Tag: dividends

snowball toss in los penitentes mendoza

Review: Snowball Analytics

RobHLeave a comment

Snowball Analytics (link here) is a tool that markets itself as a “Simple and Powerful Portfolio Tracker” with “automated dividend tracking”.

I don’t remember when or where I first kicked the tires of this tool but I figured I’d give it another look. I’m only using the free version of Snowball, since my multi-asset tracker tracks my portfolio and also I don’t really care about dividends.

Startup

Snowball gives you full access to all its feature set for 2 weeks so you can really see if it’s worth paying for. That’s a plus in my view. But even the free version allows you to manually create a single portfolio with up to 10 holdings in it. All the paid-for versions include direct connection to your brokerage, and the ones I’m most familiar with (Questrade and Wealthsimple) are both supported.

For fun, I created a public portfolio that’s sort-of1 based on the percentages in my June 2026 portfolio update. You can see it here. What you see on these public portfolio pages is similar, but not identical, to the screens shown if you create your own login.

Dashboard

Gives a high level overview of what’s going on in the portfolio: what it’s worth, how much you made today/all time, and, atypically, Passive Income aka yield.

One weird thing Snowball does is insist on putting your assets into “Categories” which you can define yourself or let it assign them automatically. It doesn’t really know what to do with ETFs and so it classifies them all as “Funds”, which is about as helpful a category as “Unclassified”. I flagged this with support, but I don’t really expect much. If you click through the pie charts, it does show what’s underneath, so this is mostly a cosmetic issue.

Pie Chart, like the one I show every month

Also shown on the dashboard are the timing and predicted value of future dividend payments, which is nice.

Future passive income from dividends shown on the Dashboard

Dividend tracking

Here we see what Snowball’s focus is. The dividend screen is quite comprehensive, and will warm the heart of the dividend-focused investor. I can’t really comment if the numbers presented on this screen are sufficient for that audience. My portfolio focus is on absolute growth, and I’m completely indifferent as to whether that growth comes from dividends or unit price appreciation. 

Anyway, I’m happy to hear whether others out there find this sort of dividend analysis useful, let me know at comments@moneyengineer.ca!

Analytics

Here you have a bunch of views of the makeup and performance of your loaded portfolio. For the holder of all-in-one ETFs, these pages are a mixed bag of helpful and not-helpful. On some screens, Snowball isn’t able to look deeply enough into what’s actually inside an all-in-one and thus produces unhelpful results. For example, I know my portfolio is 80% equity. Snowball has other ideas, especially when it comes to Canadian ETFs:

Asset class distribution has obvious problems

There’s problems here:

  • XGRO/XEQT/HXT are missing asset classes. Their percentages don’t add up to 100%
  • A lot of Canadian all-in-one ETF asset classes are classified as “Other”, which is wrong. XGRO (for example) should line up exactly as AOA does, with 80% stocks and 20% bonds, more or less. For XGRO, the bond percentage is right, but the other 80% is suspect.
  • XIC/VFV/HXT are 100% Canadian equity, but Snowball seems lost here.

The performance widget seems to be a lot better; here you can backtest your portfolio against a bunch of benchmarks. Unfortunately, none of the included benchmarks includes bonds, but you can see how my portfolio stacks up against a global equity pool, namely the MSCI World index:

Growth charts are helpful to see how your portfolio compares to a benchmark

I did see a few problems here, too:

  • Not all of my portfolio holdings have been around for (for example) 5 years. So how is the tool generating 5 year return charts?
  • When you select “all” as a timeframe, my portfolio shows a one year performance. Puzzling.

The fact that my portfolio lags the MSCI World is unsurprising since my portfolio has 20% bonds, and the MSCI World has none. Bonds add stability to a portfolio at the expense of growth. Sometimes I wonder if that stability is really worth it.

Conclusion

Snowball, like many tools, struggles with understanding what’s actually inside an all-in-one ETF like XEQT or XGRO. For me, that sort of shortcoming is a deal-breaker. If you were a holder of individual stocks that cared about passive (dividend) income, it might be worth your time.

What do you think? Let me know at comments@moneyengineer.ca!

  1. “sort of” because I have more than 10 holdings in my portfolio. I got most of them, and scaled it to start as a 100k CAD portfolio. ↩︎

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A trend I ignore: covered call ETFs

RobHLeave a comment

As an investor, I only care about one thing: how much return are my assets generating? I don’t care what the source of the return is, and there’s really only two:

  • The price of the asset can increase (price appreciation)
  • The asset can pay out dividends (yield)1

The combination of these two is the total return of your investment, assuming that you reinvest any dividend into more of the same asset.

