How I manage my DIY stock portfolio

I was inspired by this post over at Dividend Growth Investor, so I thought I’d share some of my own answers to the same questions.  I’ll add in a few more answers as well…

On researching and analyzing companies…

As a buy-and-hold dividend growth investor I’ve been very comfortable to date with our 30 Canadian holdings.  These are not companies I trade in and out of so I actually don’t review financial statements or read the daily business news on these companies.  Most of these Canadian companies are household names.  I own a few blue chip U.S. stocks such as Coca-Cola where dividends in these companies are also reinvested every quarter.  More and more however my Registered Retirement Savings Plan (RRSP) is indexed for better diversification.

On buying companies…

I’m probably unlike many DIY investors, I don’t have a stock watchlist set-up.  I don’t follow certain stocks each week.  I don’t have a massive list of stock screening criteria although I do have some purchase parameters I follow, that include blue chip stocks approaching their 52-week price lows while maintaining a low dividend payout ratio.  I make some purchases in those companies accordingly.  Otherwise I reinvest all dividends paid in the existing companies owned.

I try and rebalance across the portfolio by buying new assets to align with the sector breakdown of the TSX Composite Index; roughly 35% financials (think banks and life insurance companies), 20% energy (think Enbridge, Suncor, Canadian Natural Resources and more), 12% materials (think mostly mining companies) and a lesser amount of industrials and telecommunications companies.  I don’t worry about rebalancing my U.S. assets very much since I’m indexing more there as previously mentioned, buying more U.S. assets using a low-cost ETF a few times per year.

On ignoring market noise…

I feel I do this rather effectively, at least I do this much better than I did before.  There’s lots of information out there to warp your investing brain if you want it to. I enjoy reading blogs that provide some stock analyses but I honestly treat that as entertainment.  Most bloggers let alone experts have no hope in predicting the financial future of any stock but don’t tell them I said that 🙂

The reality is I can only afford to make a few purchases every few months so reading the daily or weekly news about any given company is irrelevant to my purchasing power, which is very limited.

On portfolio monitoring and performance…

I do not constantly gauge how well my DIY stock portfolio is performing to a relative benchmark other than maybe to check this one or two times per year.  For the last five years I’ve obtained an annualized return just above the annualized return of the TSX Composite Index. (This is not surprising since I own most of the largest companies in this index.)

I don’t monitor nor really care about my portfolio value very much however I am very focused on increasing my cash flow over time to cover retirement expenses, which is why I post these monthly dividend income updates. These updates provide inspiration that we’re on right the path to cover future expenses.

On adding more “core” to my existing “explore”…

I discussed my favourite equity Exchange Traded Funds (ETFs) here.   I’m adding more “core” going forward to increase diversification across our portfolio.  This means we will have a higher percentage of indexed ETFs in our registered accounts and we’ll rely less on a basket of dividend paying stocks going forward to drive returns.  I will continue to hold our existing dividend paying stocks for the “explore” part of our portfolio.  This is largely because we are sitting on some capital gains in our taxable accounts and I want to continue making good use of the Canadian dividend tax credit.

Conclusion…

As a “hybrid” investor (in dividend paying stocks and indexed ETFs) things seem to be working for us but I suspect this is largely because of our savings rate, our desire to keep investing costs low and our focus on increasing diversification across companies and countries over time.  Our plan is not without some flaws and some risks but I’m confident it will get us to where we want to be.

How would you summarize your investing approach?  How would your answers compare to mine?

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49 Responses to "How I manage my DIY stock portfolio"

  1. Hi Mark,
    My approach is somewhat similar. All money saved for retirement is completely indexed and exposed to as low risk as possible. I gamble more in my open account by holding individual stocks there. I also look at all my accounts as a “whole” portfolio so they are as tax efficient as possible. Maxing out my TFSA is #1 right now so I can preserve as much of my government benefits in retirement.. It all starts next year as I move from semi-retirement to retirement. I like your plan:)

    Reply
    1. Maxing out my/our TFSAs is always priority #1. If we can continue to do that in the coming years, we’ll be in semi-retirement.

      I look forward to learning how you will manage your portfolio in semi-retirement; the strategy to invest vs. divest can be very different!

