowingly) set themselves up to underperform benchmarks thanks to not staying fully invested. Market timing is impossible. We can stay fully invested and pay attention to valuations. Of course, there’s loads of value these days as I suggested in …
What stocks and ETFs are you buying?
I would guess that lower prices are on their way. But that is not an investable idea or strategy. Even though …
For more on that theme, investing as simple as possible on FiPhysician.
And there’s a portfolio update on moneymaaster – stocks can go down too. They sold their cabin (sad), plus the portfolio “stuff”.
Portfolio decreased 5.1% to $481,399.37. This is the lowest my portfolio has been since March 2021. Normally I’d be pretty annoyed by this…BUT with a bunch of cash about to come in from the cabin sale, lower prices is actually kind of nice right now, plus my dividend income continues to grow each month/year.
Tweetable …
And don’t miss the Canadian Financial Summit. I’ll be there (online) talking RRSP and RRIFs. If you want some help running retirement spending numbers and strategies, head on over to Cashflows & Portfolios, where Mark and Joe will help you out. It’s a great service for the self-directed investor.
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Consider Justwealth for RESP accounts. That is THE option in Canada with target date funds that adjust the risk level as the student approaches the College or University start date.
RETIREMENT FUNDING PLANNING
The self-directed investor might consider the service provided by Mark Seed from My Own Advisor. He runs Cashflows & Portfolios where they will provide options for that optimal retirement funding strategy. That service is provided for a very reasonable fee. Once again, Cut The Crap Investing readers will receive 15% off until October 31, 2022.
If you do head to Cashflow & Portfolios, be sure to tell them Cut The Crap Investing sent ya.
OUR SAVINGS ACCOUNTS
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.0%. You’ll find some higher rates on GICs, recently updated and increased to 3-4%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.
OUR CASHBACK CREDIT CARD
We make between $60 to $70 every month! And that’s on everyday spending. There are no fees with …
The Tangerine Cash Back Credit Card
Last month we received $75 in cashback cash. We are spending too much, ha.
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