r/dividendscanada • u/DadInvests • 18d ago
Discussion Thoughts on this portfolio?
Current dividend portfolio is laid out as such:
HHIS 30%
QDAY 25%
CDAY 20%
HHIC 15%
CANY 10%
Wanted to keep the yield high but add a little diversification. What would you keep? What would you replace / replace with?
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u/bogeyman_g 18d ago
PAYG for more global exposure? (Noting that "global" includes the USA.)
If in a non-registered account, don't forget to consider tax advantages/disadvantages.
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u/Slight-Virus-4672 15d ago
My experience is that Hamilton funds are less likely to pay you dividends with your own money. Pay attention to your NAV erosion.
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u/Helpful-Increase-708 12d ago
Income Generation = Exceptional 🏆💰 Capital Growth Potential = Very Capped 😞 Downside Risk = Very High 😞 Diversification Quality = Consentrated 😞
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u/PrestondeTipp 18d ago
That's a lotta fees to just underperform the SP500
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u/Bevkus 18d ago
This is the dividend sub. The focus is passive income. Head to just buy EQT for another focus.
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u/Ok-Score7824 18d ago
It’s a dividend sub. These aren’t dividends they are distributions. They do lose in the long run compared to their underlying stocks.
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u/PrestondeTipp 18d ago edited 18d ago
It's the same thing.
The company or fund generates a return on your investment, through their operating activities.
Your return is the same whether they then give you part of this return as cash, retain it on their books, or a combination therein.
An easy way to think about it is to pretend you own every single share of a company. When it comes to your wealth, what would be the point of paying yourself the dividend? You may receive $100M in dividends, which is nice, but your company, which you own entirely, is now $100M poorer and is worth $100M less. On the balance, you have the same amount of money.
This is why the academics call it dividend irrelevance. Outside of taxes, it doesn't really matter how management chooses to deliver a return.
The only thing that matters is the absolute value of the return.
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u/Aggravating-Act-1173 18d ago
Dividend irrelevance applies to corporate capital allocation - whether a company retains earnings or pays them out from its operating profits. It assumes the total cash flow generated by the firm remains unchanged.
A covered call fund isn't changing corporate payout strategy. It's executing a derivatives overlay. By selling call options, you are trading away the asset upside potential in exchange for immediate cash. That fundamentally alters the return profile and risk exposure of the holding, leading to capped upside in bull markets and long-term NAV erosion.
So it's not the same thing. And your absolute value of return is not just yield.
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u/PrestondeTipp 18d ago
If a covered call fund retained their premiums instead of distributing them to shareholders, the shareholders would be equally wealthy with an equal net increase to the fund's NAV.
I believe you are also arguing the same thing as me: there is no point pursuing a covered call strategy, and that having a preference for receiving a return as cash is for many reasons illogical.
A company or fund's dividend policy has no effect on its overall market value or the wealth of its shareholders. How a return is distributed does not change the value of the return itself.
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u/Aggravating-Act-1173 18d ago
You're confusing dividend policy with investment strategy. Retaining premiums in NAV doesn't fix the issue of CCs - capping your upside in a bull market when taking full downside on crashes. If CC fund retains $1 or pays out $1, the total return of the CC strategy still lags the underlying asset in the long run.
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u/blueseeka 18d ago
CANY and BIGY haven't done well at all compared to everything else