      Reply
  2. Just FYI my new site currently under construction is called “The Simple Retiree” will let you know when I’m up. Thanks for your support Mark!

    Reply
  3. Dividends: I would like to ask how you, the readers, track your dividends to know exactly how much dividend income you are receiving monthly, quarterly, annually. Do you have some brilliant Excel spreadsheets set up that you can share with us? Do you go to each company’s web sites to note the dividend payment dates?

    Reply
    1. I keep a very simple spreadsheet to track my forward/projected dividends and distributions for the year.

      I have columns in the spreadsheet such as:
      -company name
      -symbol
      -amount of stock owned
      -dividend dates
      -dividend payment amount
      -dividend payment frequency (e.g., 4 or 12)

      This provides an easy formula to calculate cash flow. I simply need to update the spreadsheet when dividend increases come along 🙂

      Reply
  4. That sounds like a reasonable approach. The important thing is to get a plan and stick to it on your way to reach your goals. And thanks for the mention.

    The only difference to a US investor is that in the US version of the RRSP – the 401(k), you are limited in the types of investments you can hold. Mine is limited to index funds or target date funds.

    Reply
  5. I take a very similar approach and have been buying on the recent dip. I’ve added some more dividend stocks but also an index ETF which I plan to add to long term. I love being able to buy ETFs for free – makes dollar cost averaging so much easier (cheaper)

    Reply
  6. I use value investing with hybrid of Graham and Enterprise value factors. Excepted that I buy only dividend stocks and CEFs, since VI can also be applied to non dividend stocks.
    So I have multiple spreadsheets and among them one to monitoring / eval stocks and one other to make buy simulations of my list of interest + the stocks/CEFs I currently holding.
    This last one contain also a subsection with all these crusty-costly blue chips and other ones too costly for my targets. It is useful in case of crash or big dip, since their prices could go back to my levels.

    Reply
  7. With regards to recording & tracking dividends I have several Excel worksheet, many of the linked together, so I only make one entries and it update the others:
    – Worksheets for TFSA, RRIF & Non-registered stocks
    – For each stock there are columns for Purchases (Date, # Shrs, Cost\Shr & Total. Then there are column for Div-Reinvest, Date, Price, # Shares, Div & Div Inc % (if any)
    – Div Received worksheet, records the Div received each month for each stock. Totaled at bottom. Summary by year and comparison to prior years.
    – Qtr Div Summary. List of the stocks paid quarterly, Tot Invest, Total Shrs, Annual Div, Total Div & Ave Yield
    – Summary report, lists each stock summarized by holdings and Accounts (Totals should match Qtr Div Summary
    – Dividend history. The annual dividend paid by company and the % Inc, if any, going back for as many years as I own the stock (min 15 years for most).

    Reply
  8. My holdings have to provide a necessity or a service we use day-to-day for the most part. From there, I use my stock list to assess a good purchase point. Dividend growth over a period of time plays a good part in my selection. Like you, regular contributions and being invested in the market goes a long way.

    I also have all my spreadsheets linked to calculate my dividends per month, per stocks and annually. I have shared some templates on google docs for anyone interested.
    https://drive.google.com/templates?q=thepassiveincomeearner%40gmail.com&type=spreadsheets&sort=hottest&view=public

    Reply
    1. Thanks for sharing Snapshot.

      I keep my spreadsheets rather simple, less to worry about this way and less to go wrong when fiddling with it! I have a good idea what our projected cash flow will be, that’s enough!

      Enjoy your weekend!

      Reply
  9. @Mark
    “Value investing definitely has its merits, anything you have your eye on this summer?”
    Yes, even if I can understand many people when they says that VI is a lot of work for no quick gain. But they always forget to see long term, and I like the financial work involved, even if I’m far to be a pro.
    Well, since I had not any REIT after 2013, I finally decided to go back on it. So I bought recently ED.UN, an under-the-radar REIT, and AAR.UN (one I had in 2012/2013) is on my buy list too.
    Out of that I have two CEFs on the list; HYB.UN and FSD.UN. These two have a full exposition on the US markets, since buying directly with exchanging $CAD => $US is a loss with the hammered loonie. I have already a small position in UCD.UN for some US exposure too.
    And the last on my shopping list are MIC and MPC.
    Out of that, my too-costly-for-you-yet list is composed with STB/CPX/CAL/ALA/ENF/CMI/FTS/TPK and AF. For these ones I wait for a more consequent market dip.
    Cheers.

