The burning question we most often get from folks who are not as familiar with investing as others, is "how much can MY portfolio make me?" Obviously it all depends on the size of the portfolio, how much you have saved, your investments, and what your expectations are. Most beginners, or those with longer time horizons, simply look at the size of their portfolio to gauge how they are doing. This is fine, but does not give a very clear picture as to how your portfolio is working FOR you in terms of income.
Based on my previous articles, the most recent being this one, I have tweaked the initial core portfolio holdings to reflect an investor seeking diversity as well as a significant dividend pay out for current income. I have also taken into consideration some of my personal favorites for both capital appreciation and in the case of Annaly (NLY), a nice added "zip" to the dividend stream.
Here Is My New Core Portfolio For 2012 Beginners
- Johnson & Johnson (JNJ)
A dividend yield of 3.75% and upward share price momentum keeps this stock in any portfolio.
- At&T (T)
Very tough to beat a 5.10% yield with a huge blue chip winner in a sector that looks like it will grow forever.
- Annaly
My personal favorite right now-- and since 1999 for me-- it sports a yield of over 13%, has had significant capital appreciation recently, and-- until the end of 2014 at least-- seems like more money is flowing into this stock both for the hefty dividend as well as the potential for capital appreciation. Almost a "must have" for income seeking investors willing to take some risk.
- Exxon Mobil (XOM)
The best of breed in the energy sector has been a must own for decades now and has an amazing track record of returning profits to shareholders, even though at the current 3% yield it appears on the light side. Own this stock for the long term and you will thank me.
- General Electric (GE)
Probably one of the most hated stocks of the last 10 years and rightfully so. The stock has shown dismal performance since the Jack Welch era, but one cannot run far from GE's impact on every walk of life on our planet, even now more than ever.
As we move into the years ahead, it does no good to dwell on the past failures. The future and the present is filled with GE everywhere we turn and eventually it will pay off. In the meantime we can also get paid to wait with an attractive dividend yield of 3.60% and a share price that has a very compelling entry point.
How Much Income Can My Portfolio Generate
This is the burning question to beginners who might need to actually see some numbers. We need to make some assumptions here to make it easy to see, compare, and understand. The assumptions are that the stocks I have outlined here are the ones you have now, or will buy now, and the allocation is what I will be outlining, as well as the different portfolio sizes.
Keep in mind that there are endless scenarios and portfolio make-ups that will give different results. Allocations will never be exactly the same and neither will any investors particular mind set. However, given these rather basic assumptions, you can still get an accurate picture of pretty close to what you can expect from a very basic dividend income growth "beginner" portfolio.
| 50,000 PORTFOLIO | |||
| STOCK | SHARES | COST | INCOME |
| JNJ | 200 | 13000 | 488 |
| T | 400 | 14000 | 704 |
| NLY | 300 | 5100 | 660 |
| XOM | 100 | 8300 | 228 |
| GE | 500 | 9600 | 340 |
| 50000 | 2420 | ||
| 100,000 PORTFOLIO | |||
| STOCK | SHARES | COST | INCOME |
| JNJ | 400 | 26000 | 976 |
| T | 800 | 28000 | 1408 |
| NLY | 600 | 10200 | 1320 |
| XOM | 200 | 16600 | 456 |
| GE | 1000 | 19200 | 680 |
| 100000 | 4840 | ||
| 250,000 PORTFOLIO | |||
| STOCK | SHARES | COST | INCOME |
| JNJ | 1000 | 65000 | 2440 |
| T | 2000 | 70000 | 3520 |
| NLY | 1500 | 25500 | 3300 |
| XOM | 500 | 41500 | 1140 |
| GE | 2500 | 48000 | 1700 |
| 250000 | 12100 | ||
| 500,000 PORTFOLIO | |||
| STOCK | SHARES | COST | INCOME |
| JNJ | 2000 | 130000 | 4880 |
| T | 4000 | 140000 | 7040 |
| NLY | 3000 | 51000 | 6600 |
| XOM | 1000 | 83000 | 2280 |
| GE | 5000 | 96000 | 3400 |
| 500000 | 24200 | ||
| 1,000,000 PORTFOLIO | |||
| STOCK | SHARES | COST | INCOME |
| JNJ | 4000 | 260000 | 9760 |
| T | 8000 | 280000 | 14080 |
| NLY | 6000 | 102000 | 13200 |
| XOM | 2000 | 166000 | 4560 |
| GE | 10000 | 192000 | 6800 |
| 1000000 | 48400 | ||
With the help of a solid allocation as well as a nice "bump" from Annaly's yield, we can produce roughly 5% income from each portfolio size. The income received can go up, of course, if the dividends are reinvested if you do not require the cash. For beginners and younger investors, I would urge you to reinvest those dividends until you are ready for your own "enjoyment without employment", then we can add this income to your pensions if any, Social Security, or even some part time work to pay for some luxuries.
Now a much more clear picture of what you might expect can be seen, and by reviewing my previous articles in this series, what you need to do to get where you want to go. There will be plenty more to follow in upcoming chapters, so make sure you are following me and edit your account settings to receive direct emails when my next articles are published.
In the meantime, have fun with this, and ponder YOUR next move.
