For those of you just joining us, below is my portfolio that is leveraged with money borrowed from my home equity line of credit (HELOC). As the money borrowed is used to invest, the interest charged is tax deductible. I write an update every so often to show new positions added along with any market gains/losses. For more details on the strategy and procedure, check out my modified smith manoeuvre strategy and my comparison of online stock brokers.
It has been about three months since the last update (May 2012) with a bit of activity in the leveraged portfolio. We have added to one existing position, and added a few new positions. With the TSX still in negative territory year to date, it has been challenging as market values are down.
What did I buy over the past few months? I added to my Transcontinental position and started new positions in Calfrac Well Services, Baytex Energy, and Finning International.
So which dividend paying companies increased their distributions thus far in the year? In my portfolio, increases include dividends from Royal Bank, Scotia Bank, TransCanada Corp, TD Bank, Canadian Utilities, Rogers Communications, Pason Systems, Corus Entertainment, Thompson Reuters, Canadian Pacific Railway, Canadian Oil Sands (twice), and First Capital Realty.
My dividend watch list remains similar where I am looking to increase my position in BMO, TD, ENB, FCR and possibly add new positions in Bonterra Energy (BNE), Canadian National Railway (CNR) and Bell Aliant (BA) when their valuations become attractive.
Going forward, I plan to increase my holdings in this portfolio and perhaps use my savings to pay down the investment loan if the balance gets uncomfortably large.
The Smith Manoeuvre Portfolio as of August 12, 2012 (prior to open):
|Stock||Symbol||Shares||Avg Buy Price||Total||Div/Share||Yield|
|AGF Management Limited||AGF.B.T||50||$22.71||$1,135.49||$1.08||4.76%|
|Bank of Montreal||BMO.T||25||$44.17||$1,104.24||$2.80||6.34%|
|First Capital Realty||FCR.T||160||$9.71||$1,555.20||$0.84||8.65%|
|Ensign Energy Services||ESI.T||200||$14.98||$2,995.98||$0.42||2.80%|
|George Westin Ltd||WN.T||50||$68.64||$3,441.99||$1.44||2.09%|
|Canadian Pacific Railway||CP.T||30||$53.90||$1,626.99||$1.40||2.58%|
|Canadian Oil Sands||COS.T||150||$19.14||$2,871.48||$1.30||6.79%|
|Calfrac Well Services||CFW.T||50||$23.00||$1,149.99||$1.00||4.35%|
|Baytex Energy Corp ||BTE.T||35||$42.98||$1,504.14||$2.64||6.14%|
- Total Cost Base of Equities (inc. fees): $79,921.26 (vs. 73,865.15)
- Market Value of Equities (Closing August 12, 2012 – not including dividends or cash): $87,749.55 (vs. $81,099.70)
- Total Dividends / Year: $3,499.04 (vs. $3,195.23)
- Portfolio Dividend Yield: 4.38% (vs. 4.33%)
Sector Allocation (based on market value)
- Financials: 30.96% (vs. 30.48%)
- Utilities: 8.43% (vs. 11.73%)
- Energy: 29.89% (vs. 29.40%)
- Resources: 0.00% (vs. 0.00%)
- Real Estate: 4.95% (vs. 7.05%)
- Consumer/Telecom: 14.13% (vs. 13.99%)
- Other: 11.65% (vs. 7.36%)
With regards to sector allocation, you may notice that this portfolio is fairly concentrated in financials and energy. Note though that this is one of my accounts where I treat all of my accounts as one big portfolio. In other words, my international and other sector equity exposure are in other accounts.
Disclaimer: There have been a lot of readers who have mentioned that they are interested in a leveraged portfolio. Over the long term it may be lucrative. However, over the short term, equities are volatile and can put the portfolio deep in the red. My portfolio during 2008 is a prime example of what can happen. If you can’t stomach losing 20-30% in the portfolio in any given year, then your risk tolerance isn’t suited for leveraged investing. Here is an article I wrote answering a reader question “Should I Start the Smith Manoeuvre?” Finally, the securities mentioned in this post are not recommendations to buy or sell.
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