    Reply
    1. That’s a on long buy list…!

      I don’t know about HYB.UN and FSD.UN very much…

      I also have a too-costly-for-me-list right now. That’s VTI. I’d like to buy more U.S. ETFs but the conversion is a headache and I don’t have enough to Gambit.

      Oh well…

      Reply
  10. Yeah sadly I have a certain number of companies that pass the valuation but fail on the price (I use a mix of Graham # and enterprise valuation to calculate targets). And the reachable ones are fewer and fewer.

    “I also have a too-costly-for-me-list right now. That’s VTI. I’d like to buy more U.S. ETFs but the conversion is a headache and I don’t have enough to Gambit.”
    I never directly bought US assets yet, but it seems complicated and you confirm that.
    Cheers.

    Reply
    1. I actually have a way of doing a modified Gambit – I call it the My Own Advisor Gambit 🙂

      1.Buy a CDN dividend stock, that pays dividends in USD, that is interlisted in the US.
      2.Journal the CDN stock to the US-side of portfolio.
      3.Sell the CDN/US when I wish or simply let the dividends pay out and accumulate to buy new shares.

      Reply
  11. When you talk about ETFs in your TFSA are you talking about dividend ETFs or country ETFs like VCN. I’m thinking about keeping 25% of my TFSA in ETFs and slowly adding to that percentage as I get older and the rest in dividend stocks. And another question what type of ETFs would you hold in a non registered account like utility, dividend ,USA ,CDN, oil and gas etc. Thanks Paul

    Reply
    1. Thanks for reading Paul. Yes, when I speak about my portfolio I’m talking about broader ETFs like VCN, XIC, XIU, VTI, VXUS, etc. I’m not talking about dividend ETFs.

      My plan is to eventually have 50% assets in equity ETFs like those ones I listed above (that focus on capital appreciation), and about 50% assets in 30-40 dividend stocks and REITs (that provide mostly cash flow).

      Here are some posts about asset location (i.e., where to keep CDN stocks vs. US stocks):
      http://www.myownadvisor.ca/reader-question-invest-directly-usa-outside-registered-accounts/

      http://www.myownadvisor.ca/my-asset-location-location-location/

      Hope that provides some insight. Cheers!

      Reply
  12. @Mark
    Hahaha cool for the MOAG 😀
    I knew a bit about, but never thought about letting the dividends pay out, good catch and thanks for the tip!
    For me it was like a buy / journaling / sell method only.

    Reply
  13. We share many similarities. I like doing analysis but these are often more for my DSR website portfolios than my own investments… meaning I don’t have that much capital! 😉 Our portfolio monitoring and performance are pretty much the same, except that I do have a benchmark I check once or twice a year. Ignoring the market noise sure is the best option these days, unless you have money to buy some more!!

    Thank’s for sharing

    Mike

    Reply
  14. Went back and re-read the Dividend Growth Investor’s post. Good summary and one can’t find any fault in his process. In hind sight I wish I had stuck with my Core holding stocks, which I established by basic research and using historical dividend history & growth. If one has done his initial evaluation and established a list of stocks which meet the criteria, I’d recommend you stick to those and add to those positions when they are value priced (using your own determination of Value Priced). Certainly one should periodically confirm that the stocks you like are still solid, but monitor those and ignore all others. It simplifies the process, it may even seem dull, but in the long term you may do as well, if not better than constantly looking for new buys.

    Reply
    1. Funny though…looking back, I wouldn’t change many of my holdings or decisions. CDN banks, pipelines, telcos; almost every stock I own is DRIPping for future cash flow. Did I always buy these companies at great, rock-bottom prices? No. So as I get older, I don’t care so much about buying stocks or ETFs when things are priced perfectly rather just buy at lower prices, reinvest dividends and distributions, and keep doing this for as many years as I can.

      This way, I continue to own more of the “solid” stocks that have paid dividends for generations (see post) and ignore fads and others.
      http://www.myownadvisor.ca/canadian-dividend-stocks-buy-mostly-forget/

      Reply
  15. Hadn’t read that post and it’s a good one. I own 11 of those and except for the energy stocks one could hardly go wrong by sticking with just those.

