Our Top 5 Long-Term Holdings

If you look at our dividend portfolio, you will notice that we currently hold 72 dividend stocks and 2 index ETFs. To be honest, I would like to trim down our holding somewhere around 55 individual stocks. But there are so many great blue chip dividend stocks out there that I would love to own. For examples, Diageo plc (DEO), Novo Nordisk (NVO), and 3M (MMM). Unfortunately, given the number of blue chip dividend paying stocks that are available on the market, it is simply not possible to own them all.

Over the years, we have received some stocks in small quantities from company splits (i.e. Care Capital REIT, Verizon, and PrairieSky Royalty Ltd). It makes very little sense to sell these stocks as the selling commission would account anywhere from 5 – 30% of the entire transaction amount. Therefore, we plan to continue to hold these stocks and collect dividend income.

We hold 2 index ETFs, VCN and VXC, mainly for diversification purposes.

VCN, a Canadian All Cap ETF, seeks to track the performance of the broad Canadian equity index that measure the investment return of large-mid- and small capitalization, publicly traded security in the Canadian market.  The ETF currently has 218 holdings with Royal Bank, TD, Bank of Nova Scotia, Enbridge, Canadian National Railway, Suncor, Bank of Montreal, TransCanada Corp, Manualife Financial, and CIBC as the top 10 holdings, making about 40.4% of net assets.

VXC, a Global All Cap ex Canada ETF, seeks to track the performance of a broad global equity index with focus on developed and emerging markets, excluding Canada. The ETF currently has 10,167 holdings with Apple, Microsoft, Alphabet, Facebook, Amazon, Johnson & Johnson, Berkshire Hathaway, Exxon Mobil, JPMorgan Chase, and Nestle as the top 10 holdings, making about 9.2% of net assets.

VCN gives us a good broad exposure to the Canadian market while VXC gives us a good broad exposure in international markets.

Combined with the 72 dividend paying stocks that we hold, I believe holding both dividend growth stocks and index ETFs offer the best of two worlds.

You may wonder, out of all the stocks and ETFs that we hold, which of them are considered our top 5 long-term holdings?

 

Our Top 5 Long Term Holdings

For the most part, we are deploying a buy and hold strategy. We do sell stocks once in a blue moon if a particular company undergoes dramatically changes. We also sell stocks when we believe that our money is better invested elsewhere.

Here are the 5 stocks I believe we can hold for a very long time… like forever!

 

Royal Bank (RY.TO)

Royal Bank is one of the biggest banks in Canada and derives 62% of its revenue from Canada, 22% from US, and 16% from other international regions. The company has paid its shareholder dividends since 1870. During the financial crisis, unlike many of its US counter parts, Royal Bank did not freeze or cut dividend payments.

Why do I like Royal Bank as a long-term holding?

Two words – Wide Moat.

People need financial services every single day. People need to keep their money somewhere, people need a financial institution for investing services, people needs someone to loan them money for home purchase, and people need to apply credit cards somewhere. Royal Bank’s ability to offer a large amount of financial services and having a large branch network will help Royal Bank to retain and grow its customers both within Canada, US, Europe, and other countries.

The way I see it, Royal Bank will continue making billions and billions of dollars each quarter. Therefore, it makes sense to consider Royal Bank as one of our long-term holdings and continue collecting dividend every quarter.

 

Toronto-Dominion Bank (TD.TO)

I love Canadian banks, so it should not come as a surprise that TD is one of our five long-term holdings.

Similar to Royal Bank, TD has paid dividends for over 160 years and continued the dividend payments during the financial crisis. As a dividend investor, I treat TD dividend payments as stable bond-like income.

Unlike Royal Bank, TD has been focusing in US and Canadian markets. TD has been aggressively expanding in both countries the last 10 years or so.

I plan to hold TD for the long-term for the same reasons I listed above for Royal Bank. TD has a very wide moat and will continue generating billions of revenue each year while continue rewarding its shareholders with regular dividend payments.

 

Vanguard Global All-Cap Ex Canada ETF (VXC)

Why do we consider Vanguard Global All-Cap Ex Canada ETF as one of our five long-term holdings?

Diversification.

This should not come as a surprise. While it is great to hold Canadian dividend paying stocks, the Canadian market tends to be heavy on financial and energy sectors. Holding VXC allows us to expand our exposure outside of Canada.

