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This investor has focused on creating an income-generating portfolio

Richard Morrison

Occupation

Semi-retired journalist

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The portfolio

Canadian holdings include the big five chartered banks and many blue-chip companies in the telecommunications, utility and pipeline industries; U.S. and international holdings include Colgate-Palmolive Co., General Electric Co., Lowe's Companies Inc., McDonald's Corp., Procter & Gamble Co., Wal-Mart Stores Inc. and Taiwan Semiconductor Manufacturing Co. Ltd.

The investor

"My wife and I began investing in 1993 when I became editor of Investor's Digest of Canada and we began maxing out our RRSP contributions annually," Mr. Morrison discloses. "We use a discount brokerage and ensure we diversify by having at least 20 stocks in each portfolio."

Over the years, Mr. Morrison has found some success picking stocks with the help of Benjamin Graham's book, The Intelligent Investor. One key concept is to not fret over market fluctuations but to instead take advantage of them by using the downturns to buy shares in good (usually blue-chip) companies at bargain prices.

How he invests

Stock purchases are rather infrequent but when they occur, Mr. Morrison and his wife "favour companies that have consistently increased their dividends, like the Dividend Aristocrats found at longrundata.com." Then they hold onto them for the long run and reinvest the dividends.

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One exception to dividend stocks was the purchase of Berkshire Hathaway shares in 1996. The couple have held them ever since, "developing a fondness for Cherry Coke and See's Candies along the way."

After he and his wife were laid off from their newspaper jobs, there was some heightened investment activity: "We created an income-generating portfolio in our taxable account made up of high-yielding preferred shares and the BMO High Dividend Covered Call ETF." This increased their income for living expenses.

Best move

In 1993, a jump in interest rates allowed him to buy a Government of Canada stripped bond yielding 9 per cent annually until 2018 (his stripped bond had its coupon payments stripped out, leaving the principal – which he bought at a steep discount to the par value to be paid at maturity).

Worst move

"I foolishly tried selling covered call options in 2014," Mr. Morrison notes. Selling the calls generated extra income but they also gave the buyers the right to purchase his stocks if they went up a certain amount. As a result, his winners were called away.

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Advice

"If you need investment income, draw from a taxable account first and leave tax-sheltered RRSPs and TFSAs to grow for as long as possible," he recommends. Also, for stock recommendations made without conflicts of interest, "look to the TSI Network and 5i Research" investment advisories.

Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com.

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