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Diversification And Dividend Growth Investing

Feb. 04, 2019 11:50 PM ET55 Comments


  • How many stocks do you hold in your dividend growth portfolio?
  • How many is too many?  Or, not enough?
  • To me, the end justifies the means with regard to a reliably increasing passive income stream.  Yet, I prefer to spread my risk around high-quality names.

In a recent article I talked about the benefits of a dividend growth investing strategy, and especially, focusing on generating a reliable stream of passive income rather than focusing solely on total returns. If you’re interested in that article and the discussion ongoing in the comment section, here’s the link. Today, I wanted to follow that piece up with a piece about diversification within a dividend growth portfolio and how it might differ from traditional diversification ideas.

Before I get doing, I want to say that these are just my views on DGI diversification. Honestly, I’m not sure if there is a consensus regarding the proper way to build and manage a DGI portfolio within the DGI community. The end sort of justifies the means with regard to one’s passive income stream.

I don’t know if there is a right or wrong way to go about accumulating dividend growth stocks, but in this piece I’m going to talk about my strategy for doing so and why I believe it’s the best. As always, I look forward to your opinions in the comment stream as well. I think diversification is an aspect of dividend growth investing that gets relatively little coverage, so I’m sure that we can all learn a thing or two from one another in this regard.

If you follow my work here at Seeking Alpha, you probably know that I own what many consider to be an over-diversified equity portfolio, consisting of 60 individual holdings. In the grand scheme of the contributor portfolios that are posted here at Seeking Alpha, I think that my position count is on the higher side of things. However, there are certainly investors who hold more stocks, bonds, funds, etc.

Some of the critics of my decision to own so many equities talk

This article was written by

Nicholas Ward profile picture
Maximize your income with the world’s highest-quality dividend investments

University of Virginia, class of 2011 B.A English

Senior Investment Analyst at Wide Moat Research.

Contributor for Safe High Yield, The Dividend Kings, iREIT, and The Forbes Real Estate Investor.

I am also the former  editor-in-chief and portfolio manager at The Intelligent Dividend Investor.  

Check out my youtube channel for other investing ideas: https://www.youtube.com/channel/UCP7AhF_TqJSE7fN7CFwxKlg?view_as=subscriber

Ranked #18 overall blogger by TipRanks for 2014.

Former contributor at TheStreet.com (where I cover stocks held in Jim Cramer's Action Alert PLUS Charitable Trust Portfolio), Investing Daily, and Sure Dividend.

Former Editor-in-Chief of The Dividend Growth Club and The Income Minded Millennial.

I am a young investor focused primarily on dividend growth stocks. Seeking Alpha, and more specifically, the dividend and income community that exists here, has played a significant role in my development as a portfolio manager. I am not a professional, though I do manage my family's finances. I enjoy the process; the research, the decision making, the strategic planning...and not paying a financial adviser to do the work for me.

I've built what I believe to be a conservative, diverse, and balanced dividend growth portfolio currently consisting of ~60 positions. At the end of every month I break down the portfolio in my Nicholas Ward's Dividend Growth Portfolio Updates.

Thus far, I've been able to meet by goals from income, income growth, and capital appreciation standpoints. I use a wide variety of metrics, both fundamental and technical, when establishing fair value when doing my due diligence on an individual company. All of my methods are discussed in my work here.

I hope this work inspires debate, conversation, and education - this is why I write for Seeking Alpha, to give back to the community that has helped me so much and to hopefully contribute, in some way...even if its by posing a question, to the growth of others.

*I should note that all articles that I write here are done so for my personal informational/educational purposes only. Any purchases that I make or opinions that I express are not meant as recommendations for anyone else. Please perform your own due diligence before following my lead into or out of a position. I am not a professional. I am not a financial adviser of any sort.  I enjoy investing and the open discussion that articles on this site inspire - this is why I write, not to influence anyone else's decisions, but to enhance my own ability to make sound financial choices. That being said, I wish the best of luck to everyone. May we all meet our own financial goals.

Analyst’s Disclosure: I am/we are long DIS, AMZN, KO, PEP, SBUX, GOOGL, DIS, CMCSA, T, DEO, STZ, MO, V, MA. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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