Five ETF Portfolio

Recently, I read a post detailing a Canadian income portfolio created with only five ETFs. I wondered how I would approach this problem. Here is my answer.

• First, one must have a good whack of U.S. stocks. I would put 20% of my funds in ZSP (ZSP - BMO S&P 500 Index ETF) The yield is low (1.21%) but so be it. I can live with that to benefit from a fair amount of exposure to the U.S. market.
• To round out my non-Canadian holdings, I would put 7.5% of my money into VIDY (Vanguard FTSE Developed ex North America High Dividend Yield Index ETF.) The dividend is about 3.66% today.
  
• Now, for a decent exposure to Canadian stock I would put 57.5% into XEI. (iShares S&P/TSX Composite High Dividend Index ETF.) This ETF is yielding in the 5.2% range at this moment.
• Next, I'd invest 10% in CDZ (iShares S&P/TSX Canadian Dividend Aristocrats Index ETF.) This yield about 3.9%.
  
• And I would finish by putting 5% in FCCL. (Fidelity Canadian Low Volatility ETF.) Low volatility and a small dividend at about 2.55%.
  

I created a portfolio similar to the above but with about 5% of the portfolio kept as cash in TDB8150 where it earns 4.55% daily interest. When the Bank of Canada lowers its rate, this money market account rate will be cut as well. I figure we are good until at least June. 

This five ETF portfolio plus its cash component would yield about 4.12% today. This is not bad but it's far short of what my true retirement portfolio is yielding. The question is will it deliver better growth?

Now, how would you handle this problem. Enter your answer in Portfolio Manager in TD WebBroker and then track your portfolio for a year or two. See how your ideas play out in real time.

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Note: This post has been updated a few times as I learned more about suitable ETFs. It is too early to say too much about the success of this portfolio in the long run but so far it has outperformed my own portfolio which holds more than 20 investments. Stay tuned.

I realize there are quite a few overlapping investments to discover if one drills down into the holdings in the ETFs based on the Canadian market. I don't care. I didn't claim be an expert but a duffer. That said, it's Good Friday and I my Five ETF portfolio is up $14,611.58. Nice.

The TD Bank is a buy

The TD Bank is at $79.80 right now with a resulting yield of 4.8%. A little over a year ago, BMO stock was selling in the range of $109. 

Technically, the bank is only suffering a correction but it feels like its in bear market territory nevertheless.

Banks are not the investment of choice right now but they will be back in vogue someday and prices will recover. Meanwhile, I'd like to point out that the TD Bank has gone almost almost as long as the Bank of Montreal without once cutting its dividend. I cannot forecast a bottom but it is clear that the TD Bank is a fine buy right now and as you hold it you will be paid for your patience.

I'm told that this is not a bear market; oh?

The Canada Stock Market Index (TSX) reached an all time high of 22,213.07 in April of 2022. Right now, as I write, the TSX is at 18986.60. It is off it high by 3226.47 or 14.5%. This is a correction. It must suffer a dip of 20% or more before a bear market is declared. It is not unreasonable to imagine the TSX dropping to 17770 or even less. But even if it doesn't, this is a nasty pullback.

My portfolio is down a little more than the market. I'm down about 15% and it hurts. Downturns like this are not unexpected but that fact does not soothe the financial pain. The losses may be paper losses but the accent is on losses and not paper.

The worst part of this moment is that I did not see it coming. I thought the market had bottomed and was turning around. I bought some Telus, some TC Energy, some TD Bank and Bank of Montreal. All these recent purchases have lost money. Now, I must guard my remaining cash and dole it out carefully.

On the bright side, thanks to the crashing stock values, the yield on my RIF has grown to 5.85%. With RIFs the government sets the annual mandated withdrawal rate. This is a rate increases with each passing year. For instance, at retirement at 65 the withdrawal rate is 4%. Ten years later, at 75, the rate is 5.82%. My rather high dividend income means I will not have to sell any stock at fire-sale prices to meet the government withdrawal demands. See the withdrawal rate table here: RRIF Minimum Withdrawal.

