July 2016 Update


California meets Calgary in Regina


One of the few times I get to visit with my son.



July Results

Both the Canadian and US markets had great months in the range of 3% or more.  This brings the TSX to 12% YTD and the US markets at 6%, making for what could be a good year if there are no major pullbacks.

For the first month in quite a while, my portfolio did not perform as well as the market, however I am still on track or ahead of the market for the year to date.

For the month, my portfolio grew by about 2% and over 10% on the year.  My net worth continues to grow – meaning my growth continues to support my spending.

I had a few underperforming stocks, most disturbingly was POT which once again cut their dividend.  POT no longer fits my criteria and I will look for an appropriate time to sell.


July YTD
TSX 3.68% 12.09%
DJIA 2.80% 5.78%
S&P 3.56% 6.34%
BB CDN 2.03% 11.59%
BB US 1.62% 14.01%
BB Total (no FX) 1.90% 12.32%
BB Total (incl FX) 2.10% 10.04%



July Sales

With the US market hitting all time record levels in July, I decided to dispose of a few stocks with lower dividend yields and with good capital gains.  I try to keep my portfolio filled with stocks whose dividend yields are above 3% as this  represents my retirement income.  These stocks had higher yields before, but the stock price has gained so much that the calculated yields have dropped (not the actual payments). Also these stocks rated in the low end of my crude indicator of stocks to buy and stocks to sell.  Here are the stocks I sold and the reasons.  These are still good stocks to own, so I am not necessarily encouraging others to sell them.

LMT – is hitting record highs, thus the dividend has dropped well below 3%.  Also it rates in the bottom third of my stocks to buy.

UL – still has a 3% yield, but I wanted to take advantage of the big capital gains.  It rates right at the bottom of my list of good stocks.

KMB – great gains resulting in lower yields and placing it near the bottom of my list.  I have been getting leery of the high PE ratio.

Again, these are not bad stock, just lower ranking stocks on my “good” list.  Another reason I wanted to sell some stocks was for tax purposes.  I still have some unused capital losses that I need some capital gains to offset.  I may even sell some stocks that are in a loss position before the end of the year to balance off my gains for tax reasons.

I will sit on the cash for a while watching for a pullback in the market to replace these stocks.  Some stock I am considering are QCOM, more AT&T and IBM and perhaps getting back into NVS, which I took big gains on last year.

Will keep you posted.


Ideal Portfolio (US)

Last month (June) I showed an analysis of the “Ideal” Canadian portfolio with a 10 year compound annual growth rate of 11.16%.

Here is my version of the “Ideal” US portfolio as outlined in my May report which includes CVX, KO, PG, TRV, JNJ, MRK, BA, MCD, IBM, VZ.

Had you purchased 100 shares of each of these companies on January 1, 2006, you would have paid $35,801.  Those shares would now be worth $91,168 and you would have received dividends in the amount of $30,574 bringing the total net worth on the holdings to $111,741..  Not counting the returns on the reinvestment of the dividends that amounts to a compound annual growth rate of 12.06% over the 10 year period which includes the great crash of 2008-2009.

By contrast the Dow Jones had a compound annual growth rate of just under 5% during this period, excluding dividends and the corresponding ETF (DIA) had a compound annual growth rate of 9.06% including dividends.

I have owned most of those stock during that period of time and still hold most of them.



Politics and Markets

I often wondered who is better for the stock markets – Conservatives or Liberals, Democrats or Republicans.  The stock market is not the definitive measure as to how well an economy is doing, but it is a good indicator.  So I decided to take a look back at the past 50 years to see if there was an answer to this question.  The measurement I used was Compound Annual Growth Rate (CAGR) on the major stock market indexes – TSX for Canada and Dow Jones for the US.  CAGR is defined as follows:

“The compound annual growth rate (CAGR) is a useful measure of growth over multiple time periods. It can be thought of as the growth rate that gets you from the initial investment value to the ending investment value if you assume that the investment has been compounding over the time period.” (InvestingAnswers)

In Canada, since 1968 there have been nine separate prime ministers serving ten terms – Pierre Trudeau had two terms.  However, many of those prime ministers served for a very short time and their terms would have had little consequence on the markets (Joe Clark – 9 months, John Turner – 3 months, Kim Campbell – 5 months).  So I looked only at the longer term governments – Pierre Trudeau 1968 to 1984 (I lumped Joe Clark and John Turner into this period as Trudeau’s policies are what affected the economy); Brian Mulroney 1984 to 1993 (Kim Campbell’s term included); Jean Chretien/Paul Martin 1993 to 2006, and Stephen Harper 2006 to 2015.

