DIY Investor Profile 2018 Update – Susan Brunner
Susan Brunner is a successful do-it-yourself (DIY) investor who has been investing in dividend paying stocks for decades. Thanks to her investments, she hasn’t had a mainstream job since 1999! (She still doesn’t.)
I profiled Susan, who’s been a fan of My Own Advisor for years (thanks again by the way), back in 2012.
Many years have passed since that investor profile and I figured it was time to get an update – she kindly obliged. Here was our conversation about why she’s still very fond of dividend paying stocks, what she thinks about investment clubs, and her take on Exchange Traded Funds (ETFs) even though she’s not an indexer.
Susan, welcome back to the site!
Thanks for having me again.
Last time we talked, geez, 2012 (time flies), you shared your journey into owning dividend paying stocks for the long haul. Why are you still fond of dividend paying stocks? What are your top-10 holdings?
You’re right Mark. I have not lost my fondness for dividend growth stocks. In the following table I am showing my top 10 stocks. Note to your readers OTC means Over-The-Counter market.
|Canadian National Railway||TSX||CNR||NYSE||CNI|
|Computer Modelling Group Ltd||TSX||CMG||OTC||CMDXF|
|Pembina Pipelines Corp||TSX||PPL||NYSE||PBA|
|Richelieu Hardware Ltd.||TSX||RCH||OTC||RHUHF|
|WSP Global Inc.||TSX||WSP||OTC||WSPOF|
Interesting holdings. I own some of those. Any new stocks you have your eye on? Why or why not?
I’m trying out a couple of new stocks of:
|Alaris Royalty Corp||TSX||AD||OTC||ALARF|
|Atrium Mortgage Investment Corp||TSX||AI||OTC||AMIVF|
Alaris Royalty Corp provides money for private corporations. So far, I have lost some 17.9% on this investment.
Atrium Mortgage Investment Corp is a non-banking finance company providing residential and commercial mortgages that lends in major urban centres in Canada where the stability and liquidity of real estate are high. I just bought this a few months ago and I have up 4.4%.
So, in our last interview you told me “I tend to try out new stocks with a smallish investment and see how things go. If they go well, I might invest more. If an investment does not do well over the next 3 to 5 years, I might sell.” I see you continue to do that. Why?
I feel some big gains could be had given the core of my portfolio is very stable. Then again, you can lose money – see Alaris! I am mostly using my TFSA to try out the new stocks. I bought Alaris Royalty for the TFSA, but actually Atrium Mortgage was for my LIF account.
As part of this recent update on my site – Financial Freedom Target: Age 50 – I shared some details about our financial path and what we hope to accomplish in the coming give or so years. What are your thoughts on my approach and what benefits or flaws do you see in my thinking?
I can only speak from my experiences Mark. I am sure that in different time periods and different focus, things would be different.
First, I think dividends are great. If you invest in dividend growth companies you let compounding work for you. My dividend yield is relatively low since I have a variety of dividend growth stocks. My yields run between 1% and 6% for those companies. There tends to be a trade-off between yield and growth for dividends – I’m sure you know this as well. My portfolio yield runs between 3 and 3.5%, so on a $1,000,000 portfolio that works out to $30,000 to $35,000 per year.
Second, I wish there was the TFSA when I was saving for retirement. I had half my money in a trading account/taxable account and half in an RRSP when I stopped working. Taking money from the RIF and LIF means paying a lot in tax and I get no Old Age Security (OAS). If I was doing it over I would have had more in the trading account and less invested inside my RRSPs. I put money into my RRSP at a lower tax rate than what I am now taking it out.
I was lucky in that I was doing my saving and investing in the great bull market running from 1982 to 2000. In dreaming big when I started investing, I looked for returns of 10% a year but knew little about investing at that time. However, I was lucky as I reached my goals and in fact exceeded it.
I probably did well because of that big bull market. I focused on financials (especially banks) and utilities and stayed away from resources (oil and gas and mining) that are more cyclical.
Maybe a question for you Mark: you have a good financial plan for retirement, but have you thought of what you are going to do in retirement?
I suspect that a lot of people will work past retirement age just to have something to do. The statistics health wise are awful for inactive retired people. You need things to do, you need exercise and socializing to keep your mind and body healthy.
The other thing I will tell you is – life happens. There are always unexpected things that happen to change your plan. Some are good and some are not. I have met a number of people through Meetup and other social clubs that have lost their spouse or best friend or did a gray divorce or just moved to Toronto because their kids are here. They are looking for things to do and also to meet people.
I’m staying engaged by doing my stock research and blogging. I also walk at least an hour a day (getting to 10,000 steps). I have a walking buddy to walk through the parks and ravines of Toronto, I go out to lunch (a lot), I socialize via my clubs; I do Tae Bo (just Google Billy Blanks via YouTube) daily and I am starting into weights.
An active body and mind will be factors in living a long-life Mark. Make those changes now so you can enjoy things as you get older.
Thanks Susan. I’m getting more serious about my exercise actually. In your email to me, you told me you’ve joined 3 investment clubs recently. What was the trigger for that?
