Young And Restless And Team Alpha Retirement Portfolio Updates: Combine Dividends And Growth For A Powerful Combination

by: Regarded Solutions

I believe that the time is right for retirement investors who seek both dividend income and capital appreciation to use both of our portfolios: The Team Alpha Retirement Portfolio, and The Young And Restless Portfolio. Some combination of these portfolios could offer some very strong returns as you will see later.

The investing world of "growth and income" has changed since 2007. While the usual growth and income portfolios and mutual funds used to feature a common split of 60% allocation in growth stocks, and 40% in bonds for income, the landscape has changed for the bond world, and is not as much of a flight to quality as it once was (especially since we have no idea what the Fed will do from one minute to the next).

When income seeking investors can only get about 2% on the safest fixed income securities with longer than a 5 year maturity (hardly enough to beat inflation), they sought out higher dividend yielding stocks in a way that has always made perfect sense, as well as having gone "mainstream": Dividend Growth Investing.

Team Alpha For Income, Update

Our Team Alpha Retirement Portfolio has been a strong example of a portfolio that has sought out mainly mega cap, blue chip, dividend winning stocks. This has created a very reliable income stream, as well as some serious capital appreciation. Currently, the portfolio consists of Apple (NASDAQ:AAPL), AT&T (NYSE:T) BlackRock Kelso Capital (NASDAQ:BKCC), Cisco (NASDAQ:CSCO), CSX Corp. (NYSE:CSX), Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), Ford (NYSE:F), General Electric (NYSE:GE), Intel (NASDAQ:INTC), Johnson & Johnson (NYSE:JNJ), Coca-Cola (NYSE:KO), McDonald's (NYSE:MCD), Newmont Mining (NYSE:NEM), Procter & Gamble (NYSE:PG), Realty Income (NYSE:O), and Wells Fargo (NYSE:WFC).

The portfolio began with $100k and now has a value of $142k. Capital appreciation of more than 42% is very strong, but it is the income we get that we love. A current yield on cost of just under 5% and an annual income from dividends of roughly $6,686 has been built in just about 2 years, with a 50% increase from our original income of about $4,300.

Stock #Shares 9/27/2013 TotValue Orig. Price
XOM 100 87/shr 8700 75
JNJ 105 87/shr 9135 63
T 400 34/shr 13600 28
GE 500 24/shr 12000 15
BKCC 500 10/shr 5000 10
AAPL 20 483/shr 9660 436
PG 100 77/shr 7700 61
KO 100 38/shr 3800 34
NEM 200 28/shr 5600 33
WFC 200 42/shr 8400 40
O 240 41/shr 9840 34
CSCO 400 24/shr 9600 18
CVX 55 123/shr 6795 116
MCD 100 97/shr 9700 86
CSX 200 26/shr 5200 19
F 300 17/shr 5100 13
INTC 200 23/shr 4600 24
Cash Rsvs x x 7791
Tot Value x x 142221

My goal for 2014 will be to continue seeking dividend income opportunities that make sense, with a more targeted focus on dividend winner stocks than dividend opportunity stocks. I strongly believe that the ultra high yielding arena is less reliable in our interest rate, and economic climate. The mREITs, MLPs and BDCs that have been offering yields of 10, 12, and even 15% or more are in uncharted waters, and the risks outweigh the rewards far enough for prudent retired, or almost retired investors, to avoid them.

Yes, this portfolio does have one BDC; BKCC, and no mREITs, and that is all that we will hold for now. A word about regular REITs, however. A REIT such as Realty Income (O) can, and in my opinion, should be, part of a dividend growth portfolio. All one needs to research is the amazing track record of this dividend machine to know why. Since regular REITs actually own properties and rent them out, many of these stocks will offer us a remarkably steady and reliable income streams.

I would urge each of my readers to become an avid reader of Seeking Alpha author Brad Thomas, our REIT investing genius, whom I believe to be the finest REIT analyst anywhere. Take a look at this article from Brad, as it will give you a good foundation of how Brad brings us the world of REIT investing.

