(image from businessdayonline.com)
During the past days, I have been working on revitalizing my stock portfolio. My strategy is clear: I am a conservative investor who cares about wealth preservation and increasing income. Therefore, I only buy stocks that pay dividends. Buying a stock that doesn’t pay a dividend is insane to me. It doesn’t make sense in my head. Why would you do that? If a stock doesn’t pay dividends, it is speculation. Maybe you recall these words being said by somebody else. That is possible, because Kevin O’Leary says this day in day out. And when it comes to the stock market, I second Mr Wonderful all the way up: I only buy dividend paying stocks, and in particular, solid companies which have the ability to consistently pay dividends and increase them over time. I also allocate up to 5% in anyone’s name, and 20% per sector (if possible, low volatility is desired). As I am European, I need to apply market limits as well, and currency hedges. To achieve this, I could simply go out there and buy a wallet of aristocrat stocks in different markets, right? Well, I personally want high yields too!
So I typically like to have an average dividend yield of 5.5% or more. I mix extremely solid aristocrat companies, with some more “risky” companies. I am willing to re-balance the portfolio every 6 months and buy and sell depending on the performance of a company. I am mostly a old school investor, who likes to have a conservative portfolio of dividend paying stocks, but with a touch of a modern investor, who likes to have high yields.
During the last days, I have selected the companies I want to start with. Given my liquidity, I will only throw about 3k into the stock market. This could be all wiped out by online broker fees, except that I am working with a low cost one. Also, stocks are arguably not cheap right now. That is why I won’t throw more cash at the game. I simply want to start defining my realm of companies and make some money along the way. When the market falls, I will go full power.
Stay tuned. I will post my portfolio soon!