Full speed, no steering

[O'Bazooka]

I'm currently setting up the foundation for my portfolio and have been spending a lot of time pondering on what I would like it to look like when "ready". I realize now is maybe not the best time to start and also that I'm probably drawn to DGI partly because of the historical success and the ongoing bull market. I still believe it's not too late to get in (at least for long term outcome), and will certainly not go all-in with the current price level. I already mentioned in the introducing section that I've been investing for a while and this "start" is more of a change in strategy.

My time horizon is long (+20 years) and the goal is that in 10-15 years the portfolio could in theory support me (if harvesting capital gains in addition to dividends), and that in 20-30 years I'd be able to actually live entirely on the dividend income.

I'm inclined to creating a slightly concentrated portfolio, with the final number of stock around 30, max 40. I've come up with the following list of 30 companies, which at this point feel to me as the best bets (half of them champs, 5 non-US companies):

KO
UL
PEP
PG
MCD
DEO
GPC
NSRGY
WBA
TGT
NKE
SBUX

MMM
XOM
ECL
UPS
RDS
WTR

JNJ
CVS
GSK
ABT

V
TROW
HCN
AFL

T
VZ
CSCO
QCOM

I'd like some comments concerning the list. Are there some companies you would absolutely not buy, even at a fair price? Would you replace some stock with a similar business (forgetting current prices)? I haven't done a full analysis on all of them, and I expect to still come up with better choices for some spots. If had for example a portfolio consisting of exactly these 30 names, I would probably look for some new additions one by one, if I felt it would be a business I wanted to own. What I don't want to own (for personal reasons) are any defense companies, despite my username, tobacco companies and banks. Some names I like that almost fit in are WMT, CL, MA, O, BDX, NEE, DUK, SO.

I have done my very first DG purchases, and the portfolio now is

KO
TGT
DIS (bought last Friday)
TROW

I still have more than enough cash to initiate new positions, but I'm content on waiting for better prices to first build the core with the best names. I think today CVS looks attractive ($85 could make me buy), but I'm also watching if JNJ and T would pull back on price to 3% and 5% yields. Also RDS looks cheap, another thing is sustainability of the dividend (which I still believe is safe).

Thank you for reading this too long post, it feels the more I write the more I have to say    This pretty much sums up what I've come up this far from reading a lot about DGI, hope to get opinions on my plan and further advice here!

[crimsonghost747]

Thing is, as you keep investing you'll also keep running into new and interesting companies. While it's ok to make a list such as yours, be prepared for the list to change quite a lot during the years. It's just something to keep in mind to make sure that you don't end up buying something simply because it's on your list... and to prevent your list from growing into the triple digits. :p

A few things that I don't really see on the list. (I don't recognize all of the tickers so I could be wrong)
-Banks. Take a look at Canada, also WFC is starting to be pretty well priced after the recent turmoil.
-Defence industry. RTN/LMT should both be good in the long run, cybersecurity could be a possibility if you want a little more risk.

[ChadR]

It's a good list to start. Off the top of my head, I don't recall any being overly expensive right now, but since I don't have cash to make any current purchases, I'm not really following what is priced right currently. I understand your reasoning not wanting defense companies, banks, or tobacco companies. There are plenty of companies out there to buy with you skipping these 3 categories. I wouldn't have a set number of companies that you want to buy. I used to say I wouldn't go over 50 different stocks. I'm at 47 stocks and there are more than 3 more that I have my eye on to purchase once the time is right. The last thing you want to do is to pass up on a good stock just because you've already hit your magic number. Or buy a stock that isn't a good fit just because you need to buy one more stock to hit #30.

Happy shopping.

[EricL]

Overall, I think you've got a great list to start.

Some other ideas are if you are looking for a bit more growth are ABC/CAH, CHD, DPS, LOW/HD, DG/ROST/TJX.

I would also consider adding a utility or two, maybe something like WEC, D, NEE, XEL.

Best of luck!

[O'Bazooka]

Thanks for the comments, very good points! I understand that 30 is not a very magical amount of positions, just something to help me focus on specific names. I have a problem on looking at companies and wanting a piece of everything. Then I think of having close to 100 stocks and the strongest not having enough of an impact and then feel I want max 20 positions 

The list isn't supposed to be a must buy listing, just an example for a fantasy portfolio with some kind of diversification. I'm happy if half of those are in my possession in say 10 years. Mayde I should be more open to a size up to 50 stocks in the long run, could for example aim for 20 biggest contributing to at least 2/3 of the income, as I'd like something like JNJ to have min 4-5% weight.

