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 I started this portfolio in 2008, it has been a wild roller coaster ride. I had great market timing in 2008 and leveraged the portfolio a few months before everything fell apart (note the sarcasm). Even though the portfolio value fell over 25%, I stuck with the plan and the dividends never stopped rolling in. Now in 2010, the portfolio is hovering around break even, with the dividend stream still going strong.
Since March of 2009, the markets have been red hot. So hot in fact that I’ve been having trouble finding strong dividend companies with attractive valuations. In other words, I have been doing very little buying. I have, however, during this most recent correction initiated two new positions for the portfolio. They are Ensign Energy Services (ESI.TO) and Mullen Group (MTL.TO).
ESI is a oil well drilling contractor that has increased their dividend over the past 4 years, has a strong balance sheet with no long term debt and has a payout ratio of approximately 57%. Mullen Group is mostly known for the oil field services and trucking business in western Canada. Although their balance sheet isn’t as clean as ESI’s, they have a ton of cash, trade below book value and have a 3.6% dividend yield with a low 38% payout ratio.
My dividend watch list hasn’t changed 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 and T.L when their valuations become attractive.
The Portfolio as of June 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||100||$15.75||$1,574.99||$1.28||8.13%|
|Ensign Energy Services||ESI.T||100||$13.81||$1,380.99||$0.35||2.55%|
- Total Cost Base of Equities (inc. fees): $43,111.94
- Market Value of Equities (June 15, 2010): $44,223.65
- Total Dividends / Year: $1,834.10
- Portfolio Dividend Yield: 4.25%
Sector Allocation (based on market value)
- Financials: 54.25%
- Utilities: 16.97%
- Energy: 25.53%
- Resources: 0.00%
- Real Estate: 3.24%
- 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. As well, the securities mentioned in this post are not recommendations to buy or sell.