are you overweight real estate?

Thicken My Wallet posted an interesting piece today on asset allocation. I contributed to his article and he used my concept of tracking the ratio house value / total assets.

You can find the article here.

portfolio weighting breakdown

For those of you who don't know, I keep a regularly updated section down the right side panel which outlines my current stock holdings within my non-registered portfolio. The company name, ticker symbol, and my percentage allocation are represented there. Currently my largest holding is conglomerate, General Electric followed by Toronto Dominion Bank. Among other holdings I am invested in vodka, milk, and soil...

I don't really have a target allocation for any of these stocks or sectors yet. I have a rough idea in my head about the type of industry diversification I want to maintain, but I generally buy stocks when I find them attractive no matter how much it sways my allocations. Since I am currently in a major accumulation stage with this portfolio, my industry and stock asset allocation might vary wildly from month to month. I expect to have an opportunity in the future to strategically add to bring up sector or stock weightings if need be. This is what my portfolio looks like currently:

General Electric (GE) 8%
Toronto Dominion Bank (TD) 8%
Yellow Pages Inc. Fund (YLO.UN) 8%
IGM Financial (IGM) 7%
Inter Pipeline Fund (IPL.UN) 7%
Sun Life Financial (SLF) 7%
Bank of Nova Scotia (BNS) 6%
Walgreen Co. (WAG) 6%
Procter & Gamble (PG) 5%
Reitmans (RET.A) 4%
Johnson & Johnson (JNJ) 4% *
Husky Energy (HSE) 4%
Royal Bank of Canada (RY) 4%*
Clorox Company (CLX) 4%
Telus (T.A) 3% *
Fortis Inc. (FTS) 3%
Saputo (SAP) 3%
Canadian Pacific Rail (CP) 3%
Diageo PLC (DEO) 3%
Manulife Financial (MFC) 2%*
Scotts Miracle Gro (SMG) 2%
Bank of America (BAC) 1%
Cash 0%

*holding is in a dividend reinvestment plan where dividends paid automatically get reinvested in shares of the firm.

2007 final portfolio summary

Well, 2007 has come to a close in the financial markets and here are how some of the major indices fared:

S&P 500 = +3.5%
DJIA = +6.4%
TSX = +7.1%

Let's take a look at 2007, the year in review for our non-registered portfolio.

Volatility = Good Buying Opportunities
By all accounts 2007 will probably be heralded as a volatile year in the markets. I am thankful for the volatility that we experienced because it gave me some good opportunities to buy a few great dividend growing companies on sale. For example, in August I picked up quite a bit of Yellow Pages Income Fund (YLO.UN) at around $12.60, and since then it has recovered back to a trading range of $13.50 - $14.50. Another blessing that came in mid August was Bank of Nova Scotia (BNS) trading in around $47.50, where I scooped some up for my dividend growth portfolio as well.

Currency Squeeze
The strength of the Canadian dollar this year really took a bite out of my portfolio. The loonie appreciated about 18% over the course of the year against the greenback. U.S. stocks that I bought in 2006 or early 2007 look really red on paper currently. For example I bought Procter & Gamble in two lots during March of 2007 and since then the stock is up about 17% in real terms, but because of the rapid appreciation of the loonie on paper I am actually down 1% on the stock.

Worst Performers
Walgreen Co. (WAG) down 17% on the year
Telus Corp. (T.A) down 8%

Best Performers
Procter & Gamble (PG) up 14% on the year
Sun Life Financial (SLF) up 13%

Portfolio Returns and Statistics
This was a year of furiuos buying for my non-registered portfolio, so this combined with the currency squeeze mentioned above have been a real drag to my portfolio.

