Feb 25 2008

The Dividend Guy’s February Dividend Portfolio Review


Monthly Dividend Portfolio Review

My portfolio is down 5.5% year-to-date which is worse than my benchmark yet better than the S&P 500. The primary issue I still am facing is my banking exposure which has not recovered and I do not expect it to for some time yet. It is in these types of markets that really test an investor’s resolve and adherence to a chosen asset allocation is even more important than ever. Actions on a portfolio should only be completed to either buy more assets or to rebalance an asset class that is out of whack. Notice I did not mention the sell word as one of my investment codes is to never sell. I am not looking to sell anything.

My focus has been on rebalancing to my target asset allocation – bringing my fixed income up to the target 20% value and the Canadian equities down. I recently entered a trade through my CSA account to purchase a short-term bond index fund. In addition, I have altered my pension contributions to emphasis the fixed income pension funds. Over time, this will bring my asset allocation in line with where it should be. Here is how my asset allocation stacks up today:

February Asset AllocationClick to Enlarge

It is difficult to look at my portfolio value where it is, but I recognize that markets fluctuate and there are going to be times in the next 20+ years of my investment horizon when the markets will test my resolve. I am confident in my approach and know that over time my asset allocation will prove to be successful. Here is my portfolio as it is structured today:

February PortfolioClick to Enlarge

It will be nice to see the market perform with a little less volatility, however as I am still buying in my pension fund the volatility has been a blessing as I have picked up more shares at reduced prices. That, in my opinion, is why the only time we should be hoping for an up market is when we are trying to sell stocks.



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4 Comments on this post

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  1. moneygardener said:

    I didn’t realize you owned so much Royal Bank. I assume you are comfortable having 1 stock make up 18% of your portfolio? Personally I really like Royal Bank, but does this jive with your asset allocation plans?

    February 25th, 2008 at 8:14 am
  2. The Dividend Guy said:

    Hey MG – I am not comfotable with one stock making up 18% and that has been the problem with my portfolio in the past. However, I hesitate to sell because I beleive strongly in RY. My actions over the next year will bring this number down and the overall Canadian equite allocation in line with where it should be.

    Jeremy

    February 25th, 2008 at 10:19 am
  3. Dividend growth investor said:

    You might want to diversify your canadian holdings by reinvesting RY’s dividends into some other stock.

    I do not know how old you are ( my guess is mid 30ties), but I wouldn’t keep more than 10 % of my overall portfolio in fixed income. Fixed income is great for diversification purposes, but its long-term returns always trail the stock market.

    February 25th, 2008 at 11:00 am
  4. Tyler said:

    I personally like your choice of the MSCI index for foreign equity. I don’t hav ethe talent or knowledge to get to know foregin companies well enough to put my hard earned dough there, but I don’t want to miss out on the returns either.
    I prefer to use ARDD, but I am going to buy some EFA (MSCI Index) for my RRSP because of the 2.8% yield and long term growth prospects.

    February 25th, 2008 at 6:35 pm

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