Brian is the founder of Investor in the Family and Online Investor Conference.At Investor in the Family (http://investorinthefamily.com/), Brian's goal is to help protect investors from making big mistakes that jeopardize their portfolios and financial futures. The Online Investing Conference (http://onlineinvestingconference.com/) was created to help link self-directed investors with carefully filtered and proven investing professionals to help save investors both time and money while building a portfolio that outperforms.If you'd like to connect or learn more, please feel free to send a private message via Seeking Alpha platform.
I have been investing in the stock market since I was a teenager. I have learned a lot over the past 15 years and have survived multiple bear markets. I feel my experience and knowledge will help investors make decisions on where to allocate their capital.
I began redeploying assets from mutual funds and cash into Dividend Growth stocks in Fall 2013. Current positions: Consumer Staples: KO,PM,PG,PEP,UL,GIS,CLX,DEO,MO Energy: CVX,XOM,ESV Telecomm: T,VZ, Consumer Discretionary: MCD,TGT,ROST Healthcare: JNJ,GSK,GILD,ABBV,AMGN Industrials: LMT,GE,DE,TGH,EMR,CMI,ETN,BA,UPS Tech: AAPL,CSCO,IBM,QCOM Real Estate: O,OHI,HCN,VTR Utilities: SO,AVA,DUK,WEC,D,NGG T Materials: BBL Financials: WFC
Retired Jan. '12 so I'm focused on a paycheck replacement income stream that will grow at least 3.5% annually. Our IRAs and 401k were converted from mutual funds to div stocks starting Aug. '10. We needed a 5% withdrawal at retirement, so that cut out the MCD and KO type DGR stocks. Portfolio consists of 23 equally weighted positions, originally 3 debt funds and the rest dividend stocks.
The portfolio targets are simple: increase both distributions and "paycheck" withdrawals by 3.5% annually. (There is also a soft target to increase the portfolio value by 3.5% annually, but a lot of year-to-year fluctuation is expected.) The "paycheck" withdrawal plus social security, is more than adequate to our needs.
Before long I tired of tracking each of the individual stocks, reviewing their financials, and trying to figure out if their price fluctuations were signs of serious problems, normal market fluctuations, or shorts playing their games. Also, not something my spouse is prepared to do when I am no longer able. Recently converted many individual stocks to carefully selected CEF funds, mostly those that have recovered, or on track to recover, their NAVs and dividends following the Great Recession. They are easier to monitor. Several have increasing dividends.
Current portfolio: PDI, JRO, GOF, ETO, ETV, JCE, JTD, GEQ, BUI, UTF, KYN, RQI, STAG, OHI, IVR, MCC, TAL, THQ, and AAPL.
A few double positions (KYN, AAPL), but no more than 20% in any sector. The KYN replaced a double position in KMR after the KMI consolidation announcement due to the future income reduction. The double AAPL position is historical, left over from when I worked there. Like it too much to reduce it. TAL will likely be replaced with a CEF when prices/discounts look good. The REITs will be kept as I find no suitable REIT CEFs. That will leave only two high-yield stock positionss to monitor, IVR, MCC, which will also be replaced with fixed income CEFs in time.
Although there is significantly more dividend risk than a typical CCC-style DGR portfolio, the current dividend/distribution income (8+%) exceeds the paycheck withdrawal by 1/2, giving a 33% cushion to potential distribution cuts. That cushion is backed by a cash reserve equal to at least 18 months of withdrawals that could be used to supplement distributions if they fall below withdrawals. This would have been adequate to traverse the 2008 recession and recovery.
In the absence of huge dividend cuts, excess distributions are reinvested, as needed, to meet the distribution growth target. Excess beyond that can be taken as an annual bonus and added to the cash reserve which can be skimmed for large expenses: travel, home remodeling, new car, contributions to grandkids college funds, etc.
Many thanks to SA authors David Fish, David Van Knapp, Brad Thomas, Philip Mause, BDCBuzz, Power Hedge, Left Banker, and Doug Albo for their education and advice; to Regarded Solutions, Five Plus, and Miz Magic DiviDogs for their enjoyable prose and good sense; to Jeff Miller for his weekly market sanity; to the multitude of SA readers that take the time to intelligently comment; and special thanks to Chuck Carnevale for F.A.S.T. and his level-headed approach to valuation. I couldn't do this without each of you.
Dividend Growth and Value investing.
Portfolio: AB, ABT, ADP, AFL, APD, BAC, BAX, BBT, BDX, CMI, CSCO, CVX, DOV, EMR, EXC, FE, GD, GE, GERN, GILD, GIS, IBM, INTC, ITW, JNJ, K, KO, MCD, MDT, MMM, MSFT, NSC, OXY, PEP, PG, RDS-B, SHPG, SJM, T, TGT, TROW, UL, UNP, UTX, V, XOM.
MLPs: APU, EPD, MMP, PAA, SEP, SHLX, TCP, WPZ.
REITs: HCP, O, SNH, VTR,