FFJ Portfolio - March 2021 Report

This is my FFJ Portfolio - March 2021 Report. The portfolio was created in January 2017 to demonstrate how investing in high-quality companies with competitive advantages can assist investors in reaching their long-term financial goals without the need to speculate or chase dividend yield.

FFJ Portfolio Realignment

I wrote several articles during the month but did not acquire or dispose of any shares.

In March, I terminated the automatic dividend reinvestment on holdings held in several accounts because I think current valuations are unreasonable. The termination of the automatic dividend reinvestment will help me build my cash position. I intend to deploy this cash once valuation levels become more attractive.

I also transferred the following equities from Side account #6 to Side account #8 in exchange for cash.

Canadian Dollar Holdings

  • Bank of Montreal (BMO)
  • BCE Inc. (BCE)
  • Brookfield Asset Management (BAM.a)
  • Canadian Imperial Bank of Commerce (CM)
  • Canadian National Railway (CNR)
  • Enbridge (ENB)

US Dollar Holdings

  • Apple (AAPL)
  • FedEx (FDX)
  • Goldman Sachs (GS)
  • Moody's (MCO)
  • S&P Global (SPGI)

These changes trigger capital gains tax but are necessary for tax planning purposes. In November 2020, I also triggered capital gains when I consolidated accounts at another discount broker for tax planning purposes.

My FFJ Portfolio reports reflect average costs following these tax planning changes.

An added benefit to these changes is that BAM, BCE, ENB, and FDX shares were held in Side accounts #6 and #8. Consolidating these shares simplifies record keeping.

The holdings within my FFJ Portfolio - March 2021 Report reflect these changes.

FFJ Portfolio - March 2021 Income

Based on the YTD dividend income generated from the holdings within the FFJ Portfolio, I am cautiously optimistic the 2021 dividend income projections set out in my November report will be exceeded:

  • Core Accounts – CDN ~$17,600 and USD ~$23,500
  • Side Accounts – CDN ~$24,200 and USD ~$17,000

Maximizing dividend income, however, is NOT a priority. I will not acquire additional shares in a company whose shares are trading at an unreasonable valuation just for the sake of being able to reach an annual dividend income target.

Option Trades

In my February 3rd Nike, Inc. – Employing a Conservative Option Strategy on Richly Valued Shares article I disclosed that I had written 5 covered call contracts with a $155 strike price to expire March 19th. At option expiry, Nike's share price closed below the strike price. I, therefore, continue to own the underlying shares and I retain 100% of the option premium (less nominal commission).

Final Thoughts

I am currently concerned about the valuation of companies in which I wish to increase my exposure or initiate a position. Given my concern, I have terminated the automatic dividend reinvestment for several of my holdings and am building my cash position.

In my recent Employing Debt to Buy Equities article, I indicated I would be receptive to employing the use of debt to acquire shares in attractively valued companies. I will not, however, acquire shares on margin. Interestingly, it is readily apparent many investors do not share a similar opinion. The Financial Industry Regulatory Authority (FINRA) monthly margin statistics show how 'Debit Balances in Customers' Securities Margin Accounts' have ballooned following the sharp broad market pullback in March 2020. I suspect a great number of investors are going to be in a world of pain if we get some event that causes a sudden steep broad market pullback. Should such an event occur I would be actively looking to acquire shares.

I wish you much success on your journey to financial freedom.

Thanks for reading!

Note: Please send any feedback, corrections, or questions to [email protected].

Disclaimer: I do not know your circumstances and am not providing individualized advice or recommendations. You should not make any investment decision without conducting your research and due diligence.

I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with the company mentioned in this article.