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5%+ Dividend Yield Portfolio: Leaning In Is Yielding Results (April 2018 Review)

May 07, 2018 3:29 PM ETABBV, BP, EWA, FDRR, FGD, SCHD, VDE15 Comments
Dividend Disco profile picture
Dividend Disco


  • General choppiness in the markets continued in April, but staying calm and true to my strategy is working in turns of returns and sleeping well at night.
  • My April 2018 capital gains (1.1%) again solidly beat the S&P 500 (0.4%).
  • My dividend yield of almost 5% also crushed the pathetic 1.8% of the S&P 500.
  • I also continue to narrow my portfolio to only my best ideas by trading out of ideas that were just ‘okay’.


April continued to deliver the volatility that 2018 is becoming known for, though the trough value of -10% is hardly unusual or large by historical standards.

Source: JP Morgan

However, if you are looking to make up for any 2018 losses with one killer trade, then you are on a fool's errand (and likely suffering from the gambler's fallacy). Thinking like this is one of the reasons why individual investors have terrible historical performance against almost every other asset class.

Source: JP Morgan

If you are worried that you missed the rocket ship ride that the market has been on, you are probably right (sorry to be the bearer of bad news). However, that doesn’t mean that hope is lost or that equities shouldn’t play a role in your current asset allocation. In my (occasionally) humble opinion, it means that you need to be smarter (because the easy money has already been made) and you need to accept the returns that are being offered (as opposed to always swinging for the fences). This is what major pensions are doing around the country as they accept the reality of the situation and proactively move to reallocate assets in response.

Source: JP Morgan

For me, that means looking for value (enhanced by supportable dividend yields). Fortunately, corporate earnings growth (despite 2018’s bumpy ride in stock prices) has been strong, so valuations are coming back in line to historical averages. This story is even more powerfully made overseas, where valuations are even more attractive on a relative basis.

Source: JP Morgan

So attractive opportunities exist (even if they aren’t the ‘screaming deals’ available at the beginning of this bull market). I think this is especially true for foreign markets, so I am gently tilting my portfolio to favor international equities.

Source: JP

This article was written by

Dividend Disco profile picture
A mid-30s ex-venture capitalist and investment banker (finance degree)...now a serial startup CFO. I used to look for yield in all the wrong places, but have created a modified dividend growth (DGI) strategy that works for me.

Analyst’s Disclosure: I am/we are long ALL POSITIONS AS MENTIONED. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author is an amateur who has a history of getting calls both right and wrong with zero predictive power. Trade at your own risk and never rely solely on this author's opinion. Also, as I have no knowledge of your circumstances, goals, and/or portfolio concentration or diversification, readers are expected to complete their own due diligence before purchasing any stocks mentioned or recommended.

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