Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Tentative Dividend Taxable Retirement Portfolio

|Includes:ABT, AFL, CAT, CVX, INTC, JNJ, The Coca-Cola Company (KO), LMT, MSFT, PG, TGT, WMT, XOM

Dividend Investing caught my eye after browsing articles back in November 2011 from notable authors such as Chuck Carnevale, David Crosetti, David Fish, David Van Knapp, and Tim McAleenan to name just a few.  After doing extensive reading of articles by those above and reviewing comments from several others within the Dividend community I began evaluating my current performance of my Roth IRA which was managed by a fund manager at the urging of my financial adviser.  The performance was lackluster to say the least. It mirrored the returns of the S&P but the fees at around 2% concerned me to the point that I realized not only could I take over my own account and minimize those fees but I could be successful by integrating a Dividend strategy. The difficult decision was not whether or not to begin to invest in solid companies with a long history of dividend increases but rather which specific companies I should build my portfolio around. I began to ask myself several questions.

1.       Which stocks should I buy

2.       How much of my portfolio should I allocate to each stock

a.       Is 5% per stock smart?

b.      Do I stay away from certain sectors?

3.       Should I DRIP once I invest or build up the small initial dividends to re-invest with added new capital

 

 

Before we continue I want to share a little background about myself as well as my investing in order to help evaluate my decisions.  I am 28 years old and have been investing in a Roth IRA since I started my first job out of graduate school in 2007. I have contributed the maximum each year from 2007 through the present and plan to continue to do so as long as I can. I work for the State Government of New Jersey. As a result of my current position I contribute towards a pension automatically. This has allowed me to be a little more aggressive with my retirement investing within my Roth.  As of January 17th, 2012 I am awaiting a transfer of assets (Roth IRA) from my previous brokerage account into my Sharebuilder account where I will manage my own account going forward.  I expect the transfer to be completed sometime in February and expect the balance to be roughly $21,000 in cash.

 

I have decided to build my portfolio around a number of core dividend stocks that I believe are either fairly valued or undervalued at current prices.  Those stocks include PEP,  KO, MSFT, INTC, CVX, XOM, WMT, PG, JNJ, AFL, LMT, CAT, TGT, ABT.  *I am considering one small position of 5% in APPL just as a speculative buy as the cash rich company may issue a dividend at some point in the near future.  

SYMBOL

Percent of Portfolio

AAPL

PEP

KO

MSFT

INTC

CVX

XOM

WMT

PG

JNJ

AFL

LMT

CAT

TGT

ABT

5

5

5

5

5

5

5

10

10

5

10

10

10

5

5

15 Companies

100

 

 

5% = $1,000

10% =$2,000

 

The total value of the account would be $20,000 with $1,000 in cash. Depending on the amount that the previous account is sold that amount in cash may be greater or smaller. Every month I will contribute $416.00 to the account and repurchase stocks or add to my holdings in increments of either 1K or 2K.

 

I would sincerely appreciate any feedback on the above tentative portfolio as well as suggestions to add or eliminate particular stocks. Once the final portfolio is completed in February I will share my holdings at that time and the purchase price etc. and follow my portfolio sharing and updating my moves.

Stocks: KO, MSFT, INTC, CVX, XOM, WMT, PG, JNJ, AFL, LMT, CAT, TGT, ABT