Try Fund Library Premium
For Free with a 30 day trial!
The main objective of a high-yield portfolio is to generate above-average cash flow. If we can score some capital gains as well, so much the better.
Recently, the model high-yield portfolio I created for my Income Investor newsletter has been delivering on both counts. When you consider the beating these stocks took when the Bank of Canada was raising interest rates, the turnaround was most welcome.
This portfolio was created in March 2012 for investors seeking above-average dividend income who were willing to live with somewhat more risk. The portfolio invests entirely in stocks, so it is best suited for non-registered accounts where any capital losses can be deducted from taxable capital gains and dividends are eligible a tax credit.
The initial portfolio value was $24,947.30, and I set a target average annual total rate of return of 7% to 8%, with an annual yield of around 5%.
Here is a review of the securities we own and how they have performed in the time since our last review in October. Results are to May 16.
Enbridge Inc. (TSX: ENB). The stock continues to perform well. The shares are up $4.76 from the last review. The quarterly dividend was increased by 3% in February, to $0.9425, and due to timing, we received three payments. The stock yields 6%.
Pembina Pipeline Corp. (TSX: PPL). Pembina shares pulled back by $6.89, as oil and natural gas prices retreated. We received two dividend payments that totaled $1.38. At the current price, the dividend yield is 5.25%.
Sun Life Financial Inc. (TSX: SLF). SLF continued its strong recovery and added $9.04 in the latest period. The quarterly dividend was increased 3.7%, to $0.84 a share, in November. We received two payments. The current yield is 3.8%.
Capital Power Corp. (TSX: CPX). After a big gain in the early part of 2024, the stock slowed a bit but still added $2.08 in the latest period. We received two dividends totaling $1.304 a share. The dividend yield is 4.8% at the current price.
Canadian Imperial Bank of Commerce (TSX: CM). Bank stocks continue to recover strongly as recession fears have eased. CIBC is up $6.23 since October. The bank raised its quarterly payout by 7.8% to $0.97 per share last December. The stock yields 4.2%, which is respectable for a big-five bank.
Power Corporation of Canada (TSX: POW). We added this conglomerate to the portfolio in March 2024. It has interests in life insurance (Great-West Life), asset management, and banking. The stock is now trading at $49.99, up $5.80 since the last review. The quarterly dividend is $0.6125 ($2.45 a year) to yield 4.9%.
BCE Inc. (TSX: BCE). The other shoe finally dropped. BCE slashed its dividend by over 50%, to $1.75 a year. The shares continued to drop and are now at $30.11. Even with the dividend cut, the stock yields 5.8%.
Firm Capital Mortgage Investment Corp. (TSX: FC). Mortgage investment corporations normally see their share prices decline when rates rise. But when rates switch direction, these shares move up. That’s where we’re at now – the shares gained $0.27 in the latest period. Not a lot, but we should see more of this as interest rates continue to fall. The monthly cash flow is steady at $0.078 a share, with a yield of 8%.
Peyto Exploration & Development Corp. (TSX: PEY). This is an Alberta-based natural gas company that was added last October. It is currently paying a monthly dividend of $0.11 a share ($1.32 a year) to yield 7% at a price of $18.97.
North West Company Inc. (TSX: NWC). This company has a long history, with a prime focus on general stores in Northern Canada and Alaska. The shares are up $3.19 since the last review, and we received two dividends for a total of $0.80 per share. The yield is 2.9%.
We put our cash and retained earnings of $3,899.16 in an EQ Bank 30-day notice savings account paying 4.25%. We earned interest of $96.67.
The table below shows what the portfolio looked like on May 16. The weighting is the percentage of the market value of the security in relation to the total market value of the portfolio. The gain/loss shows the performance of the security since it was added to the portfolio. Sales commissions and exchange rates are not considered.
The portfolio has a total value of $83,340.04 and is up 6.4% since the last review.
We have a total return of 234.1% in the 13+ years since inception. That translates into an average annual growth rate of 9.59%, which is above our target range.
In terms of cash flow, the portfolio earned $2,081.27 in the latest period, for a yield of 2.66% in seven months. Our annual cash flow target is 5%, so the portfolio is just a bit short of that.
NWC has performed well for us, but the yield has fallen below 3%. That’s too low for a high-yield portfolio, so we will sell this position for a total of $8,836.90, including retained income.
We will use this money to buy 430 shares of Northland Power Inc. (TSX: NPI), which is trading at $20.69. Northland is a clean energy company with operations in Canada, the U.S., and Europe. The shares pay a monthly dividend of $0.10 ($1.20 a year) to yield 5.8%. The total cost of this purchase is $8,896.70. We’ll take $59.80 from cash to make up the difference.
We will also reinvest some of our retained earnings as follows:
ENB – We’ll buy another 10 shares for $627.30. This brings our total to 110 shares and leaves $49.98 in reserve.
CPX – We’ll add 10 shares at a cost of $541.70. That brings our total to 140 shares, with $38.88 remaining.
POW – Here again, we’ll add 10 shares for a cost of $499.90. That brings our total to 190 shares, with $15.53 left in reserve.
We have cash and retained earnings of $3,849.19. Simplii Financial is offered a promotional rate of 3.7% for the next seven months so we’ll move the money there.
Here is the revised portfolio. I’ll review it again in The Income Investor in September.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
For more information and details on how to subscribe to Gordon’s newsletters, go to www.buildingwealth.ca/subscribe.
Notes and Disclaimer
Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
Image: iStock.com/alfexe
Try Fund Library Premium
For Free with a 30 day trial!
Fund Library
