Portfolio Allocation – Income

DividendsThere are a number of changes to the income portfolio allocation since December 5th, as two new entries have been added: French integrated oil and gas giant Total, SA and the Vanguard REIT Exchange Traded Fund. Gone are Consolidated Edison and Rogers Communications, reducing income-wise investors’ exposure to the highly interest sensitive utilities and telecommunication sectors, and more favorably balancing the list of candidates by market sector. I am starting Total, SA at 8% and the Vanguard REIT ETF at 7%. I am also making some minor adjustments to the other equities in the portfolio with DuPont shedding 2 percentage points to 8% after a nice run up in price since December. And with Con Edison off the list, I slightly increased the Utilities Select SPDR ETF from 5% to 7%. I am also shaving off 2 percentage points of the pie for the ETRACS Alerian MLP Index ETN. These notes have also moved higher since December and I believe the shares of the companies within the index will be average performers for the remainder of the year. AMU is up about 16.7% from its entry point and yields nearly 5% annually. With Rogers Communications gone, I will increase the allocation for the iShares Global Telecom ETF and Verizon Communications by one percentage points each for a total telecommunications exposure of 14%. To make room for these two additions, I am shaving off 1% for both Kimberly-Clark and McDonald’s Corp. from 10% to 9% each. I am maintaining the allocations for Intel Corp. (9%), Johnson & Johnson (10%) and Royal Bank of Canada (10%).

Allocation

Tomorrow I will conclude the discussion on portfolio allocation with the aggressive list.

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