I'm currently enjoying my vacation, and since my last portfolio update on May 6, I thought it's time to update my investment portfolio sheet. As of now, my net worth is likely around $361,000, approximately $8,500 lower than my net worth in May. It's comparable to my net worth in February this year.
Back in May, the TSX was soaring above 20,500 points, which boosted my net worth to a high of $370,000+. To reach that milestone again, the TSX will need to exceed 20,600-20,700 points. Though hitting a $400,000 net worth by the end of this year seems unlikely, it might be achievable in 2024 if the TSX cooperates.
I recently invested approximately $1,500 in a diverse mix of stocks for my TFSA portfolio, including Canadian Imperial Bank Of Commerce (CM), Exchange Income Corporation (EIF), TMX Group Limited (X), Pembina Pipeline Corporation (PPL), Power Corporation of Canada Subordinate Voting Shares (POW), Telus Corp (T), Brookfield Asset Management Inc. Class A Limited Voting Shares (BN), Bank of Nova Scotia (BNS), North West Company Inc. (The) (NWC), A&W Revenue Royalties Income Fund (AW.UN), Empire Company Limited Non-Voting Class A Shares (EMP.A), BCE Inc. (BCE). If you follow me on Twitter, you'd already know about these investments. I also managed to clear my margin account debt, which is now at $36,095.06.
With these new investments, my dividend income from the non-registered and TFSA portfolio now exceeds an equivalent of $910 per month, which is quite promising. In addition to that, I recently added iA Financial Corporation Inc. (IAG) and Ag Growth International Inc. (AFN) to my RRSP portfolio.
I still have money available to invest in my TFSA and RRSP portfolio, thanks to dividend distributions. Despite having a margin debt to pay off, my investment strategy remains unchanged. I prefer to reinvest my dividend income to generate even more dividends. Although I have debts to tackle, I won't touch the money coming from my dividends. I'm always on the lookout for new stocks to add to my portfolio. Recently, I came across an article from The Motley Fool suggesting two high-yield options: Slate Grocery REIT (SGR.UN) and Freehold Royalties Ltd. (FRU). However, I'll explain why I wouldn't consider either of these options for my portfolio, despite the tempting yields they offer.
More than anything else, The Motley Fool is a content site, which means they need to churn out articles about stocks at all costs. The more articles they publish, the better it is for them. It's essential to read The Motley Fool's content with a grain of salt. They don't always provide extremely high-quality pieces regarding the stock market; it's often a mix of whatever they have at their disposal, presented to the general public who may not be aware of their approach.
While many high-yield stocks may seem appealing, they may not make good long-term investments. Personally, I value capital growth more than the dividend yield. My top priority is protecting the amount of money I've invested. Ideally, I don't want to lose any of my capital, but I understand that making perfect investment choices is challenging. Yet, you can enhance your investment strategy by observing and being critical of your own picks, as well as the stock recommendations from sources like The Motley Fool.
Take, for example, Slate Grocery REIT (SGR.UN), which offers an enticing 8.37% dividend yield. However, if you look at Slate Grocery REIT's overall chart, you'll notice that the stock price has remained relatively unchanged since 2014.
It's essential to question whether you want to hold a stock in your investment portfolio that shows no growth or increase in value even after nine years. Personally, I wouldn't. While the high yield may seem attractive, there's more to consider when investing in a stock like Slate Grocery REIT (SGR.UN).
Moreover, stocks with exceptionally high yields can be risky to hold. The moment the company announces a dividend decrease due to a recession or financial troubles, the stock's value may drop rapidly, leaving you with no attractive dividends or a strong stock value.
While The Motley Fool may promote such stocks, it's crucial to be cautious and think twice before investing in high dividend yield stocks that lack significant growth prospects.
Another example is Freehold Royalties Ltd. (FRU). FRU offers a hefty 7.60% dividend yield, which is certainly tempting. However, the overall chart for Freehold Royalties Ltd. (FRU) is even worse than that of Slate Grocery REIT (SGR.UN). I say worse because FRU's value is more volatile than SGR.UN.
Back in 2014, Freehold Royalties Ltd. (FRU) was trading between $23 to $26 per share. Fast forward to 2023, and FRU is now trading at $14.27. While the 7.60% yield might seem appealing, investing in this stock may result in sacrificing any long-term growth potential. While past results cannot guarantee future outcomes, a stock that has performed well in the past and weathered the 2008 stock crisis gracefully is more likely to show strong growth in the future. My thinking is always based on simple, sound logic.
Sometimes, it's easier to know which stocks to avoid than to identify good investment opportunities. At the end of the day, your priority should be protecting your capital and steering clear of stocks like Slate Grocery REIT (SGR.UN) and Freehold Royalties Ltd. (FRU).
Rest assured, I won't be investing any of my money in Slate Grocery REIT (SGR.UN) and Freehold Royalties Ltd. (FRU). I prefer to keep cash in my portfolio and invest once I've identified good quality stocks that offer a reasonable and sustainable dividend yield. It's quite surprising to me that the author of this Motley Fool article seems to be at ease suggesting two questionable stocks like Slate Grocery REIT (SGR.UN) and Freehold Royalties Ltd. (FRU) as holdings for retirement income.
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