M1 Portfolio Mid-Year Update

It has been 6 months since I last updated my M1 portfolio stats here on the site.  During that time there have been some very minor adjustments and now is a good time to summarize how it has grown, changed and what future changes I would like to make.

Contributions

I started the year making weekly contributions of $120 but in March I received a raise at work and was able to increase it to $130 or an extra $520 annually.  My total contributions for the first 6 months totaled $3,280. 

I do not foresee this changing for the remainder of the year but 2022 will be a different story as my middle daughter will graduate college and if she gets a job that should reduce my expenses and I may be able to increase an additional $40 per week around this time next year.

Portfolio Performance

My portfolio balance at the beginning of the year was $7,634, adding in the 6 months of contributions that is a total of $10,914.  My portfolio balance at the end of June was $12,994 which represents a total gain of $2,080 for a total return of 19.05%.  The S&P500 YTD return was 14.41% but a better comparison would be to compare to dividend growth ETFs VYM and SCHD. VYM’s YTD return was 17.49% and SCHD’s YTD return was 20.79%, this places my return neatly in between the two.

The portfolio yield has dropped from 3.21% to 3.01%. This is a reflection of the capital gain growth that has exceeded dividend growth. However when I compare it to VYM and SCHD, they yield 2.79% and 2.89% so I am receiving a slightly better yield.

Holdings

My portfolio holdings grew from 55 to 58.  In my Telcom pie I was never happy with just two holdings (AT&T & Verizon) and expanded the pie to include Canada’s two largest telcom companies BCE Corp. (BCE) and Telus Corp (TU). 

The third addition was Organon (OGN) a spin-off from Merck in early June and I have yet to decide if I wish to keep it.  OGN currently does not pay a dividend, but I will hold for now and see where it is going. Interestingly M1 Finance changed their policy on spin-offs and they now notify you to allow you time to adjust your pie. Prior to this M1 would just sell the spin-off shares so this is a very welcome change.

Possible Portfolio Changes

Going forward I am evaluating expanding my pies and here is a summary of the additions to my portfolio.

Technology Pie – I am late to the Broadcom (AVGO) party but it is shaping up to be a worthy addition. I would probably reduce TXN and IBM to 20% and GRMN to 15%. This would allow me to add AVGO at a 15% allocation.

Industrial Pie – For industrials I am considering adding Packaging Corporation of America (PKG) and Watsco, Inc.(WSO). As far as a % allocation I would most likely just redistribute every holding equally for simplicity.

Utilities Pie – Looking to expand my electric utilities a bit with the addition of Pinnacle West Capital Corporation (PNW) and OG&E Corp (OGE). I don’t want to disrupt my water utilities too much so I can reduce their allocation from 16% to 15%. I would spread the remaining allocation evenly across the electric utilities (an 11-12% allocation).

As of yet I have made none of the portfolio changes described above, but will continue to evaluate if worth making some or all of the changes.

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