Stock Portfolio – Dividend Growth Investing
Building a stock portfolio can be as simple as buying one ETF or many stocks. The complexity
of building a portfolio comes from your goals and investing strategy. The theories on building a
portfolio are interesting and a starting point, but you need to discover your portfolio. My process
has evolved since 2009; just be intentional about your investment decisions.
Various Stock Portfolio Examples
Before we focus on a real portfolio, here are some examples that you can start from. For young
students in university or starting to work, keeping it simple is important as your focus should be
to balance your spending and savings.
A simple beginner ETF can work for young adults.
The student-specific portfolio is all about the TFSA, but with similar ETFs.
Assuming you started with an index portfolio and are interested in evolving towards dividend
investing, the next step is to consider the beginner dividend portfolio. It’s a slower introduction to
blue-chip dividend stocks.
You can assess a tollbooth portfolio if you want to be more specific about your investment
selection. It’s a list of stocks with ongoing recurring revenue from subscription types of services
or products.
A retirement model portfolio is what we often assume everyone is building, but it’s just for when
you need to live from your income. Be intentional about the outcome you have in mind based on
your age.
A Real Dividend Stock Portfolio Example
The goal of this portfolio is to build wealth through stock appreciation while earning a steady
dividend income. In other words, a passive income machine. During the accumulation years, the
dividend income is fully re-invested through synthetic DRIP. When retirement comes, the
strategy per account may change to focus on tax efficiency while earning an income from my
portfolio. The dividend growth stocks I pick for total return are selected using a simple yet
effective stock selection process which leverages the Chowder Rule as a growth marker. The
dividend income stocks I pick for income focus on a combination of yield, dividend increases
and dividend growth. A lower total return is expected for those holdings. One of my rules is to
hold 25 or fewer stocks in my portfolio to ensure I can manage my holdings. You must read my
investing rules and leverage my dividend growth stock selection process to understand my
strategy better. All in all, it has provided me with a portfolio that can beat the index, and in
retirement, my knowledge of dividend investing will allow me to draw dividend income rather
than burn through my hard-earned capital.
Portfolio Breakdown by Accounts
During the accumulation phase, dividend growth and total return drive my stock selection
process. As such, you will see very low-yield stocks that I would normally not hold in my
retirement years.
However, approaching a pivotal point toward financial independence, I have started switching
my non-registered account into a retirement account. That means it will be focused on being
tax-efficient with a high income. REITs don’t have a part in it.
I put the table below together to give a clear view of my holdings. If you have a high yield, then
you have a retirement income portfolio. There is nothing wrong with that if that’s what you need,
but know your income growth to keep up with inflation.
> 10%
Dividend No Growth < 6% Growth > 6% Growth
Growth
None 7.10 0.00 0.00 0.00
Yield <
3.28 0.00 12.06 36.75
2%
Yield >
0.00 0.00 3.70 5.43
2%
Yield >
0.00 0.00 26.45 0.00
4%
Yield >
0.00 0.00 4.93 0.00
6%
The accounts below represent holdings across my stock porfolio and the spousal equivalent.
For now, my accounts are with RBC Direct Investing.
The annual ROR is calculated using a portfolio tracker for a money-weighted return comparison.
If your broker provides you with a money-weighted ROR, you can compare yours to my return.
Accounts ROR Yield
Computershare 12.48 6.46
Portfolio 13.62 2.10
RBC 9.26 8.67
RBC-S 14.24 4.82
RRSP 17.72 0.83
RRSP-S 14.78 0.98
Accounts ROR Yield
TFSA 12.84 0.76
TFSA-S 15.22 2.36
The details of my stock portfolio are outlined below, and you can easily see the sector exposure.
Portfolio Sector Chart
Bar chart with 9 bars.
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying Values. Data ranges from 0.44 to 25.930000000000003.
ValuesPortfolio Sector Chart0246810121416182022242628EnergyCommunication
ServicesTechnologyFinancial ServicesConsumer CyclicalHealthcareConsumer
DefensiveIndustrialsUtilities
End of interactive chart.
As you know, I don’t put much weight on sector diversification as there are too many businesses
now overlapping. Take Disney for example, it’s a communication services company now. Visa is
a financial company but it’s really a technology company at the end of the day. Industries are
more representative of risk. Check out these dividend income reports for the details.
