Marc Johnson
Marc L. Johnson, 46
Occupation: Editor of The Investment Reporter, based in Toronto
Portfolio: Over three dozen stocks, including Bank of Montreal, Royal Bank of Canada, BCE Inc., Bombardier Inc., Canadian National Railway, Enbridge Inc., IGM Financial Inc., Imperial Oil Ltd., Manulife Financial Corp., RioCan REIT, TransCanada Corp., General Electric Co., Home Depot Inc. and Pfizer Inc.
Investor background
Since 2000, Mr. Johnson has been the editor of The Investment Reporter, a stock market advisory founded in 1941. "Over the past decade, we delivered average annual compound returns of 10.4 per cent," reports Mr. Johnson, a graduate of McGill University. By comparison, the Wilshire 5000 Total Market Index, which represents the broadest index for the U.S. equity market, gained an average of 0.2 per cent a year (on a total return basis).
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All-stock portfolio His personal portfolio is allocated 100 per cent to stocks. "They do best over the long run," he explains.
One of his best stock ideas currently is McDonald's Corp. It generates two-thirds of its sales outside the U.S. "That's a plus because many foreign markets are growing faster."
A focus on dividend stocks Mr. Johnson prefers stocks that pay dividends. "My investment approach is to build a portfolio that generates enough dividend income to replace my salary in retirement. That's why all my stocks pay dividends."
Furthermore, he likes dividends that grow over time. "I emphasize companies with rising dividends, since this should enable my retirement income to at least keep up with, and preferably exceed, inflation."
A focus on diversification The economy can be divided into five broad sectors: financial, utilities, consumer, manufacturing and resources. "Since financials and utilities are the two more stable sectors in the long run, I keep 30 per cent of my money in financial stocks and 25 per cent in utilities," Mr. Johnson says.
"Manufacturing and resources, by contrast, are typically the two most volatile sectors, so I keep 15 per cent and 10 per cent of my money in these two sectors. The consumer sector is usually of medium stability, so I keep 20 per cent of my money in that sector.
"I also diversify within each sector. To achieve adequate representation in the manufacturing and consumer sectors, I have added some U.S. stocks."
Best Move
His best investment move was buying Fortis Inc., an electric and natural gas utility headquartered in St. John's. It has raised its dividend every year since 1972 and has delivered solid capital gains over the years.
Worst move "My worst investment move was investing my earnings from a summer job into gold in 1980. That costly bet taught me the importance of diversification."
Advice His advice to investors is to use money not needed over the next five to 10 years to gradually buy dividend-paying and high-quality stocks, making regular investments over time. "It's also important to pay no more than reasonable prices for the stocks," he adds.
Special to The Globe and Mail
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