If we look at VXC’s country diversification, its holds equities from 41 countries. The top 10 countries are – 53.6% United States, 8.3% Japan, 6.2% UK, 3.2% France, 3.1% Germany, 3% China, 2.8% Switzerland, 2.4% Australia, 1.7% Korea, and 1.6% Taiwan.

If we look at the sector weighting, VXC has the currently sector weighting – Financial 22.5%, Industrials 14.2%, Consumer Goods 12.9%, Technology 12.8%, Health Care 10.7%, Consumer Services 10.5%, Oil & Gas 5.2%, Basic Materials 5.0%, Utilities 3.3%, and Telecommunications 2.9%.

As someone who seeks for portfolio diversification, I believe VXC is an excellent ETF to hold for this sole purpose. At 0.27% MER, this is an extremely small fee to allow us to hold 10,167 non-Canadian stocks.

 

Visa (V)

How many of you have a credit card in your wallet?

Most likely, the credit card you have is either from Visa, Master Card, or American Express.

Visa is well-known international brand. While many North Americans are relying more and more on credit and electronic payment for everyday purchases, bulk of the world population still use cash. If you ever been to Japan or other Asian countries, you will notice that many transactions are still involve cash. You often have to ask if paying using credit card is accepted.

As the world’s population transition toward electronic payment, Visa will continue to grow and generate more revenues. I don’t believe credit card companies like Visa is going away anytime soon. Therefore, Visa is one of our top 5 long-term holdings.

 

Johnson & Johnson (JNJ)

Johnson & Johnson is yet another very well-known international brand. JNJ operates through 3 segments – consumer, pharmaceutical, and medical devices. While its consumer products like Johnson’s Baby, Aveeno, Neutrogena, BAND-AID, Tylenol and Listerine are well-known products used by people every single day, the consumer products only brought in 18% of the 2016 total revenue. 47% of the 2016 total revenue came from its pharmaceutical business and 35% from medical devices. So rather than seeing Johnson & Johnson as a consumer health care product company, we should treat Johnson & Johnson as a pharmaceutical company.

The key reason behind holding Johnson & Johnson as a long-term holding is its long consecutive years of dividend increases. At 55 years and counting, JNJ’s dividend increase streak is the longest compared to other pharmaceutical counter parts like Pfizer, Merck & Co, AbbVie, and Bristol-Myers Squibb.

Just like the other 4 dividend stocks mentioned above, I believe Johnson & Johnson has a wide moat that will continue to widen it via organic growth and acquisitions. As an investor, this can only mean consistent dividend payments.

 

Final Thoughts

There you have it, the top 5 long-term holdings of our dividend portfolio. We only own a small amount of Visa shares right now, so I would love to add more shares in the future. We plan to continue adding more VXC shares regularly through Questrade’s commission free ETF trading.

Dear readers, what do you think about our 5 long-term holdings? What are your top 5 long-term holdings?

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38 Comments

  • Reply
    Sascha
    October 5, 2017 at 9:00 am

    nice little list of top holdings. Mine are ENB, T, BNS, LB and XAW.

    VXC I like the quarterly distributions but the purchase price is like 10$ more then XAW. So it evens out between both.
    Also using Questrade for all my ETF’s.

    • Reply
      Tawcan
      October 5, 2017 at 10:51 am

      That a great list for your top holdings too. Way to include an index ETF.

  • Reply
    Turning Point Money
    October 5, 2017 at 9:43 am

    I love Visa sitting in my portfolio. Its not a top 5, but it is a long time holding. The valuation is getting a little heavy for me. I wish it would correct some so I can pick up more shares!

    • Reply
      Tawcan
      October 5, 2017 at 10:55 am

      Visa is nowhere a top 5 for us when it comes to weighting of our portfolio but I really like the company. The price has been going up consistently since we purchased, hopefully it’ll drop for a bit to allow picking up a few more shares.

  • Reply
    jd
    October 5, 2017 at 9:59 am

    I also hold TD, RY, JNJ, and V, and would consider these as part of my core portfolio, along with others like BNS and MMM. My top holding is Brookfield Infrastructure–it has a well-managed portfolio of wide-moat assets. I didn’t really intend for this to be my top holding, but it has performed very well, and I don’t see any reason to sell at this time.

