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. (NASDAQ:AGNC), Fifth Street Finance Corp. (NASDAQ:FSC), Sabra Health Care REIT, Inc. (NASDAQ:SBRA), Medical Properties Trust, Inc. (NYSE: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.