Enriching your portfolio with diversified stocks

Whether tackling new ventures or looking for steady and stable long-term growth understanding TSX sectors and diversification strategy concepts help grow wealth.

The Toronto Stock Exchange has a category called Diversified Industries. In that sector, an array of services resides ensuring a range of companies exists to put money into. Other than the sector name it has no running theme between the groups. Stock includes communications and media, consumer products and services, financial services, industrial products and services, and real estate. A person finds that stocks that fall in those categories on other portions of the TSX so what does it all mean when it comes to dividends.

TSX overall

When buying Canadian stock, diversification can become difficult since most of the market consists of financial and energy sector. Any venture into shares for any length of time a person learns diversification becomes the most likely way to maintain receiving dividends or increasing wealth overall. The number of consistently performing dividend stock over a five-year period in the market remains small. To be fair, it remains small in all stock markets but the bigger the stock market, the more choices an investor has. According to Seeking Alpha in Canada the 5-year dividend growth stock numbers around 100 stocks. So, for long-term growth, a dive into industry groups might help. The TSX consists of 11 sectors, 24 industry groups, 69 industries, and 158 sub-industries presently.

Diversifying a portfolio negates some of the volatility naturally inherent in a market. A portion of the Canadian market moves in conjunction with the USA markets so even if Canadian economics or industries remain up, they get impacted by USA policies and market movements. It does lag, but it does have an effect. Have several strategies for making money on the market depending on Canadian market conditions and for USA market conditions. Dividend growth stock can fuel the other riskier ventures investors like to take.

Communication services

Organizing TSX stocks by dividend growth with companies having a market capitalization of $100 million or more gives a different perspective. Media has a potential of seven dividend-paying stocks with diversified telecommunications and wireless communications all having two. Interactive media and services came in at zero. Dividend growth for a five-year period happened in media, entertainment, and telecommunications. Now for the all-important naming of the companies :

  •       TELUS Corporation
  •       Cogenco Communications, Inc.
  •       BCE Inc., Cineplex Inc.
  •        DHX Media Ltd.
  •        Quebecor Inc., Stingray Digital Group Inc.
  •        Newfoundland Capital Corporation
  •        Trilogy International Partners Inc.
Buying Canadian stock can be difficult as most of the market consists of financial and energy sectors. Diversifying your portfolio would mean including companies that are in the media or financial services industries. (Source)

All of the above had positive growth dividend streaks. Any investor who can analyze and find commonalities between all those companies that caused such stable dividend growth over such a long period has a way to make money consistently. When buying diversified stock as a group check if those companies list there or list in other categories.

Diversified Industries

Now pulling up the listing of companies for Diversified Industries notice the Excel sheet labels those stocks as TSXV. Venture stocks have junior status and have much risk. So, the Diversified Industry stock has diversification, but it is with new companies. The labeling of the sector here does not refer to diversification in the financial advisor sense but reflects the diversity of the industries in the group which are all risky venture stocks. An investor seeking long-term growth may not find what they need here. An investor searching for companies likely to graduate to TSX status and would possibly eventually pay dividends could invest here. By diversifying the venture stocks within those groupings, a person would more likely obtain shares in a company that could make it all the way to dual listing on the TSX. Diversified Industries stock must have a monitor on it to track the investment and when to invest more or when to fold. It does allow an investor a way to sample many new company stocks. If the company graduates an opportunity to buy more of that company’s stock may occur as it develops.

Diversifying portfolios

No matter what the market conditions are, diversifying a portfolio offers a hedge against dips and bears. More an art than a science practicing stock investing in the good times when an occasional dip occurs develops strategies for long dips or bear markets. Preparing ahead of time by diversified stock choices remains much better than reacting since most of the damage has happened before an investor can do something about it. Regular periods of Investing help as well. Never a no on any new ventures or junior stocks just do the research necessary to make the best choices. Expect some loss on venture stocks not due to any company issues but outside forces overcoming good practices. Markets sometimes dip into unfairness as new trends develop and emotions take over but eventually the market rights or corrects itself due to normal dynamics.  Here the averages pay off in between the up and downtime.

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