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Starting over - Printable Version

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Starting over - Bobo - 02-24-2018

This year I'm starting over with a new partner, so I decided to start my portfolio over too. My fiancé is more sensitive then me about what to own, so I picked companies that we would both be happy with.
     Since I have about 8 years to retirement, I want the portfolio to supplement my pension and 401K. Thought it would be nice to have it payout monthly, so developed groupings. This is currently how I set it up:

Group 1 (Jan/Apr/Jul/Oct)   Group 2 (Feb/May/Aug/Nov)   Group 3 (Mar/Jun/Sep/Dec)   Group 4 (monthly payers)
 KMB                                 APPL                                    D                                         O
 DLR                                 HCN                                     MMM                                    STAG
 AMT                                 NEP                                     PSA                                      PFLT
 HASI                                                                           AMGN                                   GAIN
 PEGI                                                                           JNJ                                       CLDT
 CAFD                                                                                                                      MAIN
 NRZ                                                                                                                        AMZA

    I will have to add two more positions to group 2 for dividends to even out. Looking at TXN and ABBV, but HAS, CLX, CVS, HRL and LOW look good too. Going to drop the yieldcos due to having to deal with the K-1s (plus CAFD being sold).
  
    My goal is to have this portfolio pay me 6% or more by the time I retire (It's at 4.41% with my current cost basis.)

   Any thoughts or suggestions would be greatly appreciated.


RE: Starting over - EricL - 02-25-2018

Overall I like the portfolio, but it seems pretty heavy on REITs and light on utilities, staples, or telcomm.

Perhaps consider swapping out a REIT or two for something like T, VZ, DUK, SO, WEC, or AEP.

I like the other names you mentioned, and think PEP at a 3.4% looks decent as well. UPS is nearing a 3.5% yield after its recent pullback, and CSCO is just over a 3% yield after its recent dividend increase.

Good luck!


RE: Starting over - Kerim - 02-25-2018

Generally I agree with Eric.

My biggest reaction is just that, while I completely understand the desire for more consistent monthly income, using that as a structuring principle for the portfolio could diminish your returns. My instinct would be to focus on the best companies that meet your general criteria and that present the best opportunities at the time of purchase, without regard to when they pay the dividend.

Instead, you can route all of the dividends to a single account, and then calculate the monthly distribution you can pay yourself out of that. You can use a simple spreadsheet to determine the current average monthly dividend payments. So your holding account will fluctuate in value (growing most in the high-dividend months like December and March, and growing least in low-dividend months like February), but you'll withdraw the same amount each month. And with luck, that monthly amount will grow incrementally as dividends grow and you add to the portfolio.


RE: Starting over - ChadR - 02-26-2018

Since she is sensitive about what you own, what is off the table? I would suggest you look at RDS, T, PM, CVX, SO, and DUK.


RE: Starting over - crimsonghost747 - 02-28-2018

I agree with Kerim, there is very little sense to base your investments on the dividend payment date. Calculating the monthly average and withdrawing that much each month sounds like an OK plan, especially if you plan on using this money to help with everyday expenses. Though I might just let all the dividends gather on a separate account and use them on a vacation or something a bit more "splashy" than buying groceries. But in any case, try to disregard the dividend timing as it really makes very little difference.

Regarding the companies, some utillities and telecoms might be good to bring up the yield if that is what you're after.

What was your portfolio like before though? And why did you decide to redo it, were you not happy with the performance or is it simply because you need some safer options now?


RE: Starting over - Bobo - 04-10-2018

Thank you all for the responses. They are helpful in the continued development of my investment strategy.
I decided to redo my cash account so my fiancé wouldn't have to pay my capital gains. The old portfolio consist of LMT, AEP, PFE, XOM, BAC, CHFC, DPS, UNP, ETN, LXP, AND WPG. I'm not a fan of certain stocks, like ones that sell tobacco or soda. Wife-to-be doesn't want non-union, anti-environmental, war/defense stocks. (She loves SBUX.)
Yes, my portfolio was REIT heavy. I like REITs as well as BDCs, and look at them like a bond with more upside. I believe they would serve me better in the Roth account do to tax reasons.
I do agree that my plan to structure a consistent monthly portfolio based on the dividend pay dates is not necessary the best idea for picking the best stocks.
So with all this in mind, I made changes to the cash account. Wanted to find qualified dividend paying stocks in different sectors with focus on dividend growth over yield.

D, EIX, MMM, ITW, DAL, GLW, AAPL, CSCO, TXN, CE, PRU, BEN, LM, HRL, CVS, HD, SBUX, VLO, AMGN, ABBV.

I crunched numbers; used chowder rule; think these stocks could double their dividend in 5 years.


RE: Starting over - ken-do-nim - 02-05-2021

(02-25-2018, 12:39 PM)Kerim Wrote: Generally I agree with Eric.

My biggest reaction is just that, while I completely understand the desire for more consistent monthly income, using that as a structuring principle for the portfolio could diminish your returns. My instinct would be to focus on the best companies that meet your general criteria and that present the best opportunities at the time of purchase, without regard to when they pay the dividend.

Instead, you can route all of the dividends to a single account, and then calculate the monthly distribution you can pay yourself out of that. You can use a simple spreadsheet to determine the current average monthly dividend payments. So your holding account will fluctuate in value (growing most in the high-dividend months like December and March, and growing least in low-dividend months like February), but you'll withdraw the same amount each month. And with luck, that monthly amount will grow incrementally as dividends grow and you add to the portfolio.

Just reading an old thread and thought I'd chime in.  A thousand times what Kerim said above.  When you're really into household budgeting, you'll find you have to do this anyway to cover non-monthly expenses.  I have a Checking Account, and a savings account dubbed "Checking Escrow".  I have a spreadsheet that tallies up my annual non-monthly expenses (water bill, life/auto insurance, excise tax, AAA membership, snow plowing, etc.) and divides it smoothly by 12.  It comes out to around $550/month.  So every month I transfer $550 from Checking to Checking Escrow, and then I pay Checking back when those irregular expenses come up.  So this same Checking Escrow account could be your overall holding account that the dividend payments go into.