My Top-5 Stocks

My Top-5 Stocks

Over the years of running this site, I have received numerous requests to share everything in my portfolio. For today’s post, I will reveal a bit more to help other DIY investors out since they are curious: what are my top-5 stocks?

Read on!

My Top-5 Stocks

As I approach 15 years as a DIY investor, a hybrid investor no less, we inch closer to some major financial independence dreams.

I recently referenced those two major goals in a recent post:

1. Own our home.

• Our mortgage will be gone in seven months. 

2. Beyond two workplace pensions, beyond our future CPP or OAS benefits, beyond any future part-time work – another big goal was for us to own a $1 million dollar investment portfolio for retirement.

• We’re now working beyond this second goal to tally meaningful income from our portfolio – income to ideally cover our food, shelter and basic expenses such as utilities for life. Here is our latest income update:

August 2023 Dividend Income Update

I believe our hybrid investing approach has been both very successful and very simple over these 15 years, an approach I believe many investors can easily replicate with some personal tailoring for solid investing results:

• Approach #1 – we own a number of Canadian dividend paying stocks for income and growth. At the time of this post we own nearly 30 different Canadian stocks within our non-registered account and across our Tax Free Savings Accounts (TFSAs). We own these stocks because we believe buying and holding our DIY bundle of Canadian dividend-paying stocks will, over time, provide some steady monthly income for future wants and needs in retirement.
• Approach #2 – we’re owning more units of low-cost Exchange Traded Funds (ETFs) across our accounts. While dividend paying stocks are great, dividends are not everything. They are just one part of total return. We believe it is wise to invest beyond Canada for growth and diversification.

A bias to getting paid – my top-5 stocks

With a bias to getting paid and being rewarded to be a long-term shareholder, I find myself gravitating to a few stocks in particular. 

Before sharing my top-5 stocks, some highlights why DIY investing along with dividend investing works for me.

1. Fees are forever.

“With investing, you usually get what you don’t pay for.” – My Own Advisor

Based on all the informtion available today, to buy an index fund or funds, I believe you don’t need a financial advisor nor money manager involved because even passive money management by someone else on your behalf could be considered a wasted cost.

2. I/we control the portfolio.

Ultimately nobody cares more about your money than you do.

I run my site to help pay forward my successes but also share what’s not working. There is never any cost for any blogpost content or to reply to any comment on this site. You are welcome to agree or disagree with my approach – all opinions are always welcome. 🙂

Given I control our portfolio, I feel I can manage our investments aligned to our objectives. A reminder about my free e-book below:

• Book introduction: Spend less than you make.
• Chapter 1: Save and invest the difference. Invest in mostly low-cost products. Consider diversifying your investments including stocks from different sectors as you wish!
• Chapter 2: Avoid active trading. Celebrate falling stock prices – buy more when stocks fall in price. 
• Chapter 3: Disaster-proof your life with insurance, where needed, to cover a catastrophic loss.
• Book conclusion: Rinse and repeat for the next 30-40 years. 

That’s the basics within 80,000+ personal finance books in just five bullets.

As a DIY investor I believe you have some powerful decisions most money managers will never possess:

1. You can decide to stay the course/avoid trading but the fund manager cannot since he/she has to demonstrate their performance and value somehow.
2. You can decide when to celebrate lower prices to get your stocks on sale without manager, director or VP scrunity involved.

To paraphrase the index investing community, with no way to consistently identify skilled managers ahead of time, it just doesn’t make sense to believe that you have a good chance of finding a money manager who will best a basic index fund over the long haul. 

There are simply too many low-cost, diversified, easy-to-own ETF choices to build wealth with. As a DIY investor, you don’t ever have to pay someone else to do your work for you.

In the spirit of going it alone, doing it yourself and being accountable for your own results, I feel my hybrid approach offers the best of both worlds:

• In Canada, we own many of the top performing stocks for income.
• Beyond Canada, beyond a few U.S. stocks, we use indexed ETFs for extra diversification.

We fired our money manager years ago and have never looked back…that approach might work for you too. 

Without further delay, here are our top-5 stocks in our portfolio by portfolio weight (excluding any ETFs) current to the time of this post. 

My Top-5 Stocks

1. Royal Bank (RY)

Royal Bank of Canada (RY) is our biggest bank by market cap. Based on recent reports, you could make an argument with inverted yield curves (i.e., short-term bonds have higher yields than long-term bonds) and with recession talks on the horizon, maybe now is not the time to buy and continue to hold RY.

I’m certainly not saying that. RY is one of our largest stock holdings. 

From May 2023, while RY missed on earnings I did like the following: $13.6 billion in revenue, up 20%.

I’ve owned RY for many years – profiled here.

Here are the returns compared to one of my favourite low-cost ETFs (XIU) for comparison:

All images/sources with thanks to Portfolio Visualizer. 