The value of my stock holdings may be down but I feel confident that my dividend income will not shrink to anywhere near the same extent. For instance, income from the big Canadian banks should be safe. The Bank of Montreal has an impeccable dividend history. It has gone almost two hundred years with nary a dividend reduction. The TD Bank can make almost as remarkable a claim.

Hugo Ste-Marie, a strategist at Scotia Capital, wrote in a report published last Wednesday: "Despite a challenging environment, keep in mind that over the long run, dividends matter a lot, accounting for the lion’s share of equity returns."

To underline that point, the Scotia Capital report broke down the growth of a $100 investment in the Toronto Stock Exchange benchmark from 1956 to today. With dividends, it would have grown to $29,000. Without dividends, it would be only $3,600.

Dividends contributed nearly 90 per cent of total returns over the past seven decades. In other words, it pays to stay invested. Buy and hold pays over time.

Few investors know when a correction or a bear market will appear but both tend to only stay for a short, but painful, visit. The average bear market in Canada lasts just under a year. That said, a two year bear market is not unheard of. Bear markets are difficult to call and far more frequent that most investors believe.

But bear markets tend to be shorter than bull markets and not as frequent as corrections. The average bull market roars along for more than five years and can last much, much longer. A rule of thumb, based on the U.S. market, says a third of time the bear rules and two thirds of the time the bull runs free. Ride out the bear and ride the bull.

For a good take on bear markets, read the linked article from The Motley Fool: What is a Bear Market? In writing this piece, I found the following post very interesting and worth a read: Statistics and facts about the stock market in 2023.

Quebecor (QBR.B) may be a buy

I picked up a little Quebecor (QBR.B) some months ago. It immediately climbed into the black and never looked back until now. Late last week, my QBR.B holdings dropped into the red. By Friday close my Quebecor shares were back in the black but the Quebec-based telecom had my attention.

In an ideal world, I would own a bit more Quebecor than I do. My telecom investments are not as diversified as I would like. For instance, I have more Telus than I am comfortable owning. The excess shares will be sold when the Telus share price recovers. I look forward to the sale. I may invest for dividends but everyone benefits from pocketing some capital gains now and then.

My ideal portfolio has about 350 additional Quebecor shares. At $29.11 I can afford the purchase. The price is good but it could be better. The Morningstar Analyst Report rates QBR.B a four star stock. This means Morningstar believes appreciation beyond a fair risk-ad-
justed return is likely.

And speaking of Morningstar, the respected investment authority believes one should consider holding Quebecor as a core holding in a portfolio based on Canadian stocks. It isn't among the first tier "consider buying recommendations" but it is still listed as a stock worth holding.

The dividend yield of 4.12% is not great but it is adequate. With a payout ratio of 45.14% the dividend should be solid with very little chance of being cut in the near future. The quick ratio of 0.6X also adds to one's confidence in the company.

So, what is holding me back? QBR.B recorded a low of $23.845 in the past year. I worry that QBR.B could drop if the market were to continue to weaken. Am I being greedy? Maybe. (Oh, just to be clear, this post refers to QBR,B. Note the B. It is important.)

Retirement Income Portfolio at end of September

Three months ago, at the end of June, I posted a quickly assembled million dollar retirement portfolio with the goal of realizing an income of $40,000 annually at the outset. 

It was quite a success in its first few weeks but lately it has been losing money at a very fast rate. It is ending the month of Sept. down $32,244.54.

Am I panicked? No. The market is volatile. There are no surprises here. Heck, in a correcting market one would expect to see a loss of $100,000 or more. And if a bear market were to appear, a loss of double that would be reasonable: $200,000.

As I have no reason to sell, the losses are all on paper. On the other hand, the dividend income is real and on October first I will be withdrawing $3,333.33 just as a retired senior would. This will leave more than $2300 towards the November payment.

You might not agree but in my estimation this portfolio is a success. To see the complete portfolio, click this LINK.

My retirement portfolio is holding in there

It is halfway through September and the portfolio I posted showing how easy it is to design a successful retirement portfolio was up $17,889.73 at the close.

