US markets posted impressive gains in February posting YTD gains in the 5 per cent range. The Canadian market showed a small gain, after setting records earlier in the month before pulling back. My US portfolio almost kept pace with a better than 4% gain, while my Canadian portfolio beat the TSX considerably with over 1% in growth.
My Canadian portfolio is up over 2% YTD while my US portfolio is up almost 4% YTD. A very good start to the year.
|BB Total (no FX)||1.91%||2.69%|
|BB Total (incl FX)||2.84%||2.47%|
GW asked about an ideal 10 stock starter Canadian portfolio. He suggested based on his own screening and analysis the following fourteen Canadian stocks to pick from:
BMO, BNS, SU, TRP, T, RUS, ENB, BIP.UN, AGU, POT, NA, CM, SLF, TRI
You have compiled a great list, almost any of which could be in an ideal portfolio. Canadian banks are always my favourite and should comprise at least 25% to 30% of a Canadian portfolio. Any of the big five or six is good, but I would make sure to have RY and TD at least.
Another 10% can come from other financials such as PWF, SLF, MFC.
Oil and related companies can make up 25% or more – SU, TRP, ENB
Then teleco’s, Telus and BCE and perhaps Shaw at up to 20%
Round out with “other” including FTS and here is where you would put AGU/POT when ready.
Make sure you trade in amounts of at least $10,000 per trade to keep your trading fees low as a percent.
Comments on specific stocks:
RUS – I used to own this as it always shows on my screeners. But I was increasingly uncomfortable with its volatility. At one point I was down over 25% on this stock and sold when I was up 25%. It is a smaller cap company and has low trading volume, which contributes to its volatility. On the plus side it seems to have a high and stable dividend.
BIP.UN- I own this because of a trade made by my previous advisor who managed my RRSP account until I took it away from him for a series of bad decisions. I would normally not put it on my recommended list, but I keep it because it has a good dividend and has shown tremendous growth. This is a trust unit company (noted by the .UN symbol). I’m not fully comfortable with trust units, but I plan on keeping this for a while anyway.
AGU and POT are both good for long term along with good dividends. I sold both when they announced their merger and the shares shot up in response. I will likely buy back in once the merger is complete and the dust settles.
TRI is one I used to own, but I have not held it in a while. It seems to be a stagnant stock with little upside.
My Current Portfolio
Here is a picture of my current portfolio and weightings. US values have been converted to Canadian dollars. 36% of my holdings are in US stocks and 64% are Canadian. My current average dividend yield is 3.64%. My actual cash dividends are expected to grow by 5% in 2017.
|Bank of Montreal||BMO||2.47%|
|Bank of Nova Scotia||BNS||1.52%|
|Canadian Imperial Bank of Commerce||CM||1.55%|
|National Bank of Canada||NA||0.90%|
|Royal Bank of Canada||RY||2.61%|
|Cash on hand||2.27%|
|Johnson & Johnson||JNJ||1.09%|
|The Coca-Cola Co||KO||0.95%|
|Procter & Gamble Co||PG||1.03%|
|consumer goods Total||3.99%|
|Merck & Co., Inc.||MRK||1.34%|
|Novartis AG (ADR)||NVS||1.10%|
|Manulife Financial Corp.||MFC||1.67%|
|Power Financial Corp||PWF||1.33%|
|Sun Life Financial Inc||SLF||1.22%|
|Total SA (ADR)||TOT||1.48%|
|Exxon Mobil Corporation||XOM||0.36%|
|Pembina Pipeline Corp||PPL||1.84%|
|Suncor Energy Inc.||SU||1.12%|
|Oil & related Total||10.05%|
|Brookfield Infrastructure Partners L.P.||BIP.UN||1.71%|
|Public Service Enterprise Group Inc.||PEG||1.27%|
|Cisco Systems, Inc.||CSCO||0.47%|
|International Business Machines Corp.||IBM||2.10%|
|Verizon Communications Inc.||VZ||1.20%|
|Shaw Communications Inc||SJR.B||1.88%|
DR from Doha has provided me with the name of another broker for expats. They also apparently will allow Japanese residents as customers. He has been quite happy using their service and apparently their fees are lower than TD International in Luxembourg.
Market Highs – will it last?
Will the market continuing to set record high levels? Answer – Yes and No.
THIS article talks about reasons why the market will drop:
I like the last comment, which is one I often use – investing is “about time in the market, not timing the market.”
HERE is another article talking about market drops:
The market will drop at some point – it always has in the past. A full crash is unlikely. This has only happened a few times in history – 1929, 1987, 2009. We are unlikely to see another major market crash in our investing lifetime – but nothing is certain. A 10 to 15 % correction is quite common, but we had one of those recently, so we will likely not see another for a year or two. We have always recovered reasonably fast from market drops (1929 was the exception as it took over 10 years). It is unlikely we will see gains like 2016 any time soon. I always enjoy when my portfolio increases, but I rely on my dividends for income, not my capital gains.