Yes, since our last interview I have joined 3 investment clubs. One is by Ellen Roseman and is a share club. Share clubs are promoted by Money Sense Magazine – I recall you’ve been quoted in that publication a few times. Another club is sponsored by StockTwits through Meetup. A third is run by my friend Peter. I got involved with some investment clubs because I had two lady friends I used to talk to about stocks. Unfortunately, they both died so I had no one left to talk to about investing. With one friend we used to go to have lunch in a really nice restaurant to discuss stocks. I still miss this.
I read a book called You Could Live a Long Time: Are You Ready? by Lyndsay Green. In the book the author talked about the importance of being open to new friendships as you age. The problem with aging is that you are going to lose friends. They are going to move away to retire or they are going to die. Sad, I know but true. Because of this book I joined some investment clubs and Meetup.
Some of the members of Peter’s group are worried about the next bear market and about putting enough of their money into cash. I have never done this. I just ride out bear markets. I have a diversified portfolio of stocks. I must admit that some stocks I have do get into trouble in bear markets. There are always stocks in bear markets that cut or cancel dividends. However most keep them flat or increase them. I have noticed that my dividend growth slows down in bear markets. This is something you need to be mindful of Mark if your approach is with 100% dividend stocks (although I know you own a few ETFs).
The investment club run by Peter is the most interesting. One of the members is mostly into options and another is involved with building small condos. We visited one of the condos in Lindsay, Ontario. In that club we had presentations about hedge funds and Bitcoin. Interesting I’ll say!
To be honest, I’m not impressed with Exchange Traded Funds (ETFs) or index funds. A number of articles I’ve read, by economists, seem worried about the liquidity with ETFs in the next bear market. They worry about what might happen in the next (big) bear market because we have never had a bear market with so much passive investing. The next bear market is coming, I just don’t know when.
Any big plans for the future Susan?
Just keep doing what I’m doing – trying to stay active and lead a full day every day. I still blog at Investment Talk and I don’t see that changing. I enjoy it. It’s always nice to interact with investors.
Keep up the good work Mark!
Thanks again to Susan Brunner for making the time to share her updates on my site. What do you make of Susan’s choice to avoid ETFs, to avoid indexed funds? What do you make of her dividend stock holdings? What do you make of her advice to keep an active body and mind in retirement?
@DonG: I usually mention yield but it always refers to Yield on my total invested dollars, not the current value of my holdings. If I used current value I’d be changing the yield figure daily. My invested dollars remains the same except when I re-invest dividends. Yes, its the income that counts and that’s what I monitor along with the growth from the previous year. I’m only up 7.51% from last year, but that represents $7,660 so I’m happy.
It has been a great week with all the coverage and comments on Mark’s profile. I thank his readers for all their kind remarks. Mark does a terrific job of engaging with his readers, which I must admit I barely do. Mark has been emailing me about comments, poking me to get involved. It has been fun. However, I do think if I did do as much as Mark, I would never be able to produce as much work on my blog as I do now.
Mark you have done a great job with your web site. It provides lots of great information for all levels of investors.
I am leaving soon on vacation. I am going with some friends to Yellowknife in the hopes of seeing the northern lights.
Thanks for all the contributions to the site Susan and the comments – enjoy that vacation and talk again over email or via this site soon.
I am not sure into what reply to talk about diversification, but I thought I would share my sector diversification which is below. I have high cash amount because I am talking out money from my RIF accounts each year.
Real Estate 4.60%
US MF 0.08%
or further broken down:
Cons Dis 6.32%
Cons Staple 7.09%
Real Estate 4.60%
Financial Serv 1.76%
Telecom Serv 1.79%
US MF 0.08%
Thanks for sharing those details Susan. Very interesting. Lots of infrastructure and less financials than I would have guessed.
I started off only in financials, utilities and consumer type stocks. This is where I made my original money. I expanded into industrials when I realized that you can make good dividends and money in the long term but they are more volatile. I also have more in connection with resources as some of my industrials serve the oil and gas industry.
Gotcha. Cheers. These stocks on this page form the foundation of my CDN stock portfolio. Thoughts?
I have a lot of the same stocks you do, but only two REITs.
Having $30,000 from TFSA. Sound good. The difference between RSPs and TFSA from the government’s point of view is taxes now (TFSA) or taxes later (RSPs). I would worry that when you take money out tax free from the TFSA that the government at that time might think it is a bad idea because they do not get any tax and then change the rules.
Because of RSP money, I do not get any OAS. I know a lot of seniors in that position and I must say that many are annoyed because they feel that the government changed to rules on them and they had expected to get OAS.
My feelings about OAS is that the claw back should start earlier at $30,000 and it should target only those in need. OAS is not even pay as you go, It is entirely funded out of current taxes and is unsustainable.
Yeah, but you also own different more speculative plays than I do I guess. Or maybe you’re simply smarter than I am with those picks! (The latter is more likely!)
Hard to know how the TFSA rules may or may not change. I figure it’s the last account we’ll draw down anyhow – based on current rules.
“Because of RSP money, I do not get any OAS.” Well then, that gives me an idea how well your RRSP withdrawal/dividend income must be. Very, very well done.
