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.
Since the last June 2010 update, very little has changed in the portfolio as bargains have been challenging to find. I did manage to find one position to add to, and what was Mullen Group (TSE: MTL) where 50 shares were added. The best performer of the year was First Capital Realty (FCR) and the worst performer was by far Manulife Financial (MFC).
Overall with the markets going up in 2010, the rising tide resulted in a gain in this portfolio which I’m pleased with. As we have our house paid off, our home equity line of credit now has a lot of room to move. I plan on keeping the investment loan balance and even increase it should the opportunity arise.
My dividend watch list hasn’t changed much since my last couple reports. I am looking to increase my position in T.BMO, T.TD, T.ENB, T.FCR and new positions in T.CNR T.L and T.BPO (new on the list) when their valuations become attractive. What’s also interesting are income trusts that will be soon converting to corporations. It’ll give this portfolio a few more choices.
If you are a dividend investor, which income trusts are you interested in?
The Portfolio as of December 2010:
|Stock||Symbol||Shares||Avg Buy Price||Total||Div/Share||Yield|
|AGF Management Limited||AGF.B.T||50||$22.71||$1,135.49||$1.00||4.40%|
|Bank of Montreal||BMO.T||25||$44.17||$1,104.24||$2.80||6.34%|
|First Capital Realty||FCR.T||160||$9.72||$1,574.99||$0.80||8.23%|
|Ensign Energy Services||ESI.T||100||$13.81||$1,380.99||$0.35||2.55%|
- Total Cost Base of Equities (inc. fees): $43,837.14
- Market Value of Equities (Dec 10, 2010): $48,143.90
- Total Dividends / Year: $1,859.23
- Portfolio Dividend Yield: 4.24%
Sector Allocation (based on market value)
- Financials: 51.51%
- Utilities: 17.87%
- Energy: 25.58%
- Resources: 0.00%
- Real Estate: 5.03%
- Other: 0.00%
With regards to sector allocation, you may notice that this portfolio is fairly concentrated in financials. 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 over 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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