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Mutual Fund News


Special to The Globe and Mail


Occupation Operations research manager

The portfolio Mostly blue-chip Canadian and U.S. companies, including the big five Canadian banks, TransCanada Corp., Coca-Cola Co., Procter & Gamble Co. and Wal-Mart Stores Inc.

The investor In university, Glen Phillips studied finance and investment theories. He started out as "essentially an index investor following the tenets of modern portfolio theory," using broadly based mutual funds and exchange-traded funds. During the meltdown of 2008, he decided to switch into dividend stocks.

How he invests "I like to look for companies that pay a regular and growing dividend," Mr. Phillips says. Indeed, his portfolio looks like Globe and Mail columnist John Heinzl's model dividend portfolio in the Strategy Lab series. "Of his 12 holdings, we have nine [plus others not in the portfolio]," Mr. Phillips says.

Dividend investing helps him lower his costs: By owning individual stocks, management expense fees on funds are avoided. Also, his focus on building a regular and growing stream of dividend income takes much of the emotion out of fluctuations in stock prices. Lastly, by limiting positions to large cap, blue-chip companies, he minimizes "the amount of time spent on portfolio management."

Since moving fully to dividend investing in the fall of 2012, "the total return is 47.1 per cent versus the TSX total return of 21.6 per cent." So far, the switch out of index funds into dividends stocks is paying off for him.

Best move The best move for Mr. Phillips and his spouse was to take full advantage of employee share purchase plans (ESPPs) at their workplaces. Because the employers match employee contributions, "this has allowed us to more than double the amounts we contribute." Funds are regularly moved out of the ESPPs into the stock market to improve diversification.

Worst move "Not starting earlier to invest."

Advice "By investing in great companies for the long haul, you can ignore the noise in the market, sleep well at night and build a significant portfolio."

Want to share your strategies? E-mail

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