ExcelCSVCopy
Accounts Ticker ROR % Years Held Yield Portfolio Ratio MarketCapG
Computershare TSE:TRP 16.76 13.96 6.20 0.44 Large Cap
Computershare TSE:T 10.48 13.95 7.05 0.19 Large Cap
RBC TSE:CSU 31.86 0.66 0.13 1.17 Large Cap
RBC TSE:RY 12.48 13.57 3.40 3.37 Mega Cap
RBC TSE:NA 15.20 12.57 3.42 3.06 Large Cap
RBC TSE:TD 7.18 12.57 4.99 0.00 Large Cap
RBC NE:YTSL 0.00 0.26 18.48 4.56 Large Cap
RBC-S TSE:CSU 43.20 0.90 0.13 0.39 Large Cap
RBC-S TSE:GSY 19.80 0.72 2.53 0.06 Mid Cap
RBC-S TSE:TD 24.25 0.43 4.99 1.74 Large Cap
RBC-S TSE:T 1.37 0.39 7.05 0.86 Large Cap
RRSP MSFT 24.91 12.01 0.80 7.07 Mega Cap
RRSP AAPL 24.44 9.96 0.44 6.63 Mega Cap
RRSP V 18.78 8.48 0.75 1.33 Mega Cap
RRSP ABBV 21.24 8.00 3.19 8.66 Mega Cap
RRSP COST 27.69 7.05 0.52 9.46 Mega Cap
RRSP MA 16.16 5.93 0.53 3.56 Mega Cap
Accounts Ticker ROR % Years Held Yield Portfolio Ratio MarketCapG
RRSP GOOGL 15.98 2.25 0.00 2.88 Mega Cap
RRSP CTAS 43.68 0.73 0.76 2.39 Large Cap
RRSP AVGO 225.92 0.19 1.14 1.20 Mega Cap
RRSP NVDA 144.14 0.19 0.03 1.02 Mega Cap
RRSP ADP 32.35 0.72 1.95 3.92 Large Cap
RRSP-S ABBV 86.35 0.37 3.19 2.19 Mega Cap
RRSP-S TXN 11.88 6.48 2.69 2.14 Large Cap
RRSP-S AAPL 41.13 5.76 0.44 2.26 Mega Cap
RRSP-S V 8.17 3.84 0.75 1.40 Mega Cap
RRSP-S GOOGL 31.61 1.99 0.00 1.60 Mega Cap
RRSP-S AVGO 86.47 1.23 1.14 2.74 Mega Cap
RRSP-S CTAS 54.49 0.67 0.76 2.03 Large Cap
TFSA TSE:IFC 16.69 3.84 1.87 2.27 Large Cap
TFSA MSFT 19.46 3.40 0.80 1.31 Mega Cap
TFSA COST 29.72 3.40 0.52 1.10 Mega Cap
TFSA TSE:ATD 15.78 2.92 0.94 1.34 Large Cap
TFSA GOOGL 27.61 1.99 0.00 2.00 Mega Cap
TFSA TSE:WCN 42.77 0.91 0.63 4.16 Large Cap
TFSA-S TSE:FTS 40.81 0.37 4.15 0.53 Large Cap
TFSA-S TSE:EIT.UN 11.74 0.37 8.51 0.51 Mid Cap
TFSA-S TSE:TD 29.59 0.36 4.99 1.26 Large Cap
TFSA-S TSE:IFC 16.64 6.62 1.87 3.01 Large Cap
TFSA-S TSE:ATD 16.23 6.35 0.94 2.66 Large Cap
TFSA-S TSE:WCN 37.96 0.90 0.63 1.11 Large Cap
Showing 1 to 41 of 41 entries
Canadian Stocks – Purchase Rationale
When choosing a Canadian stock, the list of companies matching my investing criteria will
mostly be Canadian Dividend Achievers with a 10% CARG dividend growth.
However, in some industries, it can be difficult to find a match, and I have to vary my approach
and selection.
You can see my rationale on why I hold each stock in my portfolio and that’s what I use to run a
portfolio stress-test. I love companies that operate like a toll booth where there is regular
payments made by the customers.