The winner, by far, is the era of Jean Chretien and Paul Martin, who presided over the Canadian economy for  a combined period of over 12 years.   The TSX had a CAGR of almost 9% during this period of time.  The worst time was the nearly 10 years under Stephen Harper with a CAGR of 1.27%.  Pierre Trudeau had a CAGR of 5.45% while Mulroney had 6.39%.

Justin Trudeau has not had enough time in office to provide meaningful numbers, but in his short term as PM his CAGR is 8.55%.  If this trend continues, it would rank him up with the previous Liberal government as the best.

In the US, the strongest performances are by Bill Clinton at a CAGR of almost 16% and Barack Obama with almost 12%.  The worst were Nixon at minus 4.38% (roughly zero if you include the Gerald Ford years) and George W. Bush at minus 3.52%.  Jimmy Carter wasn’t much better at close to zero. Ronald Regan and George H. W. Bush turned in respectable performances of 11% and 9.7% respectively.

So what does this mean for the upcoming US election?  Only time will tell, but using the above data as a predictor, it would appear that Hillary Clinton would produce better stock market results than Donald Trump.

The above analysis in no way provides a judgement on who were the best PMs or presidents, just their apparent impact on the markets.  It does appear that Liberal/Democratic leaders outperform Conservative/Republican leaders.


Reader Questions

A reader in Saudi Arabia sent me a few questions noted here with my responses:


A recent reply of your regarding stock choices is below (highlighted list of stocks, 17 of them below). In your personal opinion (not to be meant as advice, just your opinion), is there enough diversification with the 17 stocks highlighted below? If not, what area am I not diversified in and which stocks would you reckon would cover me enough?


My Answer:

Those are all quality stocks and worthwhile having in a portfolio.  Some would not fit in my portfolio because of lower dividend yields, but I am in retirement and the income is important to me.  The younger you are the less you need to worry about yields.  I wouldn’t get to anal about the amount of diversification – this portfolio may not be perfect, but it is pretty well diversified.  There are some areas a bit heavy (drug – LLY, PFE;  consumer – HD, WMT, KO, KMB) but not enough concentration to worry about.


Re your response: “Using my current strategy, it is highly unlikely that any stocks will fall to zero, because as soon as it drops in rating, I sell.”

How do you know when a stock has dropped in rating?

My Answer:

I use ValueLine for the ratings.  This is paid subscription service and probably not worthwhile for most average investors to pay for.  I try to keep my readers informed using my subscription, so you can always ask me if there has been a change.  Otherwise, you can just use Yahoo Finance, Google Finance, or even the research available on your own trading platform to see if any of the rating agencies have issued changes.    


Re: “I buy my stocks for their dividends and although I watch the share price, it doesn’t really matter for my purposes.  With a good stock the dividend will continue and even increase in spite of falling share prices.  For example TOT share price has dropped considerably, but the dividend is still growing – it just means the dividend yield appears higher.  When share prices drop, you don’t actually lose unless you sell the stock.  Good stocks will eventually recover.”

So do you basically buy and hold (rebalance once in a while) and just enjoy the dividends and resist any temptation to sell the stocks if they are going down? or up?

My Answer:  

I do buy and hold – and usually will not sell just because of a drop in price.  I will sell with a drop in ratings.  I occasionally sell when a stock has risen above what I think it should be worth – for example, I sold MCD as it hit new highs and recently sold LMT because of high prices.    


Any good mobile apps you use to monitor your portfolio?

My Answer:  

I haven’t found one yet that I really like.  Google Finance is good if you only have US stocks, but doesn’t access Canadian stocks.  I use Yahoo Finance which is acceptable, but not great.  


So the list of stocks you post on your blog – they are diversified across the industries I’m assuming?

Also would you still stay away from oil and gas or just have low exposure given current conditions?

Finally: the biggest fear I’ve heard from others is that if the stock goes belly-up (bankrupt or whatever) or if there is a severe correction then This could wipe out dividends for the year or worse the capital as well. How  would you respond to this sentiment?

PS: has any if your stocks, present or past, gone through this?

My Answer:

The suggested list of stocks I publish every month is quite diversified, but you would need to select from a variety of industries.  The model portfolios (US and Canadian) that I listed in the last couple of months are a good example of diversification.  Also my stock portfolio listed is  quite diversified. 

Oil is a long way from recovering, so I wouldn’t buy oil for its short term gains, but rather for reliable dividends.  In Canada SU is the best while in the US CVX and TOT are good.  I may buy some more TOT in the near future.  Oil will come back but it may take a few years.

