canadian-only dividend growth portfolio - bad idea right?

[Russellhantz]

So im just throwing this out there since ive been scouring the portfolio section of the forum and noticed that there are a bunch of US only portfolios. Now i totally understand that generally american equities tend to have better growth numbers, are diversified better over a number of sectors, and have superior brand presence and enough cultural capital to dominate respective fields.

But im theorizing if an all canadian folio is possible. There are a few reasons that might might tip scales. 1) currency risk 2) canadian equities are given preferential tax treatment in non registered accounts canadian divindeds. the number is something like if your total income in retirement was 65,000 earned solely off dividends you only pay 10% vs roughly 30% if you made it by working. 3) us equities are locked into registered accounts which tax you if you withdraw from before you are 71. Technically wont be so bad if you dont sell the stocks but still relatively not liquid 4) ease of use.

Is this possible if you try to remain evenly weighted in all 8 major sectors with canadian equities and balance this with american and intl index funds?

Or am i just being dumb and it's KO, PG, KMI, JNJ, XOM over everything?

[hendi_alex]

An all or nothing approach bothers me, no matter what the theme. I think that a portfolio should have a minimum of five 20% allocation groupings to approach reasonable diversification and probably a minimum of ten 10% groupings is much better. The groupings should include things such as region, market cap, sector, etc. IMO the U.S. markets are worth an overweight, but with lots of ex. U.S. exposure as well as inclusion of multinational corporations which also provide some regional diversity. My allocations are a bit sloppy right now, but still include lots of European and emerging market exposure via CCJ, DEM, DLS, HIMAX, IDV, KMF, OIH, POT, VGK. I would consider a diversified basket up to 20% in Canadian stocks, either via individual tickers or via fund selection. I'm on the low end of Canadian exposure for now because of currency risk, and because I think that they have a banking crisis to face as well as a housing bubble that is ready to pop.

[earthtodan]

I see no point to that. I have plenty of exposure to Europe and Canada, and even some Chinese solar stocks.

[cannew]

If one is Canadian than than you've mentioned the main reasons for sticking with Canadian stocks:

1. US equities don't qualify for the dividend tax credit. They would be taxed at the highest rate if held in a Non-registered account.
2. There is a 15% tax on the dividends unless stocks re in Registered accounts.

But the question is can one put together a Canadian-only dividend growth portfolio and the answer is Yes! There are plenty of great Canadian dividend growth stocks and they will provide adequate diversification.

I don't feel one needs to hold stocks in all sectors, but would be better concentrating on good DG stocks which have a long history of paying and increasing their dividend.

Certainly you won't get the selection available from US stocks, but that may make your stock selection easier. When I look at some of the portfolio's they hold 30 to 50 stocks and some as many as 75. I, being a Canadian, hold 19 different stocks (with only two US) in 9 sectors (Banking, Financial, Industrial, Communications, Pipeline, Insurance, Utilities, Health and 1 REIT). I don't hold any funds or ETF's.

It may not be the best portfolio but it suits me, is easy to manage and provides a total return which meets my needs. Although I am really concerned with my dividends and the dividend growth, rather than total return.

[cannew]

Took this list from the Passive Investor site. I own 11 and would not buy many of the others on the list, but it's the place to start.

2015 Canadian Dividend Aristocrats: Canadian Dividend Aristocrats Requirements

The company’s security is a common stock or income trust listed on the Toronto Stock Exchange and a constituent of the S&P Canada BMI. .
The security has increased ordinary cash dividends every year for five years, but can maintain the same dividend for a maximum of two consecutive years within that five year period.
The float-adjusted market capitalization of the security, at the time of the review, must be at least C$ 300 million.
For index additions, the company must have increased dividend in the first year of the prior five years of review for dividend growth. This rule does not apply for current index constituents.

Company Name Ticker
Atco Ltd I Nvtg ACO.X
Alaris Royalty Corp AD.TO
Alimentation Couche-Tard Inc ATD.B
BCE Inc BCE.TO
Bird Construction Inc. BDT.TO
Bonterra Energy Corp. BNE.TO
Bank of Nova Scotia Halifax BNS.TO
Boyd Group Income Fund BYD.UN
CAE Inc CAE.TO
Cogeco Cable Inc CCA.TO
CCL Industries Inc B CCL.B
Centerra Gold Inc CG.TO
Cineplex Inc. CGX.TO
CI Financial Corp CIX.TO
Corus Entertainment Inc B Nvtg CJR.B
Computer Modelling Group Ltd CMG.TO
Canadian Natural Resources CNQ.TO
Canadian National Railways CNR.TO
Canadian Pacific Railway Ltd CP.TO
Canadian Tire Corp Ltd A Nvtg CTC.A
Canadian Utilities Ltd A Nvtg CU.TO
Cenovus Energy Inc CVE.TO
Canadian Western Bank CWB.TO
Dorel Industries B DII.B
Exchange Income Corporation EIF.TO
Emera Inc EMA.TO
Empire Co Ltd A Nvtg EMP.A
Enbridge Inc ENB.TO
Enbridge Income Fund Holdings Inc. ENF.TO
Ensign Energy Services ESI.TO
Enghouse Systems Limited ESL.TO
Franco-Nevada Corp FNV.TO
Fortis Inc FTS.TO
Finning Intl Inc FTT.TO
Goldcorp Inc G.TO
Gluskin Sheff + Associates GS.TO
Home Capital Group Inc HCG.TO
H&R Real Estate Investment Trust HR.UN
Intact Financial Corporation IFC.TO
IGM Financial Inc IGM.TO
Imperial Oil Ltd IMO.TO
Inter Pipeline Ltd IPL.TO
Keyera Corp. KEY.TO
Laurentian Bank Canada LB.TO
Major Drilling Group Intl Inc MDI.TO
Magna International Inc MG.TO
Genworth MI Canada Inc MIC.TO
Metro Inc. MRU.TO
Mullen Group Ltd MTL.TO
Methanex Corp MX.TO
National Bank of Canada NA.TO
Newalta Corporation NAL.TO
Northern Property REIT NPR.UN
Pan American Silver Corp PAA.TO
Jean Coutu Group Inc A Subvtg PJC.A
Pason Systems Inc PSI.TO
Restaurants Brands International QSR.TO
Ritchie Bros Auctioneers Inc RBA.TO
Rogers Communications Inc B RCI.B
Canadian Real Estate Inv Trst REF.UN
Saputo Inc SAP.TO
ShawCor Ltd A SCL.TO
Stella-Jones Inc. SJ.TO
Shaw Communications Inc B SJR.B
SNC – LAVALIN GROUP INC. SNC.TO
Suncor Energy Inc SU.TO
TELUS Corp T.TO
Teck Resources Ltd TCK.B
Transcontinental A Subvtg TCL.A
Toronto-Dominion Bank TD.TO
Thomson Reuters Corporation TRI.TO
TransCanada Corp TRP.TO
Wi LAN Inc WIN.TO
WestJet Airlines Ltd WJA.TO