Tuesday, March 25, 2008

asset allocation update

I thought I'd take a post and update my asset allocation in my non-registered portfolio. Being a dividend growth portfolio it is no surprise that it is currently 34% financials. Several financial companies offer exceptional dividend growth histories, and sound, stable business models. Also it is not a surprise that my portfolio is very weak on commodities. Commodity producing firms in general do not really fit into my system of investing in dividend growing stocks when they are priced attractively. Companies whose earnings per share depend on the fluctuating price they are able to garner from their wares in the market tend to have less predictable earnings growth and thus less predictable dividend growth.

Currrently I have 64% of my capital invested in Canadian companies, while the remaining 36% resides in U.S. firms. See my asset allocation across sectors below:


pitz said...

The banks may be actually the best way to play commodities in Canada anyways.

Do you believe for a moment that the Canadian banks could have delivered such impressive results sustainably without the commodities run-up?

Think about it for a moment -- the banks collect 2% of pretty much every retail transaction that takees place in Canada. They skim off a very large chunk of the dividend income earned by Canadians in the form of MERs. Its a pretty hard game to beat, even if you buy the commodity stocks directly.

pitz said...

Not to mention, if you 'buy' a house on a 40-year amortization, in essence, you're buying 2 houses -- one for you, and one for the bank, by the time you make your payments. Lots of wages from commodity businesses are going directly into housing, especially in Alberta. Banks will continue to benefit enormously from this activity.

MG said...

very good points pitz. Banks are plays on the economy in general.

Dividends4Life said...

mg: Interesting read. Given the valuations, it would be hard not to be overexposed to financials at this point. I am currently trying to understand my allocation across all investments. It has turned in to quite a task, but I should have something in April.

Best Wishes,

MG said...

D4l, Good point. I too may take a look at the asset allocation from an overall view soon.