    • Reply
      Tawcan
      October 5, 2017 at 10:56 am

      Brookfield Infrastructure is an interesting stock, have been looking at it for a while now but haven’t pulled the buy trigger.

  • Reply
    desidividend
    October 5, 2017 at 11:39 am

    Currently My top 3 are
    GWW,
    APPLE
    JNJ

    • Reply
      Tawcan
      October 6, 2017 at 1:11 pm

      These are good stocks to hold. 🙂

  • Reply
    Norm
    October 5, 2017 at 1:24 pm

    We own a small amount of RY. We don’t own many individual stocks (mostly we’re in index funds), but our top stocks are Coca-Cola, AT&T, Bank of Nova Scotia, Target, and GE, and actually those are the only ones that we own more than $1,000 worth of!

    • Reply
      Tawcan
      October 6, 2017 at 1:13 pm

      There’s nothing wrong with investing in index funds (we own them too). Coca-Cola, AT&T, BNS, Target, and GE are all stocks we own. 🙂

  • Reply
    Oldster
    October 5, 2017 at 2:17 pm

    PM, GE, SO, PEP, and VZ. I’ve got several more (including Diageo – I’m a Johnnie Walker Black fan), but those are near the top of the list.

    • Reply
      Tawcan
      October 6, 2017 at 1:14 pm

      Great list of stocks to hold for sure. All very solid. We’d love to add Diageo in the near future.

  • Reply
    wealth from thirty
    October 5, 2017 at 2:58 pm

    Like your addition of the two ETF’s. I’ve got my eye on the Vanguard All World Ex-US and iShares MSCI All World (Hedged). These would give me all world exposure with a reduced US holding compared to the MSCI and overweight Europe and Asia. I mainly do this because I foresee the bulk of my individual holdings to be Aus and US shares, with fewer Euro and Asian companies. So the slight balancing is welcome. Other than that, few of the companies I own in my very small portfolio presently I can imagine owning in 20 years, except perhaps a Communications company. Not to say I wouldn’t like to own them all in 20 years – that would mean they’ve been worth hanging on to! I’ve got a bunch of Canadian banks on my watchlist since reading your blog 🙂

    • Reply
      Tawcan
      October 6, 2017 at 1:16 pm

      All world ex-US index sounds like a great idea. I think owning telecommunication companies is a great idea given how hooked we are with cellphone and data.

  • Reply
    Buy, Hold Long
    October 5, 2017 at 5:49 pm

    Awesome stuff. Thanks for sharing your thoughts. Really interesting. Some really big names there!

    • Reply
      Tawcan
      October 6, 2017 at 1:17 pm

      Thanks Buy, Hold Long.

  • Reply
    Tom @ Dividends Diversify
    October 5, 2017 at 5:52 pm

    Hi Bob,
    For some of the same reasons you mention, I held about 100 dividend stocks several years ago. I’ve trimmed down to about 75 as it was just to many to keep track of. I can also see your logic of cutting to around 55. Research suggests that after about 30 stocks, diversification benefits start to fade fairly dramatically. My top 5 our MO, PM, JNJ, D and T. I’m not a smoker, but the tobacco stocks have performed well for me. Nice post. Thanks. Tom

    • Reply
      Tawcan
      October 6, 2017 at 1:17 pm

      Wow 100 dividend stocks, hard to imagine holding that many. Cutting down to about 55 would be great but I’m honestly having a tough time decide which stocks to sell. 🙂

  • Reply
    moneyhelp
    October 5, 2017 at 8:23 pm

    Would love to pick up some RY and JNJ but a little too high on the valuation for me, so just sitting around waiting for a dip before I dive in.

    • Reply
      Tawcan
      October 6, 2017 at 1:18 pm

      I’m lucky that I picked up RY and JNJ a while ago. Wished I picked up more JNJ shares back then though.

  • Reply
    Mark
    October 6, 2017 at 1:25 am

    My Top 5. TD, BMO, BCE, VHYL (Vanguard high div) and VUSA (Vanguard S&P 500). Pretty much for the same reasons as you! In my RRSP I hold e-series TD mutual funds, because the MER is pretty low and I have a couch potato strategy there. Keep up the fine blogging! Mark.