I should note that I removed $3,333.33 at the first of September. If this were an actual income portfolio in its first year, it would have had to stand up to the stress of having four percent of its value deducted spread out over 12 monthly withdrawals.

Click on My latest crack at a "Retirement Portfolio" to see the entire portfolio. Come back at the end of the month for an update.

A Retirement Portfolio Designed for Dividends

How hard can it be to design a good stock portfolio capable of pumping out four percent in dividend income annually? Back in late June, June 25th to be exact, I did jut that. I designed what I hoped would be a portfolio up to the task and I posted it for all to see. Now, to sit back and see it praised or criticized depending on its performance.

I started my portfolio with an initial one million dollars. From personal experience, I believe this is a reasonable starting value. I will do more work on this in the coming months. If I have to lower the initial value of my example portfolio, I will.

I am withdrawing four percent in the first year: $40,000 annually or $3,333.33 at the start of every month. I made my first withdrawal in August. I let the first month, July, slip by as I wanted to build up a little cash before entering the withdraw stage. I filled the portfolio in June, I did not try to time the market, and so dividends began accumulating immediately.

Today, September 5, 2023, the retirement income portfolio is worth $1,008,083.36 after the withdrawal of $6,666.66 in two months (August and September). At this rate, at the end of 12 months, I will have withdrawn a full four percent in cash and the portfolio will have enjoyed a capital gain of 4.85%. Nice. Will this really come to pass. We will see.

To see the portfolio in its entirety, please click:

My latest crack at a "Retirement Portfolio"

Retirement portfolio monthly payment coming Tuesday

One can find literally dozens of investment suggestions on the Internet. Many of these are from very fine sources. Many of these I have followed. I found that many of these posts shared a lot when it came to the investment advice offered. I decided I might be able to do as well as the legion of online experts I was following.

I designed a million dollar portfolio for a retiring senior and immediately put my ideas into action. Why immediately? Because one should not try to time the market, right?

Come back this Tuesday and I will reveal how my imaginary portfolio is performing. I have withdrawn one monthly payment of $3333 already and come Tuesday I will remove a second monthly payment of $3333.

See you Tuesday. Have a good holiday weekend. Cheers!

My latest retirement portfolio: an update

In late June I posted a retirement portfolio designed around dividend-paying investments. Now, it is early August. If the portfolio had been real, one might expect that a withdrawal would have been made after its first full month of accumulating dividends. 

I have withdrawn $3,333.33 in cash. Along with the cash, I have withdrawn enough money to buy 100 shares of TC Energy (TRP). The energy stock dipped to $45.84 and this was just too good a bargain to let pass. This increased my dividend income by about $382 annually.

The portfolio balance at market close August 4 was $1,019,836.34. This is down from its high but it is still a very nice number.

Buying low and holding is often not easy

Recently, I added to my TRP position when TC Energy Corp. stock dipped to $52.50. Today TRP has hit new lows. Right now it is trading at $48.18.

I have lost more than 8% of my investment, at least that is my paper loss. I feel a little guilty. I told folk that TRP was a buy -- and it was. But it does not feel like it was such a great buy at this moment. Ouch!

I can handle the loss. I'd rather not but investing is not without danger. One cannot time the market, as they say. Still, it is impossible not to want to try. I was trying when I bought at $52.50 and I was wrong.

I worry that a close relative, who bought some TRP, will not have the stomach for this loss and will bail out. I hope not. TRP will recover. It may not hit its target in the near future but it will certainly recover its recent 8% or so loss. My spreadsheet calculates that TRP is deep into bear market territory. It is 33.76% off its high of the past year.

What is the published target price of TRP today? Analysts see TRP climbing to $60.69 in the coming year. Maybe I should buy a little more TRP but I won't. I'm afraid of catching the not-so-mythical in this case falling knife.

But, if the TRP price should continue to collapse, I'd be a buyer at $45. With a dividend pushing 8%, TRP is a core holding in my retirement income portfolio. TRP is going to reward patience. Buy and hold is the correct move here, even though holding may prove more difficult that most non investor would think.

