10-25-2015, 08:41 PM
(This post was last modified: 10-25-2015, 08:53 PM by Dividend Watcher.)
BLTN, this is how I figured your portfolio distribution right now:
I compiled your current portfolio by S&P's GICS categories and contribution to the S&P500 to show which industry groups make it up so far. Right now, S&P lumps REITs in with Financials but they'll be breaking them out in the next year or two so I've already done that. I'm sure most would agree it's a pretty good start.
Keep in mind, to achieve your goal in 14 years you'll need a portfolio valued at about $315,000 yielding 3.8%. With $1200/month for the next 14 years you'll be adding $201,000 give or take. With some judicious dividend reinvestment and the growth in stock prices over time, I think you'll be quite pleased. And dividend growth doesn't stop when you retire.
Now my thoughts ...
First, I wouldn't recommend getting rid of any. You've got a nice start there. I don't think any of them are risky as far as company viability or ability to continue paying dividends. In the future, you can balance as you see necessary with your adds and new purchases.
In my opinion, it seems the categories that make up the backbone of many dividend growth portfolios for a retiree are Consumer Staples, Healthcare, Utilities, Telecom & REITs. These sectors are considered defensive because they make or service the necessities of everyday life except for REITs which provide a pretty good income stream while providing infrastructure for other businesses.
To fill in some of your blanks, I have some suggestions. I'll try not to duplicate what you already have and you may want to add to them also as time goes on.
Energy - I'd add here when prices are at a bargain and after you catch up on other sectors. You've already got a major, a pipeline & and a services company. Unless you want to diversify further, I like your choices.
Materials - mostly cyclical but there are some interesting companies here that can provide a decent income stream. My suggestions to look at are BBL/SON/PX/ARG/APD/BMS/CMP.
Industrials - MMM/ITW/ETN/HON/UTX/PH/GE/DOV/CMI/DE/CAT. In the MRO subsector I'd look at FAST/GWW. Then there are the rails UNP/CSX/NSC. Lastly, there's the defense department LMT/RTN/GD/NOC for starters. Can you tell I'm partial to companies that make things and those that serve them?
Consumer Discretionary - since the consumer trade makes of 70% of the U.S. economy, this is an appealing sector when the economy is doing OK. During recessions, a lot of these companies can take a hit as sales slump. Long-term, there are some interesting companies. MCD/DEO/WMT/TGT/HAS/GPC/TGT/ROST/TJX/VFC for starters.
Consumer Staples - stuff people need everyday so they are often higher on the valuation scale. Some you don't have KO/PEP/GIS/UL/HSY/HRL/MKC/CVS/WBA.
Healthcare - we're going to need more of this as the baby boomers age. ABBV/AMGN/BDX/PFE/OMI in addition to those you already have.
Financials - in addition to what you already have there's BEN/EV in the investment field, TRV in insurance, WFC in the banks. If you can stand a little currency fluctuation, take a look at the Canadian banks TD/RY/BMO/BNS. Roadmap2Retire did a series on them on Seeking Alpha and he put links to them over in this thread.
Information Technology - these are cyclical too and require constant innovation to stay competitive. IBM/INTC/ADP/XLNX/HRS but I also like what you already have.
Telecommunications - Slow growers in the U.S. since the market is saturated. T/VZ although TDS intrigues me lately if it only went on sale more often. Hard to beat those juicy yields of the first two. Again, if you can stomach the currency thing, there's some Canadian telecoms to look at -- BCE/TU/RCI.
Utilities - slow growers that provide a steady but slow-growing (for the most part) dividend stream. SO/WEC/AVA/LNT/D/XEL/NEE/ES/ED. Then there's water utilities. WTR/MSEX are two that I recall but am not too familiar with them.
REITs - the infrastructure companies for a lot of businesses. DLR/O/NNN/HCP/VTR/OHI/HCN.
These are not recommendations. Just some that came to mind as I was writing this. Some are overvalued, some may not meet your income or dividend growth needs. There are many others that people may recommend.
It just occurred to me ... I think Eric Landis did a whole series on the sectors on Seeking Alpha. Maybe he can point you in the right direction to them.
