I'm going to set up a demonstration portfolio with Seeking Alpha.
I recently wrote two articles (here and here) where I outlined five high-yield dividend paying companies: American Capital Agency Corp. (AGNC), Fifth Street Finance Corp. (FSC), Sabra Health Care REIT, Inc. (SBRA), Medical Properties Trust, Inc. (MPW), New York Community Bancorp Inc. (NYB).
While doing research to find more companies to cover, I thought it would be nice to keep track of them and find out how they would do in time.
I believe that it would be interesting - as time passes - to see whether they do well or not, and examine the reasons they do so. It is my opinion it would be a teaching experience, as well as an entertaining one.
I'll buy the laid-back portfolio (LBP) as an example. The LBP will not reinvest the dividends. It will be a portfolio geared towards income to sustain retirement.
The goal is to keep it simple to manage, conserve capital (while possibly increasing it) and beat inflation with a starting dividend yield which is above inflation and a dividend growth rate above the inflation rate.
A few rules
Obviously there have to be some rules to follow.
I thought of the following:
- I want to own easy-to-understand, easy-to-follow companies. This is the basis of my laid-back dividend investing strategy. If a company is too difficult to understand, then I leave it alone.
- Companies have to have a high dividend yield.
- Dividend has to be sustainable.
- Companies have to operate in different sectors.
- Trading has to be infrequent. After all, it is the laid-back portfolio.
- I'll (fictitiously) buy the shares one day after publication on Seeking Alpha, at mid-day prices, so I don't have an unfair advantage over you, the reader (not that I think I will be able to move a stock!).
- I will also apply a $20 commission, which I think is a reasonable compromise between online brokers' fees and traditional, old-fashioned, broker-assisted fees.
- On the same day I will buy the DJ, S&P and Nasdaq indices as well, so we'll have a comparison.
- LBP will have around 20 different stocks. At $10,000 per position, this translates into a starting value of $200,000.
Tomorrow, a couple of hours before market close, I will thus buy $10,000 (give or take) apiece of AGNC, FSC, MPW, NYB, SBRA.PK. At the end of each month, I will publish portfolio performance, dividends received, comparison with major indices. From time to time I will also add new companies, as to fulfill the 20-odd Laid-Back Portfolio.
Disclaimer: Material presented here is for teaching and entertainment purposes only. It is not intended to be taken as financial advice, a recommendation to buy or sell the stocks mentioned above. Investing includes risks, including loss of principal.