Building a Portfolio, Mid December 2024

 

I recently read an article on the Globe and Mail about having too many stocks in a Portfolio but it's a preference to whatever sector mix and ranking an investor prefers and works for him or her.

I currently have 20 dividend paying stocks and 6 ETFs/Funds and always looking at other stocks for dividend and hopefully, capital growth with some being "bond like" with a steady monthly dividend payment. This snippet from that article kind of fits the way I approach the Markets.

Just as with building a house, a portfolio is not built in a day. It must be attended to with shares carefully added and nurtured. It is wise to look it over quarterly and see what variations should be made, if any. Avoid haste. This is indeed a long-term exercise where the best results are relatively slow and sure.

My most concentrated sectors are Financial, followed by Energy where I further bought Canadian Natural Resources, CNQ with a 7.4% dividend increase and Pembina Pipeline, PPL this month. The oil and growing natural gas buildup are behind these stocks, making their money here in Canada, by international export, shipping and providing resources for the growing electricity demand. Data centres, with some in the planning stages to build huge complexes will need an enormous amount of power ... probably a lot of alternative energy sources involved as well.

                                        From Forbes article about AI, Data Centers and Cooling

SOBO, South Bow is on my radar for more buying with about a 8% yield and an ex-dividend date of New Year's Eve. SOBO has gained nearly 23% since it's spinoff from TRP, TC Energy but slowed up over the last month.

A utility I got into last quarter is Capital Power, CPX with a current 4.27% yield and increased it's dividend by 6% for September, 2024. A popular stock with it's price climbing by 60% this year. Caution here where CPX is currently over-valued. The ex-dividend date is on the 31st of December.  

Concluding for today and wishing you a Merry Christmas, I like this comparison from a retired lady living in Ontario and author of the Our Life Financial newsletter I receive monthly ... keeping in mind the "boring companies" also pay dividends.

A lot of people get caught up in the hype and the media does a very good job at promoting stocks that are flashy, encouraging young (and old) investors to invest in the high flyers. I mean look at the S&P 500 this year thanks to the Magnificent 7 (namely Nvidia). They have had a terrific run and perhaps will for the foreseeable future. What people don’t take time to consider, however, is the regular, every day companies that can do just as well.

Let’s look at a few below, and I’ll start with the U.S. tech that has received a lot of coverage this year:

YTD Total Return (Jan 1 - Nov 29th):

Nvidia 187.07%

META 66.28%

Tesla 38.94%

Amazon 38.66%

Apple 28.38%

Google 22.45%

Microsoft 15.01%

Not bad at all, with Nvidia clearly having a fantastic year.

But how do those compare with some of the boring companies up here in the North? Take a look:

CES Solutions 183.43%

Aecon 121.84%

Manulife 60.38%

Extendicare 54.04%

Peyto Exploration 48.17%

Royal Bank 35.69%

Arc Resources 34.35%

Enbridge 32.82%

Bank of Nova Scotia 32.78%

There are countless others that could be added to both the U.S. and Canadian lists, the point is, many people focus only on the stocks that are continually being pumped by the media but there are so many others that if purchased at the right time can do remarkably well for you. It’s finding the stocks that are downtrodden, that is the key.

 

December and Bank Earnings 2024

 

In the first week of December, Canada's largest Banks start publishing and presenting their earning reports. It's of interest to me where I'm into financial stocks, usually ranking high in the top ten of dividend focused ETFs like the popular high yield VDY with Canadian energy stocks mixed in.

Toronto Dominion, TD could be in the news more than the others with their settled fine in the US, which the bank had set aside to pay and I recall they have a lot of cash on the sidelines when they wanted to buy more assets down south, upwards of 15 billion worth awhile back. The price of the stock is in the $79 to $80 CAD range with a 5.15% yield and a 6.25% dividend increase back in January of 2024.

I expect the stock price to increase eventually with operational compliance being mentioned more recently and a turnover of the CEO. Hopefully, another dividend increase for 2025 will occur along with the other banks as well as the Bank of Nova Scotia, BNS which hasn't had a dividend increase since July of 2023 after hitting a rough patch but has recovered since then.

December will be a busy month with my energy stocks going ex-dividend and I'll update about that in the 2nd week looking at Pembina Pipeline, PPL and Canadian Natural Resources, CNQ in the first half with a 7.14% dividend increase kicking in for this month.

Trump's 25% tariff threats for Canada when he takes office next year will probably cost everybody more money after getting over high inflation. See what happens and if the tariff increase will be exempt on our energy/oil sectors flowing into the US where he plans to ramp up oil production down south.

Lots of daily news about the economy and stocks to keep informed on with all that Trump noise lately and how different stock sectors could be affected by US moves.

I should be getting a better picture of the JP Morgan ETFs I bought when they were offered in Canada starting with JEPI and JEPQ back in October. JEPQ gained the most so far where it's into NASDAQ and the USA "AI infused" tech stocks.

The first distributions should be on the 10th of December but where they both pay monthly, I assume this distribution will be based on 2 months since it's startup in October. 

On January 2nd, 2025, the expected ex-distribution date will be more accurate along with the fluctuating yield based on price, although one can get an idea from JP Morgan's US site displaying those two ETFs in USD with a past start date of May, 2020.

Overall, I'm pleased with the combination of growth and dividend stocks I own and seeing more positive "green" than usual. One can hope it continues for awhile but the Markets can turn quick at times. However, the diversified portfolio dividends will continue to accumulate going forward.