“I know a lot of seniors in that position and I must say that many are annoyed because they feel that the government changed to rules on them and they had expected to get OAS.” Honestly though Susan, I think an OAS clawback or no OAS is a GREAT income problem to have in retirement 😉
OAS rules will need to change eventually I think for the reasons you already know – demographic shifts and general taxation funded. My wife and I are not counting on OAS to fund our retirement. I think that’s smart but maybe overly conservative…I don’t know. Time will tell…
I am not a speculator, but I do buy stuff for the short term. I do not buy resources or tech for the long term. Resource stocks tend to go up and down, so sometimes I buy on the down side and sell on the up side. (It is fun.) With Tech stocks you have to be careful as that industry can change quickly.
Yes the OAS claw-back is good news, bad news sort of situation. I never counted on OAS and I still do not consider CPP either in my long term plans.
CPP is only partially funded. Only the extra money collected since 2000 has been invested. CPP was totally a pay as you go plan until 2000. Unless changes are made it will have problems in the future.
People are very resistant to changes in Government Pension Plans. However if changes are not made (in Pension Age, reduced Pension or increase in pension payments, or government sponsored individual accounts) Government pensions are going to run into funding difficulties. It seems that only the Nordic countries are making the tough decisions.
Both Canada and Australia have also made moves to strengthen pension plans.
That’s what I meant Susan, you do buy stuff on the short-term hence you are hoping for a good short-term return.
I also don’t invest in resources or tech stocks very much although from what I see from the U.S. – the FANG stocks – I wish I did ;(
CPP and OAS programs will be interesting to watch in the years to come. I am optimistic both government programs will OK?!
I only buy short term stuff for fun. They have added to my portfolio but I really made my money in my dividend growth stocks.
Gotcha – sounds like a plan for me too!
I am in awe of people that keep that much detail about their finances. I have evolved over the years but in no way do I meet that standard of detail. I probably should but I just can’t work up the motivation to do so.
Actually, I have on spreadsheets all my investments from late 1970’s. I have used quicken from the last 1990’s, but I still use spreadsheets because Quicken does not provide enough information. It is not hard for me to pull off the sort of information I provided above.
The good thing I can say is that my dividend increases where always higher than the rate of inflation.
Susan you are fine example of an astute and very thorough investor.
Staying ahead of inflation is a good thing for sure.
That is why I go for dividend growth stocks. You let compounding work for you.
“The good thing I can say is that my dividend increases where always higher than the rate of inflation.” This is part of the reason why I follow this strategy today actually. I could see, in my future, hopefully (?) where dividend increases keep pace or stay ahead of inflation. This way, I can keep my capital intact long-term and draw down the portfolio as I please.
Susan, do you mind me asking how much in dividends your portfolio now generates per year? Ballpark?
I am a little reluctant to say in dollars, but I will say that I am aiming for 3.5% income off my portfolio. It goes above and below and currently running at 3.35%. Over the past 10 and 20 years my income has been around 50% of my total return.
My dividend income is basically my only source of income. I do not have pension income because of job changes. Of course I get CPP, but it is not much. I have no idea on how anyone could survive on that, especially if you live in Toronto.
People in countries that use a forced individual savings plan for retirement will be the ultimate winners. Government pay as you go systems will fail. Some countries like Australia and Nordic countries have mixed pension plans because of problem with pay as go schemes.
Dividend yield and dividend growth go in the opposite way, so I have low (1% range), median (2 to 3% range)and high yield (4 to 5% range) stocks with high, median and low growth. I do go after dividend growth stocks.
One way of looking at dividend stocks is yield on original cost. For example BMO after 35 years I get a yield on original cost of 52%, RY I get 52% after 23 years. (Nothing seems to beat the banks.) CNR after 13 years I am getting 10%, CTC after 18 years, 16%, ENB after 12 years 15%, FTS after 30 years 37%.
My dividends have increased by 10.5% this year so, far. Last 5 years were are 5.5%, 5.1%, 7.6%, 3.9%, 10.5%. By the way that 3.9% in 2014 was the lowest ever that I have had.
Susan has a way more diversified portfolio than we do. Also, my wife and I are income investors rather than total return investors. The total value of the portfolio is not too important to us. It’s the total income that counts. We will hopefully never have to touch the capital so all it affects is the size of the inheritance.
We also don’t have any company pension but I do collect CPP & OAS. My wife was stay at home so no CPP and she is still only 61 so not OAS yet. She will start right at 65.
Our current yield on our total portfolio is 5.37%. As mentioned, we have lots of dividend growers (21 or 26 over last year) but we also have 7 high yield REITs of which only 2 have increased their divy over the year.
I never put any weight on yield on cost as I think only the current yield and current dividend income matter.
“Susan has a way more diversified portfolio than we do.”
For sure…she is very good at what she does…so it’s definitely worth my while to learn from her.
As I get older Don, the income derived from my portfolio is more beneficial than the total value. We hope to earn $30k from our TFSAs and non-reg. eventually and hopefully we can draw down the RRSPs to the tune of $20k each in retirement. That will be ideal.
“Our current yield on our total portfolio is 5.37%.” I was thinking you must be invested in REITs to get that yield. We own REI.UN, HR.UN, CAR.UN, SRU.UN and DRIP all of them. Like you, I only focus on current yield since that’s all I can spend eventually 🙂
Always appreciate your detailed comments Don. Cheers.
I think that people who invest in dividend stocks for income should focus on yield and also the ability of companies to pay the dividends. Value of the portfolio is secondary if important at all. My portfolio value fluctuates a lot and over the long term it means nothing.
