Skip to main content

It's time to take a fresh look at the Canadian Mini-Portfolio that I created in November 2012. It was designed for those with a limited amount of money to invest who wanted a better return than they could get from a GIC without a lot of risk.

The idea for this portfolio came from two readers who held GICs that were up for renewal. They were unhappy with the rates that were quoted and were seeking alternatives.

Three and a half years later, the situation is almost unchanged. The rates being quoted for GICs are about the same as when the portfolio began. The big banks are offering 1.5 per cent to 1.6 per cent for five years, while the best rate from a small institution is 2.75 per cent.

The mini portfolio that I created includes three securities: the common stock of BCE Inc. and Scotiabank, plus the 5.75-per-cent convertible debentures from Firm Capital Mortgage Investment Corporation.

The portfolio was last reviewed in November, at which time it was showing an average annual compound rate of return of 9.9 per cent. Here's a look at the components, based on prices at mid-day on May 27.

BCE Inc. (BCE-T, BCE-N). BCE shares have performed well and are up $3.77 since our last review. We also received two dividends totaling $1.3625 per share (the company raised its dividend by 5 per cent effective with the March payment). The total return in the period under review is just over 9 per cent.

Bank of Nova Scotia (BNS-T, BNS-N). Scotiabank shares also did well, gaining $3.08 over six-plus months. We received two dividends totaling $1.42 per share for a total return of 7.3 per cent for the period. There was a dividend increase of 2.9 per cent at the beginning of the year.

Firm Capital Mortgage 5.75 per cent Convertible Debentures (FC.DB.A). These debentures pay interest at the rate of 5.75 per cent semi-annually, on April 30 and Oct. 31. We received a semi-annual interest payment of $28.75 for each $1,000 debenture at the end of April. We have 55 shares for the equivalent of 5.5 debentures so that amounted to $158.13. The market price moved higher by $1.49 during the period.

We also received interest of $2.10 from the cash invested in a high-interest savings account.

Here is how the Canadian Mini Portfolio stood at mid-day on May 27.

Desktop users click on image to enlarge

Comments: The total portfolio value, including retained income, is $21,263.28. That is up almost 7 per cent from the last review. Since inception, the portfolio has gained 41.9 per cent, which works out to an average annual compound rate of return of 10.5 per cent. We're beating our GIC target by a wide margin.

Changes: We have enough retained earnings to add another five shares of BCE for a cost of $302.50. That will bring our total position to 140 shares and reduce the cash to $48.79.

We'll keep our interest and retained income of $709.28 in a high-interest savings account with EQ Bank paying 2.25 per cent.

Here's a look at the revised portfolio. I'll revisit it in November.

Desktop users click on image to enlarge

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. Follow him on twitter @GPUpdates and on Facebook.