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ME AND MY MONEY

Engineer doesn’t let emotion guide the building of his portfolio Add to ...

Michael Kunce, 31

Occupation

Engineer

The portfolio

Thirty-three stocks including Enbridge Inc., Royal Bank of Canada, Fortis Inc., Pfizer Inc., Southern Copper Corp., Intel Corp., TransCanada Pipelines Ltd., Rogers Communications Inc. and Keg Royalties Income Fund.

The investor

Michael Kunce works as a project manager at an engineering consulting firm. Just barely into his thirties, he has already built up a portfolio worth more than $300,000.

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How he invests

“I typically invest in companies that have strong brand value, reasonable dividends and a history of dividend growth,” Mr. Kunce said.

Blended in with this emphasis on dividends is a focus on minimizing risks. Many Canadian dividend investors tend to be concentrated in the financial, telecom and utility industries (where the good yields are). But Mr. Kunce believes in diversifying more widely. He holds at least three dividend stocks (U.S. or Canadian) within each major industry group (11 by his count).

Mr. Kunce now only buys to bring an existing holding back up to its target weight, and only sells if a holding needs to be trimmed back to target. “The biggest advantage of this rule is that it forces me to buy low and sell high,” he explains. “Emotional errors are eliminated.”

Mr. Kunce adds: “I maintain balance in my portfolio by also investing in … defined-benefit pensions and high-interest savings accounts.” He’ll raise the proportion of these “fixed-income” assets in his portfolio as he ages.

Recent purchase

After Rogers Communications’ stock plunged on news that Verizon Communication Inc. was coming to Canada, he purchased more shares to bring his holding back up to its target weight.

Reinvesting dividends

He doesn’t use dividend reinvestment plans. He prefers to take his dividends in cash so they can be directed toward opportunities to buy low.

Best move

“I loaded up with REITs in late 2008 when the market was on its knees.”

Worst move

“Ah, the human emotions … In earlier days, I bought [BlackBerry Ltd.] shares when they were flying high. They dropped and I bought more. But I ended up selling for a loss.”

Advice

“Find ways to either avoid or mitigate risks.” Mr. Kunce offers more advice and details on his blog at www.dividendtactics.com.

E-mail mccolumn@yahoo.com

Follow us on Twitter: @GlobeInvestor

 

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