I am willing to sacrifice yield for dividend growth. It is a trade off.
Yield on cost is just one way of seeing how well your stock is doing. It is, of course, not the only way.
Fair point about the YoC metric. I don’t really care about that one but I do care my current yield. Across the portfolio that’s about 4% but it could be more if I didn’t own some low-cost ETFs.
how long can AQN keep paying out more than they earn? i sold mine and did a transatlantic cruise and a week in Ireland — no worries now! lol!
I generally trust RBC Direct Investing payout ratio analysis. They seem to use the proper metric depending upon the type of company – ie: Earnings Per Share or Free Cash Flow or Adjusted Free Cash Flow or Cash Flow From Operations, etc. For AQN, they use CFFO and have a listed payout ratio of 54%.
EPS payout doesn’t really apply to a lot of the dividend generating companies.
thanks mark! that’s why i love following your blog. education is so important. maybe i’ll buy back in since we’ve got our eye on a couple of more trips.
You might have to look at AFFO metric to be sure (Adjusted Funds From Operations) or another metric to be sure. Dividends are paid from company cash flow. Oh, it looks like Don G. already wrote back on that one. Again, personally, I’m not too worried about the AQN dividend.
@Don: Since we’re off topic I might as well add that I would never buy an ETF, even a US one. Every time I’ve looked into the holdings of a specific ETF I’ve yet to find one which has more than 40% to 45% of the stocks I’d want to buy. Why diversify if almost 60% is junk (IMO). One could probably get the same diversification with 5 stocks. Some of the Vanguard have 12,000 stocks so probably 7,000 are junk.
I am not crazy about ETFs either. The problem with passive investing is that it rewards all companies, good or bad. A number of economist feel that there might be problems of liquidity in ETFs in the next bear market whenever that comes.
Thanks for the comment Susan. I guess low-cost, broadly diversified ETFs are simply “safer” by design since they remove individual stock selection risk – so yes, over time, you will own the stars and the dogs but at least you don’t hand-pick the duds only?
It’s unlikely someone who dedicates considerable time researching, trading/buying with their own strategy and a good deal of success, and also evidently in a concentrated portfolio will ever like ETFs.
Many people do not have the same interest or ability or perhaps time to stock pick succesfully, or prefer to have more diversification. They may also recognize that many DIY investors or even professionals achieve less than market returns so are wise to consider low cost broad based ETFs over the long term.
I have also read academics saying the opposite with regards to liquidity of ETFs. I guess the test will be when it happens next and hopefully I’ll be able to execute some buys that I’m planning for.
Yes, the liquidity of ETFs has been good. It is just in the next bear market that economists are concerned about liquidity for ETFs. It is mostly individual investors that have ETFs. Individual investors have a history of panicking in bear markets.
Economists are concern that because of this that in the next bear market all the individual investors with ETFs will panic and try to sell their ETFs and there will be no buyers. This is just speculation, but there has never been a bear market when there has been so much passive investments and they have some concerns about that.
On the other hand, Individual investors that do not panic and try to sell that ETFs will probably be ok in the long run.
Probably a fair concern to raise. We’re going to find out at some point.
My guess is many people who own ETFs “graduated” there on their own accord after owning mutual funds. Perhaps the same way some stock investors “graduated”. They may have a little more investing saavy than the average mutual fund investor using a bank advisor. However that’s pure speculation on my part.
I generally don’t like ETFs either and totally agree with you that I usually see at least a couple companies in them that I don’t like and definitely don’t want to own.
Having said that, we do own a “secondary” position in 2 – FIE & ZWB. I originally got into both when I was searching for enough dividend income to cover our living expenses. We’ve actually done quite well with both – FIE up 4% & ZWB up 23% not counting all the excellent dividend income we’ve received.
As an interesting sidenote, our dividend income has almost doubled in the 5 years since I retired. We now have way more than we need so are handing out some early inheritance to our 2 kids and their families. Pretty darn nice to see how happy it makes them.
“We now have way more than we need so are handing out some early inheritance to our 2 kids and their families. Pretty darn nice to see how happy it makes them.
Big thumbs up from me on that Don! I’ve seen and heard that money can not buy happiness but in this case I disagree. Good on you!
Good on Don indeed! Well done 🙂
RE: dividend income has almost doubled in the 5 years.
That’s very impressive, especially considering you are retired and you live off the income from your portfolio. For the income doubled in the 5 years, you have averaged 14% annual growth. WOW. This year so far I have only achieved 5.7% organic growth on distributions of my portfolio.
@DonG: Good job on achieving your goals. Another problem I have with ETF’s is that their distributions don’t rise as do individual stocks. FIE has paid .40 since 2010, while ZWB has been up & down.and down from 2011 2012.
Very true, you don’t often get dividend increases/distribution increases at the same rate over time like you do with (some) dividend paying stocks.
Good for you Don with your div income and the early inheritance. Got to be pretty rewarding for you!
Lloyd, May, Cannew, RBull – thanks for the nice words.
I should clarify that I did a major portfolio make-over in 2013 going from the accumulation phase to the income phase. I worked part time from July 2012 to June 2013 before fully retiring. This gave me way more time to spend on figuring out how I wanted to invest for retirement.