REITs: traditional income investments

Office space is in trouble. Since Covid-19, many office workers are working from home. Vacancy rates are up. One has to wonder if REITs are still a good place to stash some of that retirement savings.

I figure the old advice of holding as much as 20% of one's retirement portfolio in REITs may be on the generous side. But holding nothing in REITs may be a little extreme in the other direction. My goal today is to have 10% in REITs in the form of a couple of ETFs. At the moment I am falling a little short of my goal but not by all that much. Always keep in mind that office REITs make up only a faction of the ETF holdings. Apartment REITs are a big component, as well. 

The main REIT ETFs in Canada are all quite similar. That said, I like RIT as my main holding. Unlike the other three REIT ETFs I am going to mention, RIT has some exposure to the U.S. REIT market. This adds a little extra diversity to the RIT holdings.

ZRE and XRE are my next picks after RIT with ZRE getting a the nod. I hold both RIT and ZRE. At the bottom of my list but not that far off the pace is VRE. Why is it at the bottom. Its yield is at the bottom and that fact alone drags it down in my book.

I checked the Morningstar ratings for the four ETFs mentioned and RIT got four stars, ZRE and XRE got three stars and VRE got only two stars. It is always nice when the financial experts at Morningstar appear to agree.

Retirement income portfolio update

On June 25, I created a million dollar retirement portfolio with the goal of providing both monthly income and capital growth. My attempt has done better than I could have ever hoped. It has gained $50,893.30 in less than a month. The bulk of the gain is unrealized but $5503.65 is dividend income. The portfolio records the dividend income the moment the x-date has been reached. In reality, the actual cash payment would follow.

I based my imaginary retirement portfolio on the lessons that I have learned since retiring some 14 years ago. As I don't get a lot of hits, I will leave you to click the link and check out my posted portfolio. If I get a few comments and questions, I will return and complete this post. I will, of course, answer your questions, if any. Until then, have a good day and wishing you good luck with your investing. 

This add was made on December 24th. My imaginary retirement portfolio fell on tough times shortly after it hit $50 thousand plus in gains. It fell tens of thousands in the red. Today, in December, it is up a bit more than $30,000 while it has pumped out $3,333.33 per month in dividend cash to cover living expenses.

Look for an early January post bringing my readers completely up-to-date on how this portfolio is performing. The link below will take you to the original post creating the retirement portfolio.

My latest crack at a retirement portfolio.

What me worry?

According to Wikipedia Alfred E. Neuman, of Mad Magazine fame, first appeared in late 19th-century advertisements for painless dentistry – the origin of his "What, me worry?" motto. Today an investor could do worse than take Neuman's worry-free attitude to heart. 

When stock prices fall and investing looks bleak, that is often the time to buy. Telus was well down from its high of the past year and all the telecoms as a group were out of favour with investors; I saw an opportunity and bought.

Almost immediately bad news concerning Telus made big news. Telus took an immediate hit. Within a day or two, the Telus stock price had stabilized and was showing signs of recovery. It was time to buy more.

Today my Telus holdings are in the plus column and my dividend income is up in a four digit amount.

Telus: the story just gets better

 

I saw Telus as a buy a few days ago. I added to my position. This morning, watching BNN, I noticed Telus (T) was down even more today than it was yesterday. And yesterday it was awfully attractive.

I immediately booted up my computer and logged onto TD WebBroker. I picked up another few hundred shares of Telus at a truly fine price. Telus is now yielding 5.77%. This stock is a keeper in the short term and a core holding in the long term. I am one happy retired investor.

I can see a very nice profit at the end of the Telus rainbow.

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Telus has gone up nicely since I made my last purchase. It appears that lots of other investors agree with me, Telus is worth trading today. Its trading volume is well up for the day.

I see Telus (T) as a buy today.

I noticed today that Morningstar is rating Telus (T) as a five star buy. I bought: 500 shares.

As a dividend investor, Telus, yielding 5.66% at its present price, is a wonderful stock. A generous dividend with a low chance of being cut by any meaningful amount.