I buy my stocks for their dividends and although I watch the share price, it doesn’t really matter for my purposes.  With a good stock the dividend will continue and even increase in spite of falling share prices.  For example, TOT share price has dropped considerably, but the dividend is still growing – it just means the dividend yield appears higher.  When share prices drop, you don’t actually lose unless you sell the stock.  Good stocks will eventually recover.

I have made a few errors in the past. See my book.  You can get your own copy if you want on Amazon:


Check the chapter on Flubs and Prizes to see where I lost a lot on stocks.  That is the beauty of diversification.  Some stocks dropped in value to almost zero and still my portfolio grew.

Using my current strategy, it is highly unlikely that any stocks will fall to zero, because as soon as it drops in rating, I sell.  But in the unlikely event that one does go belly up, your other diversified stocks will keep your head above water.

In my two analyses of US and Canadian ideal portfolios, they still had good annual returns even with the crash of 2008 and 2009.

There have been two major crashes in my lifetime – 1987 and 2008/9 and still the market was the best place to be.  It always recovers.  And a portfolio of good stocks still provides a return even in bad times.


I recently read your latest post where you provide some historical data (if we had invested some money in certain stocks it would have been worth such and such today).

Can you recommend a tool that would allow me to enter stocks in a portfolio for a given year of history to see how it would have performed to date?

What strategy do you use for rebalancing and how often do you do this annually?


My Answer:

I have not found an effective tool for checking on past investments. The one website I did find, you had to enter one stock at a time and I found it to be inaccurate.  So I go through a labour intensive manual process.  Most financial websites (Yahoo Finance, Google Finance, MSN Money) have a tab for historical prices.  The one I find the best is Yahoo Canada.


When you do a stock quote there are links along the left showing historical data.  You can filter the historical info as you want.  I then just copy down to Excel and do my analysis.

I don’t do an actual formal rebalancing, but I regularly monitor my stocks to see if any need to be culled.  I check regularly to see that I am diversified adequately.  I make sure that I cover a broad range of industries.  Given the current low interest rate environment, my balancing doesn’t include any fixed instruments.


Suggested Stocks


Company Ticker Financial Strength Dividend Yield Dividend Growth 10-Year Current PE Ratio
3M Company MMM A++ 2.46 8.5 21.85
Amer. Express AXP A++ 2.02 7.5 11.53
AT&T Inc. T A++ 4.56 3.5 14.92
Automatic Data Proc. ADP A++ 2.39 13 27.99
Boeing BA A++ 3.45 12.5 15.17
Bristol-Myers Squibb BMY A++ 2.01 2.5 29.61
Cardinal Health CAH A++ 2.25 26 18.28
Chevron Corp. CVX A++ 4.06 10 87.83
Coca-Cola KO A++ 3.17 9.5 23.31
Colgate-Palmolive CL A++ 2.11 11 26.38
Deere & Co. DE A++ 2.92 15.5 20.56
Dover Corp. DOV A++ 2.34 9.5 20.26
Du Pont DD A++ 2.39 2.5 21.2
Emerson Electric EMR A++ 3.42 8 17.4
Exxon Mobil Corp. XOM A++ 3.2 9.5 35.42
Franklin Resources BEN A++ 2.23 15.5 13.68
Gen’l Dynamics GD A++ 2.13 13.5 15.04
Grainger (W.W.) GWW A++ 2.27 17.5 18.17
Home Depot HD A++ 2.03 19.5 21.7
Honeywell Int’l HON A++ 2.01 9.5 17.84
Int’l Business Mach. IBM A++ 3.52 20 12.99
Intel Corp. INTC A++ 3.04 17.5 13.99
Johnson & Johnson JNJ A++ 2.6 9.5 21.03
Kimberly-Clark KMB A++ 2.76 8 27.5
Lilly (Eli) LLY A++ 2.54 3.5 22.65
Lockheed Martin LMT A++ 2.72 20.5 21.45
McDonald’s Corp. MCD A++ 2.83 20 22.92
Merck & Co. MRK A++ 3.13 1.5 15.89
Microsoft Corp. MSFT A++ 2.58 19 20.74
Novartis AG ADR NVS A++ 3.34 13 19.7
PepsiCo, Inc. PEP A++ 2.78 11.5 22.62
Pfizer, Inc. PFE A++ 3.27 4.5 20.39
Procter & Gamble PG A++ 3.14 10 23.49
Public Serv. Enterprise PEG A++ 3.61 3 15.85
Qualcomm Inc. QCOM A++ 3.54 22.5 14.27
Raytheon Co. RTN A++ 2.17 11.5 18.61
Schlumberger Ltd. SLB A++ 2.5 15.5 64.02
Texas Instruments TXN A++ 2.34 29.5 22
Total ADR TOT A++ 5.79 5.5 13.81
Travelers Cos. TRV A++ 2.3 8 12.22
Unilever PLC ADR UL A++ 3.13 6.5 22.23
Union Pacific UNP A++ 2.42 21 17.49
United Technologies UTX A++ 2.49 12.5 16.16
Verizon Communic. VZ A++ 4.08 3 14.02
Wal-Mart Stores WMT A++ 2.72 14.5 17.51