Anyway, a major part of our dividend increase was the make-over and moving into some really good dividend income/growth stocks. A big chunk was also the dividend increases over the 5 years on our holdings. Of our 26 stocks, 21 have increased their dividend in the last year.
“Of our 26 stocks, 21 have increased their dividend in the last year.” Impressive 🙂 Companies that can continually grow their dividend will really accelerate the income power of your portfolio. I hope to do the same someday!
@Don: There is no right number of holdings, just what one feels good holding. I sold my REIT as it was a bad choice. Cut its dividend. Over the many years we’ve been invested it became clear that just a few holdings did well through all markets and consistently raised their dividend over time. They may not have been the best companies, but they just kept growing. We trimmed over time and also didn’t feel we needed to be in every sector. We could hold less banks but had the 5 for a long time and saw no reason to sell any of them. I probably should have kept my US holdings but don’t regret selling.
I am (today) 35% pipelines, 35% Utilities, 15% banks, 15% Com & Health Care. * Not exactly the allocation I would like to stay at – but sold some banks to buy more ENB under $40 and CU (thats down on the year more than it should be). I plan to add some Reits in the (tfsas) when they go on sale (waiting) and will add back to the banks when I can. Who knows when the next market correction will happen – right?
ENB under $40 was a great buy. Now, what, $47?
CU seems to be totally beaten up, unnecessarily. Interest rates are still modestly low. “In the period 2018 to 2020, we expect to invest $4.5 billion in regulated utility and commercially secured capital growth projects. This capital investment is expected to contribute significant earnings and cash flow, and create long-term value for share owners.”
Now is the time to buy before this thing “pops” IMO but I could be wrong.
Absolutely, who knows when the next correction will or won’t occur, nor how big it will be? At least with my basket of dividend paying stocks I get paid to wait!
ENB “seems” to making some moves to get them themselves out of the penalty box. I like it.
You might be right with CU. It’s the highest credit rated utility in the country- very conservative and the future seems very bright. With the Southern daughter running things- how will all this pan out? I have been debating buying more but really am a bit overweight utilities and this may “cost” something with rising rates.
I agree- paid to wait, but in our case spending the divvys. I would “like” to buy some more but also want to stay disciplined on my goal asset allocations.
An interesting piece by perma bear D. Rosenberg though on CDN market in globe today. When he starts talking positive I pay a little more attention. Hmmm
I might buy more utilities too, debating on which one to buy. I own 700 ACO.X, 400 CU already, so I figure maybe it’s not wise for me to buy more CU. 700 each of EMA and FTS. I think FTS is more solid? I liked EMA for it’s growth, but looks like the growth is slowing down and debt is quite high. So maybe more FTS.
FWIW I own hundreds of shares of FTS, EMA, AQN, CU and unless they stop increasing their dividends like clockwork every year I always will.
Many of my holdings are here May:
I also have 600 AQN. But I feel AQN is not as safe as the other ones.
I also own 300 BIP.
I think AQN is super safe personally, maybe my own bias – since partially owned by EMA. Last I heard, about 12 million shares owned. BIP is a stud. 🙂
ACO and CU owned by same family- Southern. CU has mostly regulated utility business, ACO more pipeline/ nat gas longer term infrastructure exposure (headaches in tree hugger, granola crunching, save the whales, anti pipe Canada). I prefer CU.
EMA seems to be more expensive, and more debt. Both on the prowl to grow.
Emera sold all its Algonquin a while back.
Thanks for the update.
I haven’t bought any CU lately but I am DRIPping x2 every quarter synthetically. I like that they are conservative. I have no doubt they will increase their dividend again in January or February 2019 by 5-10% regardless of what the stock price does.
You are very disciplined with your asset allocations. That’s wise just in case markets go totally bonkers.
Thanks. Trying to keep some dry powder but my gut FWIW (not much) thinks we’re some time away from a correction. Maybe that’s a classic mistake as I seem to be drifting towards more market confidence over time. LOL
CU should have a record date in Feb payable in March ’19 RAISE. 10 yr avg is 8.6%, 1 yr 10, 3 & 5yr is 10.1. I’m “guessing” we’ll see 8% plus next.
Looking hard now at buying more as well as some EMA re utilities. Already drip FTS but that’s in TFSA.
Need some more income juice now, with long term upside.
Yes, it will be interesting to see this mythical correction when it comes. Some are predicting “the big one” because of the long bull market. I have really no idea.
With interest rates creeping up, if FTS, EMA, AQN, CU keep falling I might buy more. I’m overweight in financials and I need some other stocks to balance things out. Pipelines via ENB, TRP, IPL are DRIPping nicely every month and quarter respectively. I have to start thinking about my next dividend income update report. Approaching $16,750 for this calendar year in those key accounts (TFSAs and non-reg) which is 56% of our long-term goal!
Lol, mythical correction. That’s good. This unicorn will become real at some point.
Great divvy number.
We’ll see here on more utilities. Lots of stuff on my list as I build CDN & US equities over time.
The only thing i do not like about CU – is that they do not trade a lot of shares daily (compared to others). But – i guess that’s not a concern for smaller traders for CU.
No, not a lot of shares traded. More buy and hold and for pension funds really.
