Dividend Portfolio Sector Allocation Update

Several months ago I posted an update highlighting my dividend portfolio sector allocation. It’s always important to be aware of your portfolio allocation. At times when building out a new portfolio, or a particular sector experiences unusual strength or weakness, balances can fall out of alignment and you can be faced holding a portfolio that is particularly overweight or underweight in a specific sector. Of course, if this was intended then nothing needs to be done to bring balance. However, most of these imbalances occur out of our control.

In recent months we have all seen the energy sector take a major hit in price as oil and other commodity prices have fallen from summertime highs to new annual lows. I find it interesting that many of the dividend growth bloggers have been writing how overweight they have become in recent weeks as seemingly every energy name has been picked up. Names such as BP, CVX, XOM, COP, TOT, RDS and others including BBL and NOV have been making the dividend blog rounds. Of course, this was all with good reason as new bargains could be found in previously relatively expensive stocks.

Below you will find my asset allocation for my dividend stocks. Clearly, I favor the consumer staples and industrial sectors the most. However, the past several months have seen me add to my financial holdings in WFC, AFL, CB and new positions in TD, BNS and RY in my ROTH account. It was my intention to increase my financial sector exposure as I have jumped from a portfolio weight of 10.68% to 21.32% since early September in my ROTH account. Other changes to the portfolio have been more muted with changes of only a few percentage points in the last three months.


Brokerage Account

Sector Sector % Market Value
Consumer Staples 25.66% $27,737.87
Industrial Products 19.08% $21,366.11
Medical 14.35% $16,071.96
Finance 12.10% $13,554.42
Utilities 7.37% $8,258.37
Retail/Wholesale 5.91% $6,622.71
Multi-Sector Conglomerates 5.41% $6,057.07
Basic Materials 5.04% $5,641.71
Auto/Tires/Trucks 2.92% $3,271.44
Consumer Discretionary 2.16% $2,424.83
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Disclosure: Long all above.

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Keith Park 3 years ago Author's comment

The large Canadian banks, in many regards, are more solid than most U.S. banks. They operate as a quasi-monopoly in Canada too and don't face as much competition like American banks. In fact, the only two banks in the U.S. that I would consider for a long term dividend growth portfolio is WFC and USB of which I own WFC. The large Canadian banks have been paying dividends non-stop for over 100 years and during the financial crisis not one cut their dividends. I like TD, BNS, RY, BMO and CM of which I own the first three. Having 4 banks in my portfolio is more than enough diversification and I doubt I'll be adding more names anytime soon. Many of the Canadian banks are off their 52 week highs and may hit some rough patches as oil declines as much of the Canadian economy depends on oil. Yielding close to 4% and all with low historic PEs might make these banks something to consider. Thanks for your question.

Joel Santiago 3 years ago Member's comment

Why so many Canadian financials?