[CORE] National Bank – An opportunistic purchase as it was undervalued against the other big
banks at the time. More specifically, it caters to small businesses in the province of Quebec and
has cornered that market well. While I would say it needs some improved branding for the
consumers, the business will not care as long as they are served well. Did I mention the bank
fees :)
[CORE] TD Bank – A strong Canadian bank across Canada with good product offering and
technologically on par with other Canadian banks. TD stands above other Canadian banks with
its expansion in the US market through TD Ameritrade and other ventures. Regular fees are
paid and dividend increases can always be covered by some increase in fees. Good and safe
dividend yield and growth.
[CORE] Royal Bank – Same reason as TD. Royal Bank happens to also have some
international exposure and a strong wealth management segment.
[CORE] Intact Financial – The leader in property and casualty insurance growing through
acquisition and organic growth. Normal dividend yield but great dividend growth. It passed the
10-10 test and is a Dividend Ambassador. The insurance business is a cash-flow business.
Even in a bad year, you know they will recover with higher costs the next. It’s like gambling, the
house never lose.
[CORE] Alimentation Couche-Tard – station stops around the world. I am late to the party for
this company but it has done well. It’s basically a driver tollbooth masquerading as a gas station
– huge profit margin on all the items in the stores. It is a true Dividend Ambassador with strong
dividend growth offsetting the low yield and supported by the stock growth.
[CORE] Waste Connections – The garbage and recycling industry is big. A number of players
own the majority of the business across Canada and the US. WCN is an acquirer similar to ATD
within North America. It’s a tollbooth business as the service is a necessity but is also controlled
through city taxes, unlike big tech.
[CORE] Constellation Software – A new addition to slowly build up towards growth. These
holdings break my research criteria from a dividend growth perspective, and I looked at it the
same way I looked at Google from a growth perspective.
[INCOME] Telus – I hold Telus as it offers strong mobile revenue followed by internet/television
revenue. However, it chose to diversify into the healthcare sector as opposed to buying content
or sports teams like the others. It is also well-positioned to grow customers across Canada and
is part of a controlled oligopoly.
[INCOME] TC Energy – A strong pipeline operating between Canada, the US and Mexico. It
pays a good dividend yield with consistent dividend growth. The Chowder Score is above 10%,
and the dividend growth is consistent.
[OPPORTUNITY] Scotia Bank – An opportunistic purchase in 2022 as it was beaten down and
offered over 6% yield. A yield this high is never seen with the big banks and in my view, the
bank will bounce back in the future as it makes the necessary adjustments.
US Stocks – Purchase Rationale
The list of stocks matching my investing criteria will mostly be US Dividend Aristocrats, with the
exception of the technology sector. That sector is relatively recent to fulfill the requirements for a
US Dividend Aristocrat.
[CORE] Microsoft – I opted to buy into Microsoft as a dominant software company in the
operation system and office software. Those two segments alone and the transition to
subscription for consumers meant the company was moving to a strong recurring revenue. The
cloud segment was in the early stages and proved to be a catalyst to the company’s growth.
[CORE] Apple -While most of the revenue is generated from the iPhone, the tollbooth concept
comes from people upgrading their phone regularly (every 2 years) and from the app
marketplace where Apple takes a cut of all transactions. Apple is also shareholder-friendly
friendly with share buybacks and strong dividend growth.
[CORE] AbbVie Inc – A solide healthcare companie.
[CORE] Costco -The undisputed subscription leader. Costco gets people to pay to go shop
there, and the price value offerings keep the subscribers coming.
[CORE] Texas Instrument – TXN is a play on the IoT devices. Homes are generally moving into
the space of IoT and needs chips to connect to the internet and do some data processing. It’s
also a play on the growth in connected automobiles.
[CORE] Broadcom Inc. – TXN does OK, but I wanted to benefit from AI and saw AVGO as
another option to benefit from the need for chips. Also, many countries have adjusted their view
on chip production to stop relying on Taiwan and certain geopolitical tensions, which positions
AVGO as a good contender to benefit from these changes.
[CORE] Google – Great company purchased at a great price. I just could not resist when the
price was at $100. I did not have cash on hand, I just sold another company with less upward
potential to get in.
[CORE] Visa – A purchase transaction tollbooth, what else could you want. VISA doesn’t
assume any risks from credit card holders and gets paid on all transactions that go through the
network. Whether you like it or not, using a credit card is a lot simpler than carrying cash and
coins. The convenience is here to stay and VISA is increasing its market share.
[CORE] Master Card – Same as VISA. There is room for 2 big players. It gives options to the
consumer.