I always marvel at how few holdings you have but appreciate how well you do. I think I’m also very “focused” with mainly 5 sectors but have double the holdings. Also very interesting on how similar our allocations are (other than me having REITs and you have more telecom): you: 29% Comm, 25% Banks, 22% Utl & 24% Pipe; me: 9% Telecom, 21% Banks, 26% Utilities, 22% Pipes, 17% REITs, 5% other.
I am always really interested and curious on the breakdown of people’s holdings – which sectors, how many stocks, ETFs, etc so thanks for the details.
Take her easy
@Mike – FYI – back in March, you asked why I had so little in financials (16% at the time). I said that I had basically substituted more REITs over financials for the higher yield. Since then, we received a nice inheritance from my wife’s parents and got some big dough from the Enercare take-over. We spread the money around our existing holdings but with extra to the banks. I like our percentages now other than I’d like to add more to telecom but only like BCE & Telus and both are a full position.
Hey Don, Great news! I Like what you have done. I guess when the banks show some gains – you can always sell a bit and top up your Reits (if you need more income).
@Don and cannew: “I always marvel at how few holdings you have but appreciate how well you do.”
I think your strategy makes total sense, but I simply can’t concentrate my portfolio that much for fear of lack of diversification.
That’s a question you might like to explore or repeat if you’ve already covered it. “Exactly what is reasonable diversification”.
– No one seems to disagree that the stock market is the best place to achieve long-tern gains.
– Most measure market gains by Price growth
– Everyone accepts that market corrections can wipe out much of Price growth and the recovery time will vary
Here’s where diversification comes in:
– Most suggest holding a %, 20%-60% in Fixed Assets to protect your capital from market corrections
– All agree that FA do not grow their income and the capital may loose value because of inflation (or ignore that fact)
– Most believe that by owning stocks in all or most sectors as well as other markets will also protect ones capital.
– Most know but don’t acknowledge that when there is a major market correction, All stocks, sectors and markets will fall.
– Few believe that dividends can or do generate the majority of a stocks long-term gain
– Even less invest to generate a growing dividend income, sticking to the norm of watching price growth and seeking capital gains.
– So how much diversification will protect one from major market corrections?
I prefer to stick with a select group of stocks which have as we say “A long history of paying & growing their dividend”, especially as over the long-term those dividends have grown where they far exceed our expenses.
So in summary do you think diversification is a huge cash grab for fund companies, FAs, etc.? I mean, if history is any indication, the companies that lead the S&P 500 are hardly the same 40 years ago than those that lead it today. This is the case the indexers always make with diversification. Instead of figuring out the market; selecting long-term winners, you can be the market (and ride the market returns).
I find it interesting that different people have commented on the fact that today’s indexes are different from years ago. I have been tracking a number of stocks for a number of years. What I have found is that I have had none go bankrupt, a few taken private, there was a fair amount of name and symbol changes and buyouts (which offered stock, cash or combination thereof).
So, I have been thinking that the change in names on index lists are not that significant. Just a thought
For the CDN market – agreed – the big names don’t change that much. I think the U.S. market is a different story. GE, largely irrelevant. Who could have predicted Apple, Amazon would be so big 30 years ago? Nobody I suspect. Hence the benefit of indexing – you don’t have to speculate at all.
I feel diversification is valid to an extent, but is over-stated. It ties into Re-balancing which again is valid to a degree, but too often leads to excessive Trading, rather than applying common sense. Yes, don’t put everything into one sector or stock. Add some US and try not to hold too much in any one company. One can re-balance by adding to sectors or stocks, rather than selling. I’m less fond of International and emerging markets as one does not know the companies or market controls.
Indexers welcome “Holding Entire Markets” and assume market returns, but those returns may not be available when one needs them and being diversified will not resolve the problem.
Like everything else one must monitor their holdings, but as long as a company grows and pays its dividend than hold, if not, make the adjustment.
Yes, good points particularly in US markets.
RE TSX not changing names. It may not be just about the names although Nortel comes to mind.
Kinda rusty on this but I believe the TMX “composite” change was made circa Valeant overtaking RBC in market cap to prevent undue weightings/change in that market. Canada is small enough and dominated by only few sectors so the names don’t seem to change as much, but they can over time which affect index funds.
Blackberry is another one. Although it’s still there.
When it comes to all this talk about Diversify, Diversify & Diversify. I laugh! IMO one can argue that Diversifying too much HURTS a portfolio (these 30 go up and these 40 go down). Who wants the garbage stocks they throw into some of these etfs? I let the CPP board Diversify for me and will wait till I hit 60 to start collecting. I never look at Asia or emerging markets or feel a need to Diversify into them. People living in those markets are buying the USA market over their own & more than their own. Too much talk about having to do this and that to be Diversified. I like the balance Don & Cannew have and I am somewhat the same.
I think that’s the challenge that some DIY stock investors have with the indices…you own both ‘good’ and ‘bad’ stocks with you own the broad market.
Interesting point about CPP – they absolutely do the diversification for Canadians on your behalf. I’m not sure of Don G’s holdings but I suspect they are similar to cannew and it seems Don G. simply holds more, different stocks.
People have looked at lists of indexes at different time periods and say wow, look at how different the lists are. I am not saying that there have been no changes over time, as you have mentioned with Amazon and GE, but what I am suggesting is that, just perhaps, there has not been as much real change as it might appear.