• 2007 Return = +0.2% (incl. dividends) (fully time/value weighted)
• 2007 Dividend Growth Rate = 529% (incl. new funds)
• 2007 Final Div./Dist. Income Per Year = $1,430
• 2007 Final Portfolio Value = $35,574
• Largest Asset = Financial Services (30%)
• Smallest Asset = Technology (0%)
• Geographic = 65% Canadian & 33% U.S.
• 2007 New Funds (Savings) = $23,513 or $1,959/month

In Summary
Overall I am pleased with our progress in 2007. When I look back on 2007 I'll probably mostly see the strong appreciation of the loonie as the story of the year for my portfolio. Also, 2007 will probably bee seen as an accumulation year as we deposited about $24,000 and bought 10 new stocks in the calendar year. I don't expect to deposit anywhere near $24K into the portfolio in 2008. Also, I expect my emphasis in 2008 will be adding to existing positions, although I may still purchase a couple new dividend growing stocks or Exchange Traded Funds (ETFs). 2007 was a really bad year to use any type of benchmark to judge my portfolio performance as the currency move and scale of new funds that my portfolio experienced were unprecedented. Next year I am going to try to develop a good benchmark to evaluate my performance.


Happy New Year!

random portfolio stats # 1 - 12/07

As previously mentioned I am a bit of a numbers guy. I actually found out today that I am predominantly a 'FIERY RED' personality type (competitive, decisive, strong-willed, demanding and task/goal focused), so apparently my motto should be "Be Brief, Be Bright, and Be Gone". The second largest component of my personality though, is the 'COOL BLUE' type, so I also have a lot of interest in facts, figures, logic, and everything analytical. Someone who is this 'COOL BLUE' personality will have the motto "Give Me Details". Being partly the details guy, I'd like to share some random stats that I track for my non-registered portfolio. The holdings inside this portfolio are listed down the right panel of the screen.

• Cash Weighting = 2%
• Canadian Equity Weighting = 63%
• Financial Services Weighting = 32%
• Cash Savings Per Month (last 20 months avg.) = $1,481
• Percentage of Money in a Dividend Reinvestment Plan = 19%
• One Year Dividend Growth Rate to Date = 507% (new contr. included)
• Portfolio Yield = 4.1%
• Portfolio Yield on Cost = 4.0%
• Dividends Per Day = $3.78

I'll try to update these figures randomly and periodically as a type of information update on my some facets of my portfolio. I welcome any new ideas for interesting stats to track for a stock portfolio.

portfolio update (non-registered)

Here is a summary of my allocation within my non-registered stock portfolio currently, and some comments about the outlook going forward:

Asset Allocation

As you can see I don't own any technology stocks. This is probably typical with many dividend growth portfolios, as tech companies tend to use earnings for R&D and growth rather than return them to shareholders. I am completely comfortable with my 28% weighting in financial services; in fact I could see that go as high as 50% if situations presented themselves.

This portfolio is currently yielding 3.7% and is 68% invested in Canadian stocks. 19% of the portfolio is in a Dividend Reinvestment Program.

I am currently sitting on about 4% cash as you can see from the pie chart above. One stock that I am watching closely right now is Bank of America (BAC), which sports a fat 5.5% yield, and trades at a P/E of 10.9. Several U.S. stocks are beginning to look attractive since the Canadian dollar closed at around $1.04 today. Home Depot is another stock that looks interesting. It is trading around a multi-year low, and sentiment regarding housing may be bottoming. HD's earnings have been coming down as of late, however the fundamentals for the company still look very strong. That being said, I may already be exposed a little heavy to the U.S. consumer holding Walgreen and Scotts Miracle Gro. I do feel a bias toward the U.S. right now since our dollar has appreciated so far so fast, as well U.S. stocks are showing more value than CDN....it feels like an opportunity to use the $CAD buying power.

In Canada, nothing is really getting me too excited lately. Reitmans (RET.A) is probably the name that I have the most of my attention on. Bank of Nova Scotia (BNS) starts to look good whenever it wants to go below $50. I think BNS' next earnings report might give the stock a good bump, as I have a feeling Latin American earnings will come in very good, after seeing some numbers from U.S. companies like Whirlpool. Also BNS may look relatively unscathed in the subprime realm since they have smaller exposure than their peers.

Maternity-Leave Section

The Maternity - Leave section of the portfolio is about 83% complete. After some recent developments with my income, combined with recent looks at our budget, I may not bring the Mat. - Leave amount to 100%. Instead I may call the section complete and allocate funds elsewhere...I'm still debating that one.