Alex in Virginia
Recycles dryer sheets
- Joined
- Dec 23, 2012
- Messages
- 145
response #3 to comments on my high-yield investing
OK, now we're going to start getting into some of the nitty gritty. IMO, my portfolio is extremely diversified. These are my guidelines there: no more than 6% of the portfolio in any one company... no more than 3% of the portfolio in any one "junk" bond... and no more than 12% of the portfolio in any one industry (stocks and bonds combined). This has allowed my portfolio to roll with the punches and keep growing the dollar dividend payout and the dividend yield percent notwithstanding the occassional dividend cut and even dividend suspension.
At this moment, I hold positions in 25 separate companies in 14 different industries. Is that not diversified? (Cash and real estate I've kept separate from this discussion.)
Regarding why these companies' dividends are so high. These are not companies "nearly out of business". Setting aside the occassional accidental high-yielder, every company I own stock in is committed to returning value to its stockholders in the form of dividends to the highest degree possible within the bounds of financial responsibility. And every capital action these companies take is intended to be accretive to that payout, either immediately or within less than a year of the action having been taken.
Notes:
[] I'm responding to comments in the order they appear, so thanks for being patient
[] Don't be put off (please) by my use of the word "attack" in the thread title; I DO want and APPRECIATE any and all devil advocate comments
[] And, no, I'm not saying my way is the best way to make money in stocks; but I am questioning why so many financial advisors have told me (without providing reasons) that my way is NOT a way to make money in stocks.
Alex in Virginia
Your principal is very at risk, especially with high-yield stocks and bonds as opposed to something more tame. Those kinds of yields I associate with nearly out of business companies.
You are not very diversified, meaning you can expect wider portfolio value swings than necessary. With so many similar investments you are more vulnerable to a single event/trend knocking your entire portfolio down.
OK, now we're going to start getting into some of the nitty gritty. IMO, my portfolio is extremely diversified. These are my guidelines there: no more than 6% of the portfolio in any one company... no more than 3% of the portfolio in any one "junk" bond... and no more than 12% of the portfolio in any one industry (stocks and bonds combined). This has allowed my portfolio to roll with the punches and keep growing the dollar dividend payout and the dividend yield percent notwithstanding the occassional dividend cut and even dividend suspension.
At this moment, I hold positions in 25 separate companies in 14 different industries. Is that not diversified? (Cash and real estate I've kept separate from this discussion.)
Regarding why these companies' dividends are so high. These are not companies "nearly out of business". Setting aside the occassional accidental high-yielder, every company I own stock in is committed to returning value to its stockholders in the form of dividends to the highest degree possible within the bounds of financial responsibility. And every capital action these companies take is intended to be accretive to that payout, either immediately or within less than a year of the action having been taken.
Notes:
[] I'm responding to comments in the order they appear, so thanks for being patient
[] Don't be put off (please) by my use of the word "attack" in the thread title; I DO want and APPRECIATE any and all devil advocate comments
[] And, no, I'm not saying my way is the best way to make money in stocks; but I am questioning why so many financial advisors have told me (without providing reasons) that my way is NOT a way to make money in stocks.
Alex in Virginia
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