Thanks also for the suggestions, CAH, LOW, NEE, CHD look very appealing and have crossed my mind. I'm also open for negative hints, surely there is some company in my list not deserving the place in a top30 consideration?

[Rasec]

Based on my personal limited experience, I went too big too fast, in 1 year I accumulated 40 different positions and now I'm looking at a few of them and wondering if that was a good play.

Take your time building your diversification

[Dividend Watcher]

O'B, I like your list. Since you asked for negative hints, I'm wondering about NSGRY -- primarily the tax situation. I believe we don't have a tax treaty with Switzerland so probably would be best in a taxable account where you could use the foreign tax credit.

I like Eric's suggestions of utes to which I'd add LNT and ES along with AVA for a smaller cap ute.

I think Rasec has a point of buying too fast. You seem to be containing your purchasing zeal with a methodical approach so far so I think you're got a handle on that.

In any case, I think you're doing well.

ETA: DUH! Just went back to your intro thread and found you're in Europe. Ignore my tax comments above.

[DividendGarden]

With 20 years until retirement, your strategy has time to evolve. When I started out, I planned to be concentrated to ~25 companies, but it's evolved over the years. Now, I just buy quality DGI companies that are on sale and I don't worry about how many I have. I want my invested dollars to get me the most bang for the buck, and I'm glad that I've stayed flexible.

[EricL]

(09-21-2016, 09:03 AM)DividendGarden Wrote: With 20 years until retirement, your strategy has time to evolve. When I started out, I planned to be concentrated to ~25 companies, but it's evolved over the years. Now, I just buy quality DGI companies that are on sale and I don't worry about how many I have. I want my invested dollars to get me the most bang for the buck, and I'm glad that I've stayed flexible.

I've gotten to where I'm not concerned how many positions I have either. I found that locking in a set amount made me more apt to trade out of positions to buy something I thought was a good value simply because I didn't want to go over my magic number, and as a result I no longer own companies like MMM, INTC, CLX that have gone on to do well after I sold.

So now I pretty much buy whatever I think is best value when cash hits the account. Whether its a new position or adding to an existing one is less of a consideration anymore.

[O'Bazooka]

Thanks again, I'm beginning to get the point and will allow myself to be more flexible especially when the engine gets to more speed. I won't focus so much on the number of companies or allocation and just look for the best dividend growing business with the best current price. I have however the intention to buy and hold indefinitely, meaning I still monitor my holdings and maybe quit for example in occurrence of a dividend cut, but only initiate positions which I truly believe to stay profitable for long term.

I updated the title of the thread (I hope this is OK) and to the beginning of my first post I posted my current DG portfolio. I plan to update my holdings to this thread over time. After starting the thread I have initiated three new positions, CVS, VZ and RDS.B. CVS seemed undervalued at ~90$ and the other two are smaller positions which I'm ready to average down if the price would drop. Now I feel the portfolio is "ready" to get going and hence the title 1st gear    . I still have roughly 3/4 of my investable capital in cash and I'm closely following many stocks, but I'm now keen on waiting for some kind of sale.

[DividendGarden]

(09-16-2016, 11:52 AM)Rasec Wrote: Based on my personal limited experience, I went too big too fast, in 1 year I accumulated 40 different positions and now I'm looking at a few of them and wondering if that was a good play.

Same here, I totally agree.  If I could redo it, I would have focused on saving cash longer into $1k or $2k amounts and then just bought one position, whichever DGI company was the best value at the time.  Instead, I was buying $200 each into 5-10 different companies, paying commissions on each.

[DividendDragon]

Great list O'Bazooka!

I'm British so can help with a European perspective on things (No Brexit jokes please!)

A few stocks I would look at (LSE listed) are;

WHTB
NXT

Both, in my opinion attractively valued at present.

NOW is ALWAYS the time to start investing, even if the market has been on a bull streak, there's no knowing where it will end.
We've been waiting on a correction for years now and still, nothing.

I'm currently still nibbling on certain stocks but keeping some dry powder too.

Good luck on your journey and I look forward to following it.