Glad you joined us. In 14 years, you should be in good shape.
I compiled your current portfolio by S&P's GICS categories and contribution to the S&P500 to show which industry groups make it up so far. Right now, S&P lumps REITs in with Financials but they'll be breaking them out in the next year or two so I've already done that. I'm sure most would agree it's a pretty good start.
Keep in mind, to achieve your goal in 14 years you'll need a portfolio valued at about $315,000 yielding 3.8%. With $1200/month for the next 14 years you'll be adding $201,000 give or take. With some judicious dividend reinvestment and the growth in stock prices over time, I think you'll be quite pleased. And dividend growth doesn't stop when you retire.
Now my thoughts ...
First, I wouldn't recommend getting rid of any. You've got a nice start there. I don't think any of them are risky as far as company viability or ability to continue paying dividends. In the future, you can balance as you see necessary with your adds and new purchases.
In my opinion, it seems the categories that make up the backbone of many dividend growth portfolios for a retiree are Consumer Staples, Healthcare, Utilities, Telecom & REITs. These sectors are considered defensive because they make or service the necessities of everyday life except for REITs which provide a pretty good income stream while providing infrastructure for other businesses.
To fill in some of your blanks, I have some suggestions. I'll try not to duplicate what you already have and you may want to add to them also as time goes on.
Energy - I'd add here when prices are at a bargain and after you catch up on other sectors. You've already got a major, a pipeline & and a services company. Unless you want to diversify further, I like your choices.
Materials - mostly cyclical but there are some interesting companies here that can provide a decent income stream. My suggestions to look at are BBL/SON/PX/ARG/APD/BMS/CMP.
Industrials - MMM/ITW/ETN/HON/UTX/PH/GE/DOV/CMI/DE/CAT. In the MRO subsector I'd look at FAST/GWW. Then there are the rails UNP/CSX/NSC. Lastly, there's the defense department LMT/RTN/GD/NOC for starters. Can you tell I'm partial to companies that make things and those that serve them?
Consumer Discretionary - since the consumer trade makes of 70% of the U.S. economy, this is an appealing sector when the economy is doing OK. During recessions, a lot of these companies can take a hit as sales slump. Long-term, there are some interesting companies. MCD/DEO/WMT/TGT/HAS/GPC/TGT/ROST/TJX/VFC for starters.
Consumer Staples - stuff people need everyday so they are often higher on the valuation scale. Some you don't have KO/PEP/GIS/UL/HSY/HRL/MKC/CVS/WBA.
Healthcare - we're going to need more of this as the baby boomers age. ABBV/AMGN/BDX/PFE/OMI in addition to those you already have.
Financials - in addition to what you already have there's BEN/EV in the investment field, TRV in insurance, WFC in the banks. If you can stand a little currency fluctuation, take a look at the Canadian banks TD/RY/BMO/BNS. Roadmap2Retire did a series on them on Seeking Alpha and he put links to them over in this thread.
Information Technology - these are cyclical too and require constant innovation to stay competitive. IBM/INTC/ADP/XLNX/HRS but I also like what you already have.
Telecommunications - Slow growers in the U.S. since the market is saturated. T/VZ although TDS intrigues me lately if it only went on sale more often. Hard to beat those juicy yields of the first two. Again, if you can stomach the currency thing, there's some Canadian telecoms to look at -- BCE/TU/RCI.
Utilities - slow growers that provide a steady but slow-growing (for the most part) dividend stream. SO/WEC/AVA/LNT/D/XEL/NEE/ES/ED. Then there's water utilities. WTR/MSEX are two that I recall but am not too familiar with them.
REITs - the infrastructure companies for a lot of businesses. DLR/O/NNN/HCP/VTR/OHI/HCN.
These are not recommendations. Just some that came to mind as I was writing this. Some are overvalued, some may not meet your income or dividend growth needs. There are many others that people may recommend.
It just occurred to me ... I think Eric Landis did a whole series on the sectors on Seeking Alpha. Maybe he can point you in the right direction to them.
Glad you joined us. In 14 years, you should be in good shape.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan