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Summary

  • A portfolio such as the BTDP is set and producing income while we wait for opportunities.
  • The market looks like it is correcting, then it doesn't.
  • Dividend paying stocks pay you to hold on in times of market uncertainty.

The recently developed "Buy The Dips Portfolio," or BTDP was geared for the active portfolio manager who clearly wants to be the captain of its own ship. One of the major issues that active managers face is when NOT to be active and just sit back and watch the parade.

Keep in mind, a portfolio comprised of the largest blue chip, dividend winning stocks will continue to pay an investor while they do nothing. Unfortunately, many investors want to take action too often and get antsy when the market dips.

The correct course of action when we simply are confused by the markets is to do absolutely nothing!

Dividend Income Stocks Keep Paying Us While We Are Couch Potatoes

The BTDP consists of the following stocks: AT&T (NYSE:T), Exxon Mobil (NYSE:XOM), Johnson & Johnson (NYSE:JNJ), Coca-Cola (NYSE:KO), Procter & Gamble (NYSE:PG), General Electric (NYSE:GE), McDonald's (NYSE:MCD), Chevron (NYSE:CVX), Apple (NASDAQ:AAPL), Altria (NYSE:MO), Ford (NYSE:F), Microsoft (NASDAQ:MSFT), Wal-Mart (NYSE:WMT), and Pfizer (NYSE:PFE).

A portfolio of great stocks such as these will keep doing its job if we simply let it. This particular portfolio has a dividend yield of about 3.60% with an annual income of roughly $3,700 on an initial investment of about $109k.

Aside from keeping an eye on any opportunity that might arise, as explained in my previous article on when to buy the dips, doing nothing if the opportunities do not occur is the simplest and perhaps the most prudent strategy to employ.

To review, here is a chart of each stock, its "opportunity price" using the K.I.S.S. method, and the last update that also includes the performance of just one month in this portfolio.

Buy/Wait52 wk lo
52 wk hi
TGT PRICESymbolSharesYieldDividendYrly IncomeShare PriceTot.CostTot. Value31-Mar
BUY31.7439.0135.37T3005.60%1.8455231.95958510521$35.07
WAIT84.79101.7491.72XOM1002.80%2.5225290.0590059768$97.68
WAIT81.7199.3890.54JNJ1003.10%2.6426486.7886789823$98.23
BUY36.8343.4340.13KO2003.00%1.2224437.2174427732$38.66
WAIT73.6185.8279.72PG1003.10%2.4124175.7175718060$80.60
WAIT21.1128.0924.61GE3003.60%0.8826424.3573057767$25.89
WAIT92.22103.7197.91MCD1003.50%3.2432493.0293029803$98.03
BUY109.27127.83118.55CVX1003.60%4400111.141111411891$118.91
WAIT385.11575.14480.12AAPL152.25%12.2183526.4578978051$536.74
WAIT33.1238.5835.85MO1005.20%1.9219237.7137713771$37.71
WAIT12.6518.0215.34F4003.20%0.520015.1560606240$15.60
WAIT28.5141.6635.08MSFT2002.80%1.1222440.1680328198$40.99
BUY71.5181.3776.44WMT1002.50%1.9219276.1176117643$76.43
BUY27.1232.9630.04PFE2003.20%1.0420832.1864366424$32.12
xxxxxx3.60%x3740x109809115692x

I see absolutely no reason to sell any stocks, and aside from the 5 outlined previously, a dividend income investor can do nothing and still get paid. That to me is passive income at its best.

The best stocks, the best dividend records, and the simple, yet powerful, way our money is working for us while we wait out the market uncertainties.

What Correction?

I thought, as many might have, that last week was the beginning of a real correction of at least 10-15% in quality names as well as the biotech and momentum stocks. If that occurred we would have our shopping list ready to charge ahead and pick up a few "goodies" to grow our income.

Well, as they have in the last 6 years, the correction lasted for as long as we could make the list up. Now we are back to waiting for it once again, and in MY opinion, now is not the time to rush into adding to any stock unless it meets our K.I.S.S. target price.

In the meantime, you will save transaction fees, as well as keep a few more hairs on your head.

Doing nothing will pay you to wait.

Source: Retirement Strategy: Doing Nothing Is A Strategy For Dividend Income Investors