Company Ticker Domicile Code Financial Strength Dividend Yield Dividend Growth 10-Year Current PE Ratio
Agrium, Inc. AGU CA A 4.06 39 15.79
Bank of Montreal BMO.TO CA B++ 4.1 7 12.39
Bank of Nova Scotia BNS.TO CA A 4.5 9 11.6
BCE Inc. BCE CA B++ 4.09 8.5 18.8
Can. Imperial Bank CM.TO CA A+ 4.88 6.5 10.65
Can. Natural Res. CNQ.TO CA B++ 2.28 23.5
Empire Company Ltd. EMP/A.TO CA B++ 2.16 10 13.42
Enbridge Inc. ENB.TO CA B++ 3.98 12.5 21.29
Jean Coutu Group PJC/A.TO CA B++ 2.52 13 15.62
Magna Int’l ‘A’ MGA CA A 2.58 7.5 7.76
Manulife Fin’l MFC CA B++ 4.15 3.5 9.81
Nat’l Bank of Canada NA.TO CA B++ 5.08 10.5 10.08
Pembina Pipeline Corp. PPL.TO CA B++ 4.92 5 35.47
Potash Corp. POT CA B++ 5.85 37 21.39
Royal Bank of Canada RY.TO CA A 4.23 10.5 11.91
Russel Metals RUS.TO CA B++ 6.47 10 24.72
Suncor Energy SU.TO CA A 3.22 24 47.97
TELUS Corporation T.TO CA B++ 4.44 15.5 17.31
Thomson Reuters TRI.TO CA B++ 2.4 5.5 26.99
Toronto-Dominion TD.TO CA B++ 3.94 10.5 12.51
TransCanada Corp. TRP CA B++ 4.9 5.5 30.78



Company Ticker Domicile Code Financial Strength Dividend Yield Dividend Growth 10-Year Current PE Ratio
Novartis AG ADR NVS CH A++ 3.34 13 19.7
Daimler AG DDAIF DE B++ 5.61 5 7.19
Siemens AG (ADS) SIEGY DE A 3.65 11 11.97
Total ADR TOT FR A++ 5.79 5.5 13.81
AstraZeneca PLC (ADS) AZN GB B++ 4.59 12 21.06
Brit. Amer Tobac. ADR BTI GB B++ 3.37 14 20.36
BT Group ADR BT GB B++ 4.25 0.5 10.48
GlaxoSmithKline ADR GSK GB A+ 5.05 6 21.8
Rio Tinto plc RIO GB A 3.96 11 12.63
Vodafone Group ADR VOD GB B++ 5.81 14 40.15
WPP PLC ADR WPPGY GB A+ 3.24 15.5 14.61
Unilever PLC ADR UL NL A++ 3.13 6.5 22.23


Happy Investing !!






About borgford

Feel free to contact me with questions: brianborgford@hotmail.com
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3 Responses to July 2016 Update

  1. Shane McEachern says:

    What will happen to my shares of POT, if they merge with Agrium

    • borgford says:

      I own both AGU and POT. AGU still makes my list of recommended stocks, but POT has fallen off because it cut its dividend twice this year. It was on my list for disposal as I looked for some direction on this stock. Today’s report is that AGU and POT are considering a merger, but nothing is definite and it is not clear what kind of transaction might take place. It could be a merger into a new company, in which case you would get shares in the new company in an amount equivalent to what you currently own. It could be that one company absorbs the other and you would either be bought out for cash or receive shares in an equivalent amount. Right now it is all speculation.

      There is an adage “buy on fact, sell on rumour”.

      If you own stocks in one or the other or both companies, you are now faced with a choice of holding tight and see how it works out or sell now and take the profits generated on the speculation – both companies were up considerably on the news.

      I am tempted to sell my shares in both companies and wait for the dust to settle and look at buying the new company later. I have done this often in similar transaction, the most recent being the Burger King takeover of Tim Horton’s. There is a good chance that the resultant transaction increases the value, but a bird in the hand…

      Your choice, but I think I will look at disposal – not because I am worried about the results, but just to take the known profits.

      Hope this helps.

  2. Pingback: November 2016 Investing Update | Brian Borgford – Investing

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