    • Reply
      Tawcan
      October 6, 2017 at 1:19 pm

      That’s great to see another person that have similar thoughts as me when it comes to diversification. 🙂

  • Reply
    Mr. Tako
    October 6, 2017 at 7:20 am

    I solidly approve of your top long term holdings Tawcan — those are some pretty fantastic companies with wide moats! People absolutely depend on the products from those companies to live.

    While I do have a few incidental ‘tiny’ holdings, I tend to concentrate my holdings down to less than 10 assets. While the results are slightly more volatile than holding 55 stocks, I obviously don’t mind the minor increase in volatility.

    • Reply
      Tawcan
      October 6, 2017 at 1:19 pm

      Thanks Mr. Tako. I can’t imagine us holding less than 10 individual stocks. Too many blue chip dividend stocks out there IMO.

  • Reply
    German Korb
    October 6, 2017 at 5:35 pm

    Nice list of Top 5! Could you write up a short post a about your TOP 10 holdings?

    • Reply
      Tawcan
      October 7, 2017 at 1:53 pm

      Thanks for suggestion, will consider writing something on top 10 holdings.

  • Reply
    MrSLM
    October 7, 2017 at 4:33 am

    Hold a tonne of RY/TD/VXC. In Canada some utilities like FTS or telecoms like T are probably great long term holdings as well. Electricity and cell phones ain’t going away anytime soon (holding both of those).

    • Reply
      Tawcan
      October 7, 2017 at 1:56 pm

      I like FTS and T as well, holding both of them in our portfolio too. You’re right, electricity and cell phones aren’t going away anything soon.

  • Reply
    renewed investor
    October 7, 2017 at 12:20 pm

    I have 18 holdings so far. My list contains 25 holdings across sectors. I have 7 more holdings to go. Ideally I like to have 30 holdings with none more than 6% of my portfolio.

    • Reply
      Tawcan
      October 7, 2017 at 1:58 pm

      Having 30 holdings sounds like a great idea. 🙂

  • Reply
    Dividend Diplomats
    October 7, 2017 at 1:15 pm

    Tawcan –

    Very cool and easy to share, I have about 42 companies in my taxable account. Love that JNJ is a name, love it and it’s to no surprise that not one, but two Canadian banks have a sweet spot in that portfolio of yours – the dividends are damn good! Thanks again for sharing.

    -Lanny

    • Reply
      Tawcan
      October 7, 2017 at 2:01 pm

      JNJ is strong name for sure. 🙂

  • Reply
    Mr ATM
    October 7, 2017 at 8:47 pm

    Off your list, I only like JNJ. BTW, JNJ is one of the only two companies in S&P 500 with a AAA credit rating.

    As for the Canadian banks, I keep hearing about housing bubble and sub prime loans in Canada that could end up like what happened in the US in 2009. What are your thoughts on that?

    Thanks

    • Reply
      Tawcan
      October 9, 2017 at 4:21 pm

      I think the whole housing bubble for Canadian banks is overblown. If your down payment is less than 20% of the purchasing price, you are required to buy mortgage insurance. This is a way to protect lenders like Canadian banks.

  • Reply
    Rob
    October 8, 2017 at 8:55 am

    Interesting post from FS on what a typical retirement looks like. This comment jumped out at me.

    75% of Americans have less than $100,000 saved.

    I’d expect the numbers to be similar in Canada. He says most survive due to Government pensions.

    https://www.financialsamurai.com/age-people-retire-america/

    • Reply
      Tawcan
      October 9, 2017 at 4:22 pm

      Yea it’s something similar in Canada. Pretty shocking I have to say.

  • Reply
    Charlie
    October 8, 2017 at 2:42 pm

    Good ones as your top 5. Mine are Comcast, Chevron, Home Depot, Owens & Minor and Wisconsin Electric. Clorox, Kimberly-Clark and Power Corp are inching towards the Top 5. Rather than ETFs I hold individual stocks for geographic diversification with Canada (9%), Australia (1.5%) and Singapore (1.3%) delivering the bulk of my foreign dividends. Currently hold 174 companies in 11 countries. (Yes, I have time on my hands).

    • Reply
      Tawcan
      October 9, 2017 at 4:23 pm

      Home Depot and Kimberly-Clark would be something I’d love to own. Wow 174 companies, that’s a big portfolio.

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