Building wealth is one thing, but preserving it is another. Having built a $100,000 portfolio, you might want to book profits on cyclical stocks trading near their all-time high. Where to keep this profit? In value and dividend stocks, or the next growth drivers. The Tax-Free Savings Account (TFSA) makes such rebalancing tax-free. However, while looking for value, avoid some stocks that could be a value trap and destroy your portfolio.
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Canadian stocks that could destroy your portfolio
Not every stock that has fallen is a buy-the-dip. Some even struggle with business fundamentals that make the price correction sensible.
Timbercreek Financial
For a long time, I have been bullish on Timbercreek Financial (TSX:TF) as it sustained its dividends despite a slowdown in loan turnover. Timbercreek offers short-term mortgages to REITs to build, develop, and buy income-producing properties. However, the weakness in commercial REITs brought by the work-from-home and hybrid offices increased Stage 2 and Stage 3 loans of Timbercreek. Although the lender is seeing an increase in new loans, the growth is slower than expected. The slow growth of new loans and falling interest rates is stressing its free cash flow.
In the first quarter of 2026, it paid 98.5% of its distributable income and 138% of earnings per share as dividends. Timbercreek has set aside $3.7 million in expected credit losses that reflect the sale prices for two of the Stage 3 office/retail net mortgages sold in the second quarter.
The stock dipped as much as 13% since February, which inflated its dividend yield. However, I see more downside for this stock if loan default continues. It may have to slash dividends if the loan portfolio doesn’t improve significantly.
Any rebalancing of the portfolio from growth to dividend stocks should avoid Timbercreek Financial. Instead, you could lock in a 6% yield with SmartCentres REIT. It is safer thanks to its largest tenant, Walmart, bringing stable rental income and attracting other retailers.
Dye & Durham
Another stock to stay away from is Dye & Durham (TSX:DND). The legal practice management solutions provider has been facing management issues for over a year since the founder walked out of the boardroom. The largest shareholders are now running the board, and they recently announced the departure of George Tsivin as chief executive officer (CEO) without stating the reason.
Considering that the third quarter is seasonally weak and the fourth quarter is strong, the earnings have failed to engage investors. Declining revenue for the last four quarters is pulling down the stock price. Although Unity software is a mission-critical application and earns a high operating margin, high finance costs have kept the company in the red. The interest cost on its debt alone is 37% of the revenue.
The new board has to first stabilize revenue declines and get a CEO who can turn around the company. Until then, Dye & Durham will keep destroying your portfolio value.
Better stock to preserve the $100,000 portfolio
If a software stock is what you seek, Descartes Systems (TSX:DSG) is a better value pick. The supply chain management solutions provider continued to grow its revenue and net income by 15% and 34%, respectively, in the first quarter. Despite such strong numbers, the stock has dipped 14% in June and is trading at 25 times its forward earnings per share. Rising earnings will further reduce its valuations.
The second half is seasonally strong for Descartes as momentum picks up in the e-commerce segment. It is a stock to buy the dip as it has a net cash position to withstand a slowdown and more upside when trade momentum picks up.