2. TD Bank (TD)

Almost always bank #2 by market cap behind RY, TD continues to sit on lots of cash after it cancelled its planned US$13.4 billion acquisition of First Horizon, a U.S. regional bank. This cash float might be very helpful to weather any impeding market downturn/mild recession on the way.

Like RY, we own TD for dividend growth and capital gains. 

I’ve owned TD for many years – profiled here – as early as 2009. 

Again, returns for comparion purposes:

3. Fortis (FTS)

Fortis owns and operates eight utility transmission and distribution subsidiaries in Canada and the United States, serving more than 3.4 million electricity and gas customers.

Last time I checked, just like people need to bank or borrow money (see the desire for us to own banks!) folks love electricity and power.

I own FTS for the boring dividend income delivered to shareholders coupled with some capital gains. In fact, Fortis has generated stable cash flows over its history underpinned by steady growth in customers and regulated rates, which should continue to translate into predictable income for investors in the coming decades as well. 

I also personally like the Fortis transition out of coal; management has been very clear on this, with a plan to be coal-free by 2032 with higher investments in energy efficiency, renewable gas and use of hydrogen, low carbon transportation, and LNG too. 

I started my ownership in Fortis also back in 2009. You can read about that here.

Again, returns for comparion purposes:

4. Telus (T)

Our market operates in an oligopoly, meaning there are a few dominant players controlling the market. We see this in banking, utilities, and it continues with our telco industry. 

Historically, Telus focused on cable, wireless and internet capability but over time, has evolved into healthcare, home security, and more with many subsidiaries. As a shareholder, I like company growth and expansion – and want to see that. 

Like other companies that have become our top-stocks by portfolio weight, I started my ownership in Telus many years ago.

You can read about that here.

Again, returns for comparion purposes:

5. Bell Canada (BCE)

Like Telus, I enjoy the dividend income and dividend increases from BCE but we don’t see too much capital appreciation over time – so Bell is very bond-like in many ways. 

This is a great reminder to readers that while dividends are nice and of course growing dividend income is great, I also believe it’s important to invest for growth as well since any dividend, as good as any company may be, could be reduced/cut.

The reality is with an individual stock selection is every stock probably seems like a great decision, until it isn’t.

I’ve linked to my Then and Now series with BCE here. 

Again, returns for comparion purposes:

You’ll notice a few things in this post.

1. All top-stocks are Canadian companies. The reason why is because I started my DIY investing journey 15 years ago with buying Canadian companies and slowly unbundling my existing funds for income. I have since, slowly, been diversifying our portfolio away from just Canada. 

Read on here and here:

Reader Questions – How I built my dividend portfolio

And…

Lessons learned in diversification – reducing my Canadian home bias

2. I make no mention of U.S. stocks. The same diversification reason applies although I have and do own a few U.S. stocks in our RRSPs and likely always will. I own names like Johnson & Johnson (JNJ), Procter & Gamble (PG) among a few others like U.S. utilities too.

Another takeaway is this: Our investing approach remains simple:

1. Buy and hold many Canadian (and some U.S.) stocks for income and growth. 
2. Buy and hold low-cost ETFs for the rest of the portfolio. 

And finally, I also want to be clear: when in doubt about any individual stock selection, just index invest.

Buying and holding some low-cost equity ETFs are likely to do wonders for your wealth-building power combined with a high savings rate over time. 

With any investing approach, only you can decide what is right for you, based on your goals, based on your investing style and matching your behavioural temperment.

Moving forward, I will refresh this post (maybe every year?) to share what portfolio changes have occurred and why as I work through any retirement income planning.

Until that updated post, these are our top-stocks that should deliver meaningful income but also some collective price growth.

What top-stocks do you own in your portfolio? Why? Do any low-cost ETFs make up the bulk of your portfolio? If so, why? Happy to read all comments below. Send them along!

Happy investing.

Mark

Notes: 

1. Charts above are for illustrative purposes. I have benchmarked each stock against one of my favourite low-cost ETFs in Canada: XIU (due to the blue-chip holdings XIU has). When in doubt, consider XIU for your Canadian portfolio. No stock selection required and you’ll bound to earn great long-term returns. 
2. None of these individual stocks are recommendations for purchase. 
3. You can backtest some of your stocks and ETFs using Portfolio Visualizer. A free tool. 
4. I recognize my hybrid investing approach (stock investing coupled with low-cost ETFs) might not appeal to everyone. All good. When in doubt, do consider just low-cost ETFs. You can own a world of stocks in just one ETF these days – see my link below. This way, you can still invest on your own, own a world of stocks, while saving big money avoiding advisor or money manager fees. My hope is that no money managers nor advisors were harmed by my comments. 

The Best All-in-One Exchange Traded Funds

Mark

Mark

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.