Possibly Susan, not as much real change, I suspect it happens very slowly over time to indices.
An interesting response. With respect this seems like a contradiction- “total sense”…”lack of diversification”.
For me I can see how this approach works for some people given their cash flow needs, risk tolerance and goals. I’m somewhere in between, currently with a 61/39 portfolio (started 50/50 4 yrs ago, and drifted up to 65/35 before rebalancing), and will likely continue with a rising equity glide path as we age and additional pensions arrive. We have a slight bias to dividend payers/growers to help with an income base along with a healthy dose of FI, and pension to arrive at SWAN. (sleep well at night). Since all markets (or asset classes) often do not work in tandem and we do not know what will happen (including Canada) we also diversify globally with a portion of our funds.
It’s interesting most of the 100% equity dividends only investors seem to want to live on dividend income only (or much less). We have been doing this ourselves (including FI interest) but mostly because it’s been difficult to retrain from savings to spending. Relying on rising dividends may work but to me these investors real safety net is living below their means and having a mountain of capital (and growing). I believe many people will not be able to build that large a nest egg to generate sufficient income, be able to stomach big equity market dumps or don’t want to leave a huge inheritance or try to spend it late in life.
I must say it’s beneficial and interesting to read all of the different successful investing approaches people have.
I have little doubt you’ll increase your equity allocation as you get older. I think it makes sense.
SWAN = sleep well at night. That’s good…
I know in the early years of retirement our goal is to live off dividends for sure. Have a good cash wedge and see where that takes us with any part-time work (blog + other). This means, to your point, we should be able to live within our means; have capital grow if it markets are totally nuts and pathetic – just live off dividends and ride things out with the cash wedge and simply spend less.
I have no idea how my generation is going to retire – if they don’t have at least $200k or more in their 40s saved up. I know some folks that can’t even max out their TFSAs, let alone contribute to their RRSPs, fund their kids’ RESPs, etc. They have mortgages and car payments and more (LOC). The math simply doesn’t add up for these people unless they win the housing lottery, sell their home in another 40 years to fund their retirement. You gotta live somewhere though.
Maybe they are waiting for an inheritance. I’m not counting on anything from my parents – I keep telling them to “spend it” and enjoy it in their late-60s and early 70s. Life is short.
Early years live off dividends and PT work makes a lot of sense. Lots of years ahead. Adjust based on asset situation and closer to when other income kicks in. You’ll be more than fine with your plan overall and the sense to simply adjust the good deal of discretionary spending you’ll have, if needed. We’re similar but without the work and say 15 yrs older now.
Same with plenty of my generation too. A growing number seem to working longer or struggling to get by, little savings etc. Close family too.
Ha on what you’re saying to your folks. I’ve been saying that for a lot of years now with mine. My siblings might not agree.
I think so. I run the math every other week. I know we need PT work for about $20,000 per year, net, to travel.
The dividend income should take care of basic expenses. Dividend increases and capital growth should cover inflation. Here is what I have tallied up in 2018 dollars for those basic expenses:
-food, groceries, basic household supplies ($8,000 per year or $667 per month or ~ $150 per week)
-home/condo utilities (heat, hydro, water, internet, cell phone bills) (up to $6,000 per year or $500 per month)
-home/condo property taxes ($6,000 per year or $500 per month)
-home maintenance/condo fees (around $6,000 per year, again, another $500 per month)
-auto costs for 1 car (insurance ($100), gas ($100), maintenance ($100)); (around $3,000 per year or about $250 per month)
-healthcare costs (various).
I can’t imagine not saving for retirement now like we are. It would be terribly scared about my future.
Once we hit our $1 M portfolio goal (excluding pensions) and have no debt then we will assess if we can stop working full-time. I suspect I know the answer 🙂
Estimates look good. Basic expenses here similar range – probably 3-4K more mainly due to more vehicles.
Agree on the dividend increases & avg cap gains covering inflation.
I suspect I know the answer on that too!
Yes, great to read about a successful investor and retiree for some time. Sounds like you’re staying physically active which I’m also a big advocate of. And you’re mentally and socially engaged with your investing interest/hobby blog and networking. Interesting work. Good for you. Of your list I only own 1 – RY.
Years ago I worked for Newfie Cap that you wrote recently about but lost my shirt in the co. stock purchase plan even with the 1/3 co vesting. A valuable lesson.
Yes, she has done well with her investments and kudos to Susan!
Nice to hear from anther who has been retired for some time and been successful. Tracking and posting on all those companies must take a ton of time and I wonder why she continues to work so hard on it? I’m the opposite, I’ve settled on a small number of holdings and ignore all the rest (as long as they continue to preform well). All the best Susan!
Thanks for you comments. I do the work for myself and post what I do. I will do the posting as long as I enjoy doing it. I do not think it is difficult to be an successful investor. Lots of people do just fine. So good luck on your holdings.
As you should Susan. Thanks for the interview.
Yes, I have done well. However, this year has been rather strange as the value of my portfolio is just fluctuating but never up very much, but my dividend growth is already up by 10.5%.
Solid 🙂 I hope I can achieve the same success over time Susan.