Selling today at a price approaching its low for the year, Telus (T) has lots of headroom. I would not be in the least surprised to see Telus selling for more than $30 sometime in the coming year.

I am stocking up on Telus; I'm buying more than I have as my goal. I plan to sell the excess when the time is right. One must always keep avenues open for generating not just yield but cash for future retirement portfolio purchases.

Telus is one of my core holdings in my retirement income portfolio.

TC Energy (TRP) In my book, today this is a buy.

TC Energy (TRP) is flirting with its low for the past year. Also, it is off its high for the past year by about 25%. This puts the stock well into bear territory. I believe TC Energy is a solid company paying a dividend that a retiree can trust -- a dividend yielding more than 7% today.

Can TRP go deeper into bear territory? Sure. But, I don't see it losing any amount that I would find frightening. It has absorbed some big losses already. I cannot see more of the same happening in the near future.

Moments ago, I put my money where my mouth is; I added to my TRP position. I look forward to my first dividend in a little more than three months. My retirement income has taken a $744 pop with this purchase.

My latest crack at a "Retirement Portfolio"

I have been checking out retirement portfolios posted by financial experts found on the Net. You see, I am an outlier when it comes to most portfolio-building approaches. For instance, I balk at investing any of my retirement money in bond ETFs. And so, I like reading how others approach portfolio building.

I have been wondering how I would invest my savings if I were retiring with a million dollars in savings today. I'd take my inspiration from the Canadian market itself and invest in most, if not all, the market sectors: financial, real estate, utilities, energy, etc.

The result of my weekend musings can be inspected below. I built this million dollar portfolio Saturday. It immediately jumped more than $4000 in value on market open Monday. I'll check this portfolio once a month to see how it is performing.

I have been considering Mullen Group, Algoma Central Corp and the ETF VIDY as additions to my actual retirement portfolio. I'll be watching these three investments and following the perform of each with great interest.

Oh, if you are interested in what percent of the total portfolio each investment represents, just look at the first numbers in the Market Value and round the number up or down to the nearest number that is a multiple of five. For instance ALC is 2.5% of the total portfolio and BMO is 6.0% and BNS is 3.0%. (This corrects an earlier error.)

 

 

I checked my million dollar portfolio in early afternoon. The gain is closing in on nine thousand dollars. Is this confirmation of my approach to portfolio construction? Not necessarily. 

What it does demonstrate is market volatility. Do not overreact to market ups and downs. Always keep in mind that the market is up a full two thirds of the time. In the end, investors with the long range view always come out ahead.

One has to be very careful when reading posts recommending an investment strategy. Stock markets are very volatile. My retirement income portfolio which was thrown together on the weekend was up $17,815.90 at market close just three days later. Someone pushing a certain investment approach can make most approaches appear very good on paper; just choose the right reference dates.

Let's be honest. There may well be a recession coming. It may be mild but it should take the markets down a notch or two. These gains, so quickly amassed, could disappear just as quickly.

But this portfolio will deliver a nice income and most of the dividends are rock solid. This portfolio should get a retiree through tough times with cash to spare.

By market close Friday I was amazed at this mythical portfolio's balance. It was up almost $32,500. Wow!

During the week, I have been adding some of the investments in my mythical portfolio to my actual retirement portfolio. In calculating the number of shares to own, I have been guided by the portfolio percentages used to create this mythical portfoliio.

I am pleased to say that taking my investment inspiration from this mythical portfolio is proving to be a fine move.

To see where this theoretical portfolio was after almost a month, please click the link: 

Retirement income portfolio update

For retirement portfolio, I'm thinking CIBC (CM) and TD

When sinking money into the market I follow the five-year-rule: only invest money that will not be needed sooner than five years. If you may need it sooner, a money market fund like TDB8150 is a great place to park the money. Today that fund is paying 4.05%. A very nice return for a no-risk investment.

In retirement, I like to spend the dividends and leave the stock untouched. At the moment, one of my buy and hold picks is CIBC, stock exchange symbol CM. This bank stock is selling for $57.70 as of market close Friday. The dividend is $3.40 for a yield of 5.9%.