My focus on total return means that every month I have to sell some shares to generate cash. This does not bother me. Yes, I’m “eating into my capital”, but so far in retirement (nearly 1.5 years in), that hasn’t prevented my net worth from increasing nonetheless:

Covered call ETFs are a product that’s exploded in the past year or two. The idea is to sell call options for stocks/ETFs you own. The benefit is a stream of monthly income. The downside is a loss in overall return. The strategy generates very eye-catching yield results, if that’s the sort of thing you care about. For me, yield is fine, but what about the total return?

I asked Google what the most popular covered call Canadian ETF was, and it turned out to be ZWB, a covered call ETF that focuses on Canadian banks. I took a look at what it held and saw that 20%2 of it was wrapped up in ZEB, a similarly named ETF that is an “equal weight Canadian bank ETF”. Under the hood, they look rather similar. But ZWB has a lovely 6.23% yield which makes ZEB’s yield of 2.5% look downright miserly. But what about the total return3? Oh, my:

The covered call strategy is completely obliterated by the “buy the 6 banks and hold them” strategy. I tried to see if there was any time period where the covered call strategy outperformed the totally passive strategy. Turns out there was one year in the last ten:

The covered call strategy caused you to lose a little less in 2018 than you would have otherwise. Lest you think that the covered call strategy always works in down markets, it didn’t in the other negative return year — 2022:

Given the carnage covered-call ETFs cause, why are they so popular? Per Ben Felix, the preference for some investors have for recurring income over total return can play a big role here. For me, total return is always preferred. I don’t mind selling shares to get access to cash as I need it!

  1. Or the asset can give you back your own money. This is called “return of capital”. ↩︎
  2. I’m not sure why ZWB doesn’t just invest fully in ZEB; the remaining ZWB holdings are roughly equally split among the holdings of ZEB. ↩︎
  3. Comparative chart generated by https://www.dividendchannel.com/drip-returns-calculator/ ↩︎

My rules for retirement investing

RobH3 Comments

I provide some rules here to help you understand some of my own biases. They may not align with yours. But at least you know where I’m coming from.

Retirement investments are distinct from savings and day-to-day expenses

I have always maintained a firewall between investments and all other money. “Investments” for me always meant “money to be accessed only in retirement”. Whether that money was in an RRSP, TFSA or non-registered account made little difference. I never mixed the two. My rationale was that by keeping things separate, I made it much more difficult to “borrow” from retirement to fund today’s expenses. And it allowed me to take on the appropriate level of risk in my long-term investments, which helped boost my returns in the long run. I had another rainy-day cache of money to deal with unexpected expenses, and this money had to be absolutely liquid (no GICs, for example). My long term investments were always in place for “future me”.

More return requires more risk which requires holding more of your investments in stocks (aka “equities”)

If you want more return on your investments, you have to take on more risk. “Risk” doesn’t (or shouldn’t) mean “my money may go to zero” (that’s called “gambling”), but it does mean that in a given short-term period (one quarter, one year, three years) your money may not grow or even shrink. I have always maintained an 80/20 portfolio — 80% equity, 20% bonds. As I neared retirement, I moved to 80% equity, 15% bonds, 5% cash. Here’s my portfolio in real time (love Google Sheets for this).

Portfolio breakdown
The 80/15/5 portfolio, with breakdowns of Canadian, US, and International Equity Shown

Diversification helps mitigate risk

I don’t pick stocks. I only buy indices. You can certainly build a great portfolio at rock-bottom prices by buying individual stocks but I’m too lazy to do the necessary research. I’ve always spread my investment equity in different markets: Canada, USA, International. You can do this all through ETFs purchased on the Canadian stock market. Did I say “ETFs”? You can actually buy the 80/20 (or 60/40…or 40/60) portfolio in exactly ONE (1) ETF. More on that in a future post.

Dividends are nice, but total return is what really matters

I think a lot of the literature out there focuses on dividend stocks because they generate income. I think this is seen as attractive because many people can’t bear the thought of selling their holdings to pay the hydro bill. (“I want to just live off my dividends”). And while you can certainly be successful by buying into dividend stocks exclusively, I think you can miss out on maximizing the total return of your portfolio this way. And you may end up with a larger-than-intended estate when you die. The overall yield of my portfolio is somewhere around 2.5%, which is pretty paltry, but the total return is much higher.