Thanks for the comment cannew. No doubt your dozen or so holdings are treating you well. Some raises this week from any banks?
Jun & Sep are the only months where I don’t expect a dividend increase for the stocks I hold. So I’ll read your updates those months!
Sounds like a plan.
Hey Cannew, what do you having paying in Feb & Aug that increases their divs in these months?
BMO & NA,
@Mike: BMO was up 3.3% in Feb and will be up 3.2% Aug for 6.5%
NA was up 3.2% Feb & 3.3% Aug for 6.5%
@cannew. Thanks! Are you a little heavy on the financials? or are you balanced with pipelines & utilities?
@Mike: 29% Comm, 25% Banks, 22% Utl & 24% Pipe
@cannew. That’s pretty balanced! Whats the 29% in?
@Mike: Own 2 Comm, 5 Banks, 2 Utl & 3 Pipe. Not too hard to identify.
Simple but effective right? 🙂
@Mike: 10 of my holdings are listed in the Mark’s post here:
@cannew – Why no RY or TD. TD should have made your list.
Big fan of all 7 CDN banks here. Hard to know which ones will always grow more than the rest so I own them all!
RY & TD do not have Share Purchase Plans, allowing one to buy additional shares through a DRIP.
Another good reason to own RY:
I am dripping both 🙂
@Mike: You are dripping Synthetic shares (buying only full shares), not Full (buying fractions of shares) with your broker. For those who can only afford small amounts to invest, ie: $100/mo or less, can DRIP through Transfer Agents, like Computershare. There are no cost to buy shares or reinvest for fractions of shares.
Good points cannew. There is a difference between full and synthetic DRIPs. Mike, did you ever check out this page?
Yes i did. But is it not difficult to sell a fraction on a share?
@Mike: Our broker is ShareOwner who provides Full div reinvest and buys & sell fractions of shares.
I love Susan. I follow her blog regularly on stock advice. I totally agree with her about keeping active. Instead of dreaming of early retirement at 50, it’s now about working part time and trying to enjoy it till 65. I was totally bored when i took a few months break from work.
I thank that there are going to be lots of people working past retirement age or going into a second career after retirement. The statistics are awful for people who retire and become inactive. Does not matter what you do, the thing is to stay active. There are lots of things to do in Toronto where I live. I especially like some of the meetup groups I joined. Great variety of things to do.
I keep reading that Susan. Once you stop working, your body and mind can change very quickly if you are not engaged and remain active. Scary stuff but I believe now is the time (in my mid-40s now) where I need to get good habits ingrained.
Keeping active is not that hard. Getting in 10,000 steps is also not that difficult. To get away from the computer (and a spend a lot of time on my computer), I go for coffee at a coffee shop that is a 30 minute walk away. I get off the subway before my stop and sometimes 2 stops ahead if I have the time. I try always to take the stairs in the subway. I used to walk up and down the stairs at the office where I worked. I stand in the subway as I worry about how much time I spend sitting.
Meetup is also great as there are walking groups that I have joined. This is because too often when I go out with friends it is for lunch or dinner. There are also still community clubs. These community clubs are great as I still have friends from when I belonged to them.
There is the old community sailing club I used to belong to of Island Sailing club on center island and other ones at Cherry beach. There are still ski clubs around with both the Voyager and High Park ski clubs still around that I used to belong too. (I had to quite the clubs I belonged to when I became a single mom.) Community clubs are reasonably priced so that is great for everyone.
Great work Susan. I think my wife and I will benefit from walking more in the city, once we move. We plan to move in June 2019. We recognize now more than ever, health is our greatest asset.
Interesting to hear rn and I hear that a lot – the fact that folks are not active in retirement or semi-retirement can lead to terrible health consequences.
I love Susan Brunner!! Thanks for this interview Mark! Interesting thoughts about so much passive investing and liquidity in a future bear market.
Sounds like Susan Brunner is keeping busy for the past almost 20 years! It’s a great idea for health to keep the mind going- I think blogging is a great outlet for that. And exercising daily is great for health too. If I was retired I would increase my meditation to daily instead of three times a week and exercise daily… There’s so much to do! Also, thanks for the reminder to make new friends. I tend to not like to make new friends (haha!) so this helped open my mind a bit.
I think blogging is a great creative outlet – but I’m biased 🙂
I’ve started to work on my personal fitness and health this summer, doing more exercises at home and getting out for walks/hikes every other night. Feels good and I will keep it up since it helps my body and mind!
Creative – I could see that.
Concentrating more on personal fitness and health- you have my 100% support!
A while ago I read an article that said 90% of the people on walkers do not have to be if they just exercised. I asked a physiotherapist friend about this. She thought for a bit and said the author was probably right. One of the biggest problems in growing old is balance, but on the other hand, we can do what we practice.
I believe it.
I see lots of seniors at my gym. Many work on balance. Building some strength first from some specific exercises, being more physically active (walking etc) and then doing some specific balance exercises is what’s needed to prevent falls, have much more endurance, more strength and enjoyment in life!
I have my Polar GPS used mainly for running measuring distance pace etc but it counts steps, calories etc too. I normally wear it for my run plus during another 45-75 minutes or so daily 5x /wk strength training, and then take it off. 7k to 16K steps normally during this 2 hour period or so 4-5x/ wk. Works for me.