$30,000 buys 520 shares and pays one an annual dividend of $1768. With many analysts projecting a future value of approximately $70, CIBC offers the chance to make a very nice capital gain -- especially nice if the gain is inside a registered account (RRSP, RRIF, TFSA).

In interests of full disclosure, I hold CIBC in my retirement portfolio and have added to my position recently. Another Canadian bank well worth a second look is Toronto Dominion (TD). It is somewhat beaten up at the moment and thus is offering a better yield that is usually offered. I also bought a little extra TD recently. I like to take my own advice.

Cheers and good investing.

Core holdings in a retirement portfolio

One is often advised to have one or more annuities in one's retirement portfolio. Although I believe that is good advice, I do not have any annuities in my portfolio. I look at the stable annuity payout, so stable that in twenty-five years it will be paying exactly what it is delivering today -- not a penny more nor a penny less -- and I cringe.

Then I compare this to the dividends paid by my core stock holdings. For instance, take Fortis (FTS). As reported by Gordon Pape, Fortis "recently increased its dividend for the 49th consecutive year." I find the idea of holding a utility like Fortis for 25 years a lot more appealing than holding an annuity for the same time period.

Fortis is a utility company based in St. John's Newfoundland but with operations extending into five Canadian provinces, nine U.S. states and three Caribbean countries. And Fortis is not the only good utility company in Canada. The short list of fine alternatives includes: Emera (EMA), Hydro One (H) and Canadian Utilities (CU).

I'd feel very comfortable holding 4-5% of my retirement portfolio in each of these companies for a total exposure to the utility sector of 16% to 20%.

Another sector in which all Canadian retirement portfolios should have exposure is banking. The Canadian banking system may be unique in the world. The five biggest Canadian banks control the sector. I would argue that all five Canadian banks are "too big to fail." Conservation of assets is a core goal of one's investment approach in retirement. The five biggest Canadian banks are safe and their dividends are safe as well. This year will mark 194 years without a dividend cut for the Bank of Montreal, 189 years without a cut for the Bank of Nova Scotia and 166 years for the TD bank.

The big five Canadian banks are: RY, BMO, TD, CIBC and BNS. I prefer to weight my investments in the banking sector by bank size. For this reason, I weight my investments in the banking sector toward the Royal Bank and the Bank of Montreal and away from the Bank of Nova Scotia. Still, with all five taken together, I find I feel comfortable with from 25% to 35% of my total portfolio invested in banks. And be aware, I am not adverse to investing in the National Bank (NA) even though it has been known to reduce its dividend in tough times.

Some core holdings for a Canadian retirement portfolio:

• RY (Royal Bank)       
  
• BMO (Bank of Montreal)
  
• TD (Toronto Dominion Bank)
  
• CM (Canadian Imperial Bank of Commerce)
  
• BNS (Bank of Nova Scotia)
  
• FTS (Fortis)
  
• EMA (Emera)
  
• H (Hydro One)
  
• CU (Canadian Utilities)

After this, I would consider adding telecoms and pipelines to my retirement holdings.

Building a retirement portfolio is easy

When I retired I put my savings into the stock market. I discovered putting together a retirement portfolio in neither difficult nor all that risky. This is a classic buy and hold portfolio that rides out bear markets with grace.

The first stocks I purchased were bank stocks. The Royal is Canada's largest bank. Today it is paying  dividend of $5.28 for a yield of 4%. TD and the Bank of Montreal are two other must-haves when it comes to Canadian banks. TD pays a dividend of $3.84 for a dividend yield of 4.4%. BMO is paying $5.72 for a yield of 4.5%.

• BMO - 4.5% dividend yield
• CM - 6% dividend yield
• RY - 4% dividend yield
• TD - 4.4% dividend yield

One Canadian bank down on its luck is CIBC. Its depressed share price translates into a 6% dividend yield from a dividend of $3.40. Hold these four banks and you have checked off the financial holdings in your portfolio. Note: These Canadian banks are famous for not cutting their dividends. Invest $60,000 divided equally among these four bank stocks and you can count on about $2835 annually in dividend income.

