: That is, their share prices didn’t vary much in recent times, with the hope being they’ll continue to provide investors with a relatively smooth ride in the future.The portfolio is formed by starting with the largest 300 common stocks on the Toronto Stock Exchange by market capitalization . It then focuses exclusively on dividend payers and invests an equal-dollar amount in the 20 stocks with the lowest volatilities over the prior 260 days.
One of the nice features of the approach is that it also worked well when rebalanced less frequently. For instance, it gained an average of 11.9 per cent annually from the end of 1999 to the end of 2022 when rebalanced once a year, while the market index climbed by an average of 6.4 per cent annually.
Similarly, others were curious about how it performed using different rebalancing frequencies over the same time period. It turns out the average annual gains from the end of 1999 to the end of 2022 were 14 per cent, 13.7 per cent and 11.9 per cent using monthly, quarterly and annual rebalancing. The market index gained an average of 6.4 per cent annually over the period.
The high-yield half of the Stable Dividend portfolio gained an average of 13.6 per cent annually from the end of 1999 to the end of July, 2023, when it was rebalanced monthly. The low-yield half had average annual gains that rounded to, ahem, 13.6 per cent annually over the same period.