Revisiting my asset allocation

[copyright1997reloaded]

The dividend yield of the S&P is less than 2%. Even buying dividend stocks, one still gets less than 3%. It means more than $6M in capital.

Maybe preferred stocks can get to 5%, but if interest rate rises, one can get hurt.

Yes, I know that.

I was being conservative and using AT&T's dividend yield as a high water benchmark. (Currently 5.5% at closing market price today.)

$500.00*12/.02/.05 = $6,000,000.00

 

[michelek]

Kitties co-authored a fabulous article that illustrated how that approach can work very well. If I had had that kind of research available in 1999 I think I would have taken that exact approach.

Please give a link to this article by Kitces. I’d like to share it with my FIL.

 

[audreyh1]

Please give a link to this article by Kitces. I’d like to share it with my FIL.

Kitces blog talks about it and links to his original paper https://www.kitces.com/blog/should-...is-a-rising-equity-glidepath-actually-better/

 

[NW-Bound]

Yes, I know that.

I was being conservative and using AT&T's dividend yield as a high water benchmark. (Currently 5.5% at closing market price today.)

$500.00*12/.02/.05 = $6,000,000.00

Son of a gun! You know what? I own T, and I do not even know its dividend yield is that high. I spend more time looking at all the price movements for gains and losses of my growth stocks, and frankly do not think much about dividends.

Currently the shares of T are 0.6% of my stash, not one of the bigger positions.

 

[RobLJ]

Kitties co-authored a fabulous article that illustrated how that approach can work very well. If I had had that kind of research available in 1999 I think I would have taken that exact approach.

I was impressed by Kitces's article as well. I'm using a variation--since I'm 5 years older than DW and will pull from my account only for the next five years, my allocation is 50-35-15 in those two accounts. DW allocation is a bit above 75-20-5.
When she gets nearer to 59.5, I'll dial back her stock exposure and then increase my stock allocation when we can draw from her accounts (and two years later when I hit FRA for SS). Overall, we're at 60-25-10.

 

[copyright1997reloaded]

Son of a gun! You know what? I own T, and I do not even know its dividend yield is that high. I spend more time looking at all the price movements for gains and losses of my growth stocks, and frankly do not think much about dividends.

Currently the shares of T are 0.6% of my stash, not one of the bigger positions.

I'm beginning to think you are really me. I also own T, but it is 1.34% of my stash.

 

[FREE866]

Even though I'm 95% stock I was relieved to see a 10% pullback. I think it just prolonged the bull, scared people ( which is good from a sentiment standpoint), and personally gave me an idea of what it looks like on paper for a quick drop. Keep in mind, IF the market drops 40% the market usually comes back to the tune of ~20% per year in bull markets.