Next, I would turn to the utilities sector and put about 15% of my retirement savings in a mix of Emera, Fortis, Hydro and possibly a little in Alta Gas. I think of Alta Gas as more of a utility than a pipeline.

• Emera - 5.3% dividend yield
  
• Fortis - 4.1% dividend yield
  
• Hydro - 3% dividend yield
• Alta Gas - 6% dividend yield

Put $30,000 into these four utility stocks, 4% in all but Hydro, which get 3%, and you can count on about $1410 annually in dividend income.

Pipelines are another solid investment paying fine dividends. All retirees have money invested in pipelines even if they do not know it. The Canadian Pension Fund, CPP, has a large exposure to pipelines. Buy Enbridge (ENB), TC Energy (TRP) and Pembina (PPL) and you have three good, solid companies. Note the generous dividends. There is a good reason the CPP likes pipelines: the dividends.

• Enbridge - 6.5% dividend yield
• Pembina - 5.7% dividend yield
• TC Energy - 6.6% dividend yield

Put $30,000 divided equally among these three pipeline stocks and you can count on about $1880 annually in dividend income.

This brings us to telecoms. One simply must have exposure to this segment of the market and there are lots of good companies in which to park some retirement money. Think Bell, Cogeco, Quebecor and Telus. 

• Bell - 6% dividend yield
• Cogeco - 4.4% dividend yield
• Quebecor - 3.8% dividend yield
• Telus - 5.2% dividend yield

Divide $40,000 equally among these four telecom stocks and you can count on about $1940 annually in dividend income.

With only a $160,000 invested, our retirement income portfolio is already generating more than $8000 a year. It is a rare retired couple who have not saved at least $160,000 toward their retirement. The present portfolio contains fifteen different companies. This is approaching what many claim is the ideal number of investments for a small portfolio. 

If our retirees have a bit more to invest, it is time to consider putting a little into the American market. It is, after all, the biggest game in the world. A couple of American-based ETFs does not seem unreasonable. I'd put $40,000 into the States with 66% in ZWA, the BMO Covered Call Dow Jones Industrial Average Hedged to Cdn. Funds ETF, and 34% in XUS, the iShares Core S&P 500 Index ETF. (The ZWA is here for the dividend. Seniors need income. If you do not need the income, put more into XUS.)

• XUS - 1.4% dividend yield 
• ZWA - 6% dividend yield

Invest $40,000 divided as detailed in these two ETFs and it should generate about $1775.

Not having anything invested outside North America would be seen by some as a basic error in building a properly diversified portfolio. I am not one of these folk but if you are I would think of adding an ETF like VIDY to the mix. A Vanguard ETF, VIDY has a very low MER and pays a nice dividend of 4.35%.

If I had $25,000 I'd add some VIDY and increase my income by $1085 annually.

• VIDY - 4.35% dividend yield

At this point, I just might call it quits. I could add some health care but the stuff I would buy does not deliver the dividend income I need in retirement. And what do I like in health care? Think TDOC and XHC.

Every portfolio I have ever had contained something that was there just for fun, to provide some excitement. I wouldn't add a lot of the following but I would be comfortable putting $25,000 in my portfolio split evenly between BN, Brookfield Corporation, and BAM, Brookfield Asset Management.

• BAM - 3% (estimated) dividend yield
• BN - 1.4% dividend yield

Brookfield is a fine holding in any portfolio. BAM, a recent spin-off, promises to pay a good, if not great, dividend. BN has a posted dividend yield of 1.4%. My hope is that the Brookfield investment will deliver excellent capital gains along with a fair dividend to pay one for holding the stocks.

There, we are done. A quarter of a million invested and an income of approximately $11,400. That's close to a thousand dollars a month. This portfolio delivers the almost mythical four percent without breaking a sweat. 

If one does not already have a TFSA, tax free savings account, I'd get one. Putting as much of this investment as possible into a TFSA makes a lot of sense. Avoiding some taxes makes a dividend income in retirement go farther.