I will be looking to add a few more REITs in our portfolio very soon.

The Young And Restless For Growth, Update

Keep in mind that when investors seek growth stocks, they are looking for capital appreciation. The gains can then be used to add more growth stocks, and in today's world, as it has always been, the growth stock sector is a stock picker's opportunity to become very wealthy.

I began this portfolio about 11 months ago, and the returns have been rather exciting. The "Young and Restless" portfolio now consists of Galena Biopharma (NASDAQ:GALE), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB), Yahoo (NASDAQ:YHOO), Achillion (NASDAQ:ACHN), Ambarella (NASDAQ:AMBA), and Zynga (ZNGA).

We started with $80k 11 months ago, and reinvested all gains back into other stocks, or existing ones. It took about 4 months to round out the portfolio with 8 positions, and $10k invested in each stock. As of today, this portfolio has risen by 76%, and our original $80,000 is $141,000, as of today.

Stock Orig.Price Price Now Orig. Invst Value Now %+/-
AMZN 230 315 10,000 14,000 40%
GALE 2 2.15 10,000 10,700 7%
ZNGA 3 3.66 10,000 12,200 22%
FB 24 51 20,000 42,000 110%
ACHN 8 7 20,000 17,600 -12%
YHOO 22 34 20,000 30,100 51%
AMBA 17 19 10,000 11,000 11%
Portfolio Value xxxx xxxx xxxx 137,600
Cash xxxx xxxx xxxx 3,700
Total xxxx xxxx xxxx 141,300

While we began this portfolio for the younger investor with a much longer time horizon (click here for the original criteria), I believe that incorporating some, or all, of the stocks in this portfolio, with our Team Alpha portfolio, an active portfolio manager, even retired, can add significant growth to a vibrant income producing portfolio.

The creation of wealth, development of a reliable and growing income stream, and capital preservation, will be the "Alpha" I seek in my third portfolio I will simply name: "Team Alpha Dividend And Growth Portfolio"

Team Alpha Dividend And Growth Goals

The goals of this portfolio are basic and to the point:

  • A dividend yield of roughly 3.50% to start.
  • Capital appreciation greater than the S&P 500 on an annual basis.
  • A target allocation of 60% growth and 40% income.
  • Capital preservation will be a vital goal, as this portfolio is geared for those of us who are retired as well as the younger, moderately conservative investor.
  • Furthering the education of all of our investors in portfolio management, as well as money management.

While the core holdings of this portfolio have not been determined as of now, I will start by taking the best of the best stocks from our two existing portfolios, with a beginning amount of $100,000 to invest. I will allocate a percentage for each stock based on our goals, and the risk/reward outlook of each stock.

We currently have a total of 23 stocks combined in our two portfolios, and I will likely open the new portfolio with no more than 20 stocks. Working together, I feel we could eventually expand this portfolio to 25 holdings.

The updating of this portfolio will show the original purchase price, number of shares, current value, percentage allocation, and dividend yield of each stock (just at the beginning) and will be updated monthly. I will also be picking stocks to research, and write about, as we look to always have the best potential winners at all times.

With your input, I believe we can work together in building a strong new portfolio for just about any investor, and have a unique lineup of portfolios, for Seeking Alpha subscribers only:

  • The Team Alpha Retirement Portfolio
  • The Young And Restless Portfolio
  • Team Alpha Dividend And Growth

I look forward to your stock picks for me to consider adding to this portfolio, right here in the comment thread.

One final word; I suggest that everyone read this very important article. Trust me, it will help you become a much better investor and overall portfolio manager.

Disclosure: I am long AAPL, ACHN, AMBA, BKCC, CSCO, CSX, CVX, F, FB, GALE, GE, INTC, JNJ, KO, MCD, NEM, O, T, WFC, XOM, YHOO, ZNGA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.