Stock Portfolio
There are many strategies that can be employed to maximize the yield from a dividend growth stock portfolio. Some are riskier than others. In fact, some can be extremely risky such as chasing what some call “sucker yields” which are companies paying double-digit dividend rates. As the old saying goes “if it sounds too good to be true it probably is.”
In addition to risky strategies, there are strategies that can be implemented with risk control in mind. One strategy that has worked is overweighting a stock portfolio. This strategy would suggest something on the order of putting half your money into a select list of higher yielding stocks and the other half into lower yielding blue-chips.
With this video I constructed a hypothetical stock portfolio on August 24, 2021, of 20 stocks where I spread half of the money over 5 higher yielding stocks, and then put in equal amount of money into the remaining 15 stocks. To be clear, I constructed a hypothetical million-dollar 20 stock portfolio with $100,000 into 5 highest-yielding stocks, and $33,333 into the other 15 lower-yielding high-quality stocks. These are the same stocks I utilized in Part 1. However, I would consider this a moderately risky portfolio, but not a risky portfolio because of the overweighting.
The idea here is just to provide an example of what could be done. There are many nuances that can be applied to this kind of strategy. For example, I could have built a 50 stock portfolio with half the money placed in 10 stocks and the other half in the remaining 40 and everything in between. In many ways the market itself based on the dividend yields it provides could dictate what kind of strategy was needed based on valuation.
In summary, this strategy produced a portfolio yielding 4.9% at cost when the market was only offering a yield of slightly above 1%. Moreover, and perhaps more importantly, the yield on this portfolio has already gone over 5.2%. Therefore, although the timeframe is still too short to judge, the strategy is working according to plan.
In this Video I will go over Enterprise Products Partners (EPD), Altria Group (MO), Omega Healthcare Investors (OHI), VICI Properties (VICI), SPDR S&P 500 ETF Trust (SPY), Medtronic (MDT)
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Disclosure: Long EPD, MO, OHI, MDT
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.