Hey guys!
Time for another portfolio update and further explaining my holdings and why I picked them.
It’s been just under two weeks since I started my Product Life-Cycle portfolio and I’m still beating the market. Perhaps it’s beginner’s luck, but we’ll see if it continues. My investment in financials and covid recovery stocks continue to pay off for me and have contributed to my market outperformance. I’ve also started to have some dividends trickle in this week – I’m beginning to see the ~3.8% dividend yield of my portfolio kick in.
Below, you’ll see my portfolio as of November 14th, 2020. In just about two weeks, my portfolio’s return has been 6.73% compared to the 6.5% increase in the overall market (VFAIX) since the end of the day November 3rd, 2020. Ignore the return percentage you see on the screen, M1 finance is calculating my money weighted return while I’m calculating my portfolio value from the end of the day that I first invested vs the same criteria for the S&P 500 index. As you can see, my Stable Yield portfolio slice has lagged the returns of the overall S&P 500 during two weeks of big gains – but this is to be expected in these few weeks of rapid growth. This slice of my portfolio is up 4.07% since the end of the day on November 3rd.
To review the purpose of this slice of my Product Life-Cycle portfolio, I’ve taken an excerpt from my original blog post to highlight the purpose of the Stable Yield section of my portfolio.
Stable Yield (20%) – if the Growth + High Yield slice is the heart of my portfolio, the stable yield portion is my backbone. These companies should not outpace the growth of the S&P 500, but they will overperform on the dividend. And, if I selected the right companies, maybe they will just direct their resources effectively into new products that deliver continued growth.
This is the most conservative part of my portfolio. It should in theory underperfrom a bull market and overperform a bear market. The overall dividend yield of this section of my portfolio is 5.12% – much higher than the current S&P 500 yield of 1.68%
Portfolio Composition: What companies are included in my Stable Yield portfolio?
- AT&T (T) – 15% | Dividend Yield: 7.19%
- Brookfield Infrastructure Partners LP (BIP) – 10% | Dividend Yield: 3.94%
- Dominion Energy (D) – 10% | Dividend Yield: 4.40%
- Enviva Partners LP (EVA) – 10% | Dividend Yield: 6.37%
- PPL Corp. (PPL) – 10% | Dividend Yield: 5.56%
- 3M Corp. (MMM) – 5% | Dividend Yield: 3.45%
- Automatic Data Processing Inc. (ADP) – 5% | Dividend Yield: 2.12%
- Clearway Energy Inc. (CWEN) – 5% | Dividend Yield: 3.12%
- Consolidated Edison Inc. (ED) – 5% | Dividend Yield: 3.72%
- Horizon Technology Finance Corp. (HRZN) – 5% | Dividend Yield: 9.88%
- Pepsico Inc. (PEP) – 5% | Dividend Yield: 2.73%
- Verizon Communications Inc. – (VZ) – 5% | Dividend Yield: 4.05%
This section of my portfolio is intended to be less volatile, more stable, and rake in dividends that can be reinvested throughout my entire portfolio. Products that are old or have a ceiling for their maximum potential often lose their luster to many stock investors. But this boring-ness leads to stable cash flow in the short term and an opportunity for a major upside surprise in the long term.
Stay tuned as I continue to share my portfolio composition and my journey as I track my investment returns vs. the market. Send me an email at rothandrollfinance@gmail.com with any feedback or suggestions for content. What do you want to see? Talk to you all soon.
Roth and Roll Finance 