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Model Portfolio - Consumer Staples Sector
I allocated 5% of the income generation of the overall portfolio to Consumer Staples. This ends up looking like a fairly narrow sector but I'm not sure if that is because I just don't really think about the consumer staple sector all that much or if it is because in Canada it really is that narrow. So since we are looking for 5% of our $3500 yearly income to come fron the Consumer Staples sector we need $175 in income.
I have decided to use 2 companies in this sector, both with the same weight and both grocery stores. What is more of a consumer stapel than groceries? The first company I chose is Loblaws and the second company I chose is Sobeys. Loblaws has been getting beat up recently as it has had some problems preparing itself for the move that Walmart is going to make into the grocery business. Sobeys has done better recently but both of these companies are potentially in for a tough fight with Walmart.
Currently Loblaws pays $0.84 a year in dividends and Sobey's pays $0.56 a year. So in order for each company to pay $87.50 a year (half of the $175 allocated to this sector) the following number of shares are required (rounded to the nearest share):
Loblaws: 105 (105 * 0.84 = $88.20)
Sobey's: 157 (157 * 0.56 = $87.92)
In my next post on the Model Portfolio I will discuss the Industrials sector.
Disclaimer: This model portfolio is intended for illustrative purposes only and should not be used as a guide for building your own portfolio. Before making any investment decisions you should do your own homework and consult with the appropriate financial professionals. I am not a financial professional.