It’s been a while since my last Smith Manoeuvre portfolio update (see August update). Perhaps it’s because of the lack of portfolio changes lately as I’m one of those people who are not buying much in this market. However, since it’s the end of the year, it may be a good time to do one last update until 2010.
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, check out my modified smith manoeuvre strategy.
As mentioned above, there has been very little change to my portfolio since August 2009. The only change was the decision to sell PRFZ from my portfolio as it didn’t exactly fit. US distributions are better held in my RRSP as it is more tax efficient.
What dividend stocks am I watching? When valuations become attractive again, I will be looking at add to T.BMO, T.TD, T.ENB, T.FCR and new positions in T.CNR and T.L. I’m still looking for exposure in the telecom industry but having trouble finding the best candidate. Do you have a favorite?
The Portfolio as of December 2009:
|Stock||Symbol||Shares||Avg Buy Price||Total||Div/Share||Yield|
|FTSE RAFI US 1500 Small-Mid ETF||PRFZ.US||20||$51.50||$1,029.99||$0.42||0.82%|
|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%|
- Total Cost Base of Equities (inc. fees): $39,821.95
- Market Value of Equities (Dec 11, 2009): $40,870.50
- Total Dividends / Year: $1,692.10
- Portfolio Dividend Yield: 4.25%
Sector Allocation (based on market value)
- Financials: 57.12%
- Utilities: 18.36%
- Energy: 19.29%
- Resources: 0.00%
- Real Estate: 5.23%
- Other: 0.00%
What’s interesting is to see the dramatic change in equity value over the course of the year. If you take a look at my Feb 2009 update, you’ll notice an equity value of about $20,670 with a cost base of $35,000. Today, the equity value of my portfolio is $40,870 with a cost base of $39,821. Even though capital growth was strong in 2009, dividend growth came to a halt. I’m hoping that dividend growth will continue when the economy finds stronger footing.
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.
Leveraged Investing 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.