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Abandoning High-Yield


High-yielding dividend stocks have made up at least 30% of my portfolio.

That has begun to change.

Within 30 days or so, that percent will be about 10-15, as I shift to more traditional DGI stocks.

I admit it. I am a bold cat, sometimes reckless. I don't like playing it safe, so when I decided to boost my returns and/or dividend payments I added stocks like Energy Transfer, NRZ, MAIN and STWD to my portfolio. Truth to tell, I dreamed of adding more just like these.

I do read, and did read many articles and comments recommending the more conservative, lower-yielding (but dividend-increasing) dividend 'champions.' I would look at the yields and mostly turn away. If I bought a stock that did fit the DGI category, it was because I believed in its overall return. I still believed that the high-yielders mixed with growth or value stocks were my ticket to the best returns over time.

My tune has changed. I am still pleased to own impressive growth securities such as MSFT, AMZN and V, even though these have either low yield or no yield at all. That's not why I own this group. [In fairness to myself, my additions of CSCO and BLK are consistent with a DGI approach. And I have owned Apple for a while.] 

At a certain point, perhaps around the time some 'relaxation' anesthetic was added to my system prior to a rather complicated and endless surgery, a light went on. It flashed something like, 'Risk is not your friend in large doses.' Maybe something like too much gluten in the diet; I am not sure. But the light went on.

A few days ago, I sold small pieces of ET and NRZ, and I will be doing more of that in the coming weeks as I add to CSCO and buy into stocks like CHD and CAT. I am my own financial advisor at this point, and when that advisor saw a doctor write in big felt pen 'No IV in this arm' I realized that I had no substitutes and no one to save me if my high-yielders tank. And, sadly, NRZ has shown signs of doing just that.

Most of the time, I imagine myself to be young and possessing boundless energy. In fact, I have a pretty strong body for my age, and hope for a future after that multi-faceted procedure. But the high-yielders scare me.

I'm out.

Disclosure: I am/we are long AAPL, CSCO.

Additional disclosure: Am also long NRZ, MSFT, MAIN and STWD.