What we’re looking at
The money managers at TD Waterhouse Private Investment Counsel say a top objective of theirs is to deliver returns to clients that compare well with benchmark indexes but offer less risk. Okay, who doesn’t want that in today’s uncertain stock market environment? The question is, how to actually make it happen?
In putting this portfolio together, TD Waterhouse sought companies with above-average yields and a record of consistent dividend increases. Stocks were also selected on the basis of having a price-earnings ratio that is attractive in its own right and also relative to earnings growth.
Also used here is the price-to-book ratio, which compares a company’s value on the stock market to its value according to its financial statements. A lower reading suggests a stock is undervalued. Return on equity looks at how effective a company is at using the money put up by shareholders to generate profits. The higher the ROE among companies in the same sector, the better.
What we found
The goal of this portfolio is to generate strong total returns based on reliable and growing dividend income plus moderate capital growth. The net result has been an annualized total return since May, 1995, of 13.3 per cent, which compares to 9.9 per cent for the S&P/TSX 60 index. Returns from the portfolio have been more than enough to come in ahead of the S&P/TSX 60, even after advisory fees are paid.
The portfolio’s volatility has been much lower than the benchmark, according to TD Waterhouse. Using a measure called standard deviation, the portfolio came in at 11.8 per cent and the S&P/TSX 60 at 16.6 per cent.
TD Waterhouse Private Investment Counsel Canadian Dividend Portfolio
|Company||Ticker||Sector||Portfolio weight % (Sept. 28/12)|
|Top 10 holdings|
|Royal Bank of Canada||RY-T||Financials||7.1|
|Bank of Nova Scotia||BNS-T||Financials||6.8|
|Bank of Montreal||BMO-T||Financials||5.6|
|Canadian Utilities Ltd.||CU-T||Utilities||4.3|
|Canadian National Railway Co.||CNR-T||Industrials||4.2|
|Cdn. Imperial Bank of Commerce||CM-T||Financials||3.9|
Source: TD Waterhouse Private Investment Counsel
|Company||Ticker||Sector||Portfolio weight % (Sept. 28/12)||Fwrd. P/E (Sept. 28/12)||P/B (Sept. 28/12)||ROE (Sept. 28/12)||Price $ (Oct. 31/12)||Div. yield % (Oct. 31/12)|
|Top 10 holdings|
|Royal Bank of Canada||RY-T||Financials||7.1||11.4||2.2||13.2||56.94||4.2|
|Bank of Nova Scotia||BNS-T||Financials||6.8||11.3||2.1||18.2||54.25||4.2|
|Bank of Montreal||BMO-T||Financials||5.6||10.1||1.5||12.9||59.02||4.9|
|Canadian Utilities Ltd.||CU-T||Utilities||4.3||16.6||2.8||14.9||67.00||2.6|
|Canadian National Railway Co.||CNR-T||Industrials||4.2||16.4||3.6||23.0||86.24||1.7|
|Cdn. Imperial Bank of Commerce||CM-T||Financials||3.9||9.7||2.1||21.1||78.56||4.8|
|Shaw Communications Inc.||SJR.B-T||Consumer Discr.||3.6||12.7||3.0||15.5||21.76||4.2|
- Royal Bank of Canada$64.82-1.37(-2.07%)
- Enbridge Inc$42.83-0.64(-1.47%)
- Bank of Nova Scotia$51.84-0.83(-1.57%)
- TransCanada Corp$47.43-0.80(-1.66%)
- Bank of Montreal$69.02-1.27(-1.81%)
- Canadian Utilities Ltd$33.49-0.29(-0.86%)
- Canadian National Railway Co$75.11-0.62(-0.82%)
- Canadian Imperial Bank of Commerce$83.02-1.67(-1.97%)
- Emera Inc$45.01-0.26(-0.57%)
- Shaw Communications Inc$22.65-0.46(-1.99%)
- Updated February 11 12:26 PM EST. Delayed by at least 15 minutes.