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Back in March 2012, I created a High-Yield Portfolio for those seeking above-average cash flow and who were willing to live with a higher level of risk.

I stressed at the time that this portfolio invests all its money in stocks. Therefore, it is best suited for non-registered accounts where any capital losses can be deducted from taxable capital gains. Also, a high percentage of the payments from this portfolio will receive favourable tax treatment as eligible dividends or return of capital.

The fund's initial value was $24,947.30, and I have a target average annual rate of return of 7 per cent to 8 per cent annually. Here is a review of the securities we own and how they have performed in the six months since my last review in March. Results are to Sept. 23.

The Keg Royalties Income Fund (KEG.UN-T, OTC: KRIUF). This fund is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. It was added to this portfolio in April 2013 when it was trading at $15.25. It has been in an uptrend recently, adding $2.58 per unit over the latest six months. We received dividends of 54.11 cents per unit during the period. The shares yield 5.2 per cent at the current price.

DH Corporation (DH-T, OTC: DHIFF). The market has fallen out of love with this stock. The shares are down $9.36 from our last review and $12.53 from one year ago at this time. The quarterly dividend remains unchanged at 32 cents per share, for a yield of 4.4 per cent, but investors are not tempted. They believe something is fundamentally wrong with the company. As Gavin Graham reports in an update elsewhere in this issue, that's not necessarily the case, but weak financial results are a concern.

Vermilion Energy (VET-T, VET-N). Here's a company that's going in the opposite direction. We added Vermilion to the portfolio 18 months ago because of its well-diversified international holdings and good management. Initially, the share price has weakened in the face of continued low oil prices, but it has rallied lately and is up $6.23 since March. The price is still below where we bought it, but the recovery is encouraging. This is one of the few mid-size energy companies that hasn't cut its dividend. The stock continues to pay 21.5 cents per month, to yield 5.3 per cent.

Exchange Income Corp. (EIF-T, OTC: EIFZF). This stock was added to the portfolio in March, and it has immediately paid off for us. The share price increased by $8.08 since then, and we have received monthly dividends of $0.1675 per share ($2.01 annually), up from 16 cents per month at the start of the year. At the current price, the yield is 5.7 per cent.

Premium Brands Holding Corp. (PBH-T, OTC: PRBZF). This specialty food manufacturer and distributor was added to this portfolio in October 2013 and has been a powerhouse performer ever since. The share price rose another $11.63 during the latest six months, bringing our total return to date to 240 per cent. The quarterly dividend was increased to 38 cents from 34.5 cents, effective with the March payment; however, the increase in the share price means the yield is down to 2.4 per cent.

Morneau Shepell Inc. (MSI-T, OTC: MSIXF). Morneau Shepell Inc. is the largest Canadian-based firm offering benefits and pension consulting, outsourcing, and health management services. The shares are up $2.22 since the last update, and we continue to receive good cash flow from the monthly dividend of 6.5 cents (78 cents a year). The current yield is 4.1 per cent.

Pembina Pipeline Corp. (PPL-T, PBA-N). Pembina shares continue to recover from their slump, gaining $5.61 in the latest period. The dividend was raised in April to 16 cents per month ($1.92 annually), for a yield of 4.8 per cent.

Sun Life Financial (SLF-T, SLF-N). These are difficult times for life insurers, but Sun Life managed to post a small advance of 60 cents a share in the latest six months. The quarterly dividend of 40.5 cents per share equates to a yield of 3.8 per cent.

Chemtrade Logistics Income Fund (CHE.UN-T, OTC: CGIFF). Chemtrade is one of the world's largest suppliers of sulphuric acid, liquid sulphur dioxide, and sodium chlorate and is one of the few income trusts still remaining. The share price rarely fluctuates much; it is up 65 cents since the last review. The units pay a 10-cent monthly distribution ($1.20 a year), to yield 6.5 per cent.

We received interest on our cash position of $3.79 during the latest period.

The table below shows what the portfolio looked like as of the close of trading on Sept. 23. The weighting is the percentage of the market value of the security in relation to the total market value of the portfolio. The gain/loss shows the performance of the security since inception, or since it was added to the portfolio. Sales commissions are not taken into account, and the U.S. and Canadian dollars are treated as being at par for ease of tracking.

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Comments: We enjoyed another strong six-month period, with the portfolio gaining 11.8 per cent, including dividends. Since inception four and a half years ago, we have a total return of 61.8 per cent. That works out to an average annual compound rate of return of 12.4 per cent, which continues to exceed my target by a wide margin. This won't go on forever; the share prices are likely to retreat when interest rates rise. So let's enjoy it while we can.

Changes: DH Corp. has fallen out of favour with investors, and the stock could have more downside potential. We will therefore sell our position for a total of $3,558, including retained income. Despite the recent loss, we are still ahead by 60 per cent on this position.

We will replace it with AltaGas (ALA-T, OTC: ATGFF), which is yielding 5.9 per cent on a monthly dividend of $0.175 ($1.98 per year) and appears underpriced at the current level (see Gavin Graham's update elsewhere in this issue).

The price as of the close on Sept. 23 was $33.46 per share. We will buy 100 shares for a total cost of $3,346. The remaining $212 from the sale of DH Corp. will go into our cash account.

The other situation we need to address is Premium Brands. The stock has performed so well that it now represents more than 20 per cent of the portfolio. That's much too high, especially with the yield now down to 2.4 per cent (remember, this is a High-Yield Portfolio). Therefore, we will sell 60 shares for a total of $3,816.60, reducing our holding to 70 shares.

We will use the money to buy 170 shares of Medical Facilities Corp. (DR-T, OTC: MFCSF) at a price of $21.85, for a total cost of $3,714.50. The shares pay a monthly dividend of $0.09375 ($1.125 per year), to yield 5.15 per cent. We will have $102.10 left over, which will go to the cash account.

We won't make any other changes at this time. We will deposit our cash total of $2,069.54 in an account with EQ Bank that currently pays 2 per cent.

The table below shows the revised portfolio. I will review it again in March.

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Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to