Avoiding High Portfolio Ownership Of Successful Investments

Nov. 02, 2016 9:28 AM ETO, VFC, MO, NNN
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Dividend Growth Investing

Contributor Since 2008

I have been focusing my attention particularly to companies that regularly increase dividends to their shareholders for over a decade. I have also written about about dividend growth stocks on Seeking Alpha and my website for over a decade.


I am mostly a buyer of high quality dividend stocks, with solid competitive advantages. My holding period is forever - for as long as the dividend is at least maintained. I tend to concentrate my efforts on stocks which grow earnings and dividends, which provides outstanding total returns over time. I only focus my attention to stocks with sustainable dividend payments. I am also a firm believer in diversification accross sectors and geographic locations. I am a patient buy and hold investor, who believes that having an investment plan, investing regularly per your plan, staying the course, and keeping investment costs low are the best tools in the arsenal for the individual investor.


I share my thoughts on investing in dividend paying stocks that have consistently increased their payments over time and tips on growing my dividend income. I hope that my blog will serve as an inspiration for my readers and that it would change their financial lives for the better. 

I have been investing in dividend growth stocks for the past decade. There have been hundreds of other fellow dividend investors, who have also invested in dividend paying companies over the same period of time. There are some, who have invested for even a longer amount of time. Unfortunately, when you invest for a long time, you may end up with a few very successful positions, which account for a disproportionate amount of your portfolio. The question I have been getting recently has been what to do in this situation. I would note that this problem generally happens to investors who are not adding money to their portfolios anymore. A few examples cited include Realty Income (O), V.F. Corporation (VFC) and Altria (MO), which have delivered fantastic returns since 2008 - 2009.

This of course is a great problem to have. If you are a long-term investor, it is very much possible that after a decade or two of patient investing, the power of compounding will result in many companies which not only pay more and more in annual dividend income, but also result in large unrealized gains for the stockholder. As a result, there may be several companies in your portfolio, which could end up with a very large portfolio weight. In my opinion, you own too much in an individual security if it accounts for more than 4% - 5% of your portfolio's value.

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