    Reply
  16. HI I have several stocks with Computershare when is the right time to transfer these to my non registered brokerage account and what is the easiest way to track your ACB.

    Reply
    1. Hey Paul,

      I don’t think it matters too much when you transfer your stocks from Computershare to your discount brokerage. You need to pay income on dividends earned whether your shares are with a transfer agent like Computershare or inside your discount brokerage account.

      Personally, with the TFSA in place now, I’d consider waiting until January 2016 and use your $10k contribution room to deposit your shares inside your TFSA. No taxes on dividends inside that account!

      Also, for ACB, here is a free calculator I’ve used in the past:

      http://www.myownadvisor.ca/helpful-sites/

      https://www.adjustedcostbase.ca/

      Oh, I should have mentioned…I transferred all my shares to my non-registered account when I could DRIP at least one share.
      Good on you to be DRIPping stocks 🙂

      Reply
  17. @Paul

    I transfered all my computershare holdings once I had a good amount to hold it in my non-registered account to DRIP one share. I did some consolidation along the way. However, there really is no need to transfer them to a discount broker.

    The easiest way to track your ACB is to have a spreadsheet and enter all transactions. REITs or income trust require a little more work since you need to know about any return of capital.

    Reply
    1. I did the same Dividend Snapshot, transfer when I could DRIP at least one share for each stock I had. I continue to DRIP these stocks ever since…. Thanks for chiming in!

      Reply
  18. Paul:
    Why not transfer to a tfsa, annually? That way you pay no fees to purchase shares in the drip and your taxes, if any will be minimized. I also record each purchase & dividend reinvestment on a spreadsheet for each stock. It calculates the ACB after each entry.

    Reply
    1. Fair comment Henry. I could see value in consolidating the holdings with one brokerage. Also, the extra cash after dividends are reinvested can be saved and go towards diversifying and buying new stocks. Or, just save that money and move the cash into the TFSA and RRSP for future purchases when Mr. Market crashes.

      Reply
  19. its just easier to add extra shares right now the market is down so I send computershares some money and they don’t invest it till next quarter by then the share price is probably gone up plus I’m trying to simplify my life a bit instead of getting a dozen quarterly statements. some of these will go into my TFSA one day .maybe I’m over thinking the whole thing?

    Reply
    1. Good point Paul about the timing of the stock purchase. That’s a con in my book as well. I have a list of pros and cons on DRIPping here:
      http://www.myownadvisor.ca/drips/

      I used to run a number of full DRIPs. No longer, after I can DRIP one full share. Moved everything to brokerage and closed down all full DRIPs. It was an excellent way to get started with dividend paying stocks. They should be teaching this in school!!! 😉

      Reply
  20. all good points moving straight to a TFSA is probably a good way to go but if the government changes in October I can see it going back to 5500$ so it will make it tougher to transfer all shares from one drip ie: like Telus at once and then if you can only transfer say three quarters of them there might not be enough shares for a synthetic drip till the following year when you can transfer the rest?

    Reply
    1. I doubt the government will roll back the TFSA. Hard to say though. Yes, the lower the yield and higher the price, the harder it would be to DRIP one full share synthetically. If your focus was on your TFSA then you would need to wait until the following year in January for additional TFSA contribution room.

      Reply
  21. I hope they will keep it. But by seeing how much social warriors against capitalism ™ are in force in this country, I can see the next puppets at the head of the Fed to bring back TFSA limit to $5500 to”appease” the population.
    Sorry for this political rant, but anyway TFSA limits affect us, the “richs”…
    I bet on the low attention span of the population, so as you said they will keep the $10K limit, but it’s a 20/80 game.

    Reply
    1. Yeah…hard to say what will happen with any new regime. I suspect folks are tired of Harper so it’s either NDP or Liberals that get in. Both parties were very vocal about the TFSA limit getting bumped. I actually think it helps everyone even if they cannot maximize the account every year. At least the room is there. It’s a great benefit to seniors who wish to wind down their RRSPs and RRIFs and move funds to the TFSA as a tax-free income sanctuary.

      I also put a bet on the low attention span of the general public. You make me laugh 🙂

      Reply

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