$55,118.98 | Stable Yield

Hey guys,

I’m back for another Roth IRA portfolio update, and also to share this year’s holdings of another one of my portfolio slices, my Stable Yield portfolio slice.

First, let’s take a look at my overall portfolio balance.

I’m up a bit since the last Roth IRA Portfolio update, as is the overall market. Here’s how my portfolio’s overall returns compare to the market as of today.

Total share price appreciation as of March 27th:

• S&P 500 from Jan. 5th, 2022 – Mar. 27th, 2022: -3.38% (416.12-430.66) / 430.66 x 100
• My Portfolio from Jan. 5th, 2022 – Mar. 27th, 2022: -5.22% ((((55,118.98 – 1,500 – 339.59) – 56,210.80) / 56,210.80) x 100)

Total return as of March 27th:

• S&P 500: –3.07%
• My Portfolio: -4.59%

My portfolio is now a bit further behind the S&P in overall returns. Even though the dividend output is about double the S&P, I’m still lagging a bit behind in overall return. Overall, I still feel good about my strategy to beat the market this year, but year-to-date I’m behind.

Now, let’s take a look at one of my portfolio slices for the year in more detail – my Stable Yield slice.

This slice of my portfolio has been my strongest lately. Below, you will see two screenshots. One shows the overall return of my portfolio slices since inception, and the next shows the investment performance by portfolio slice in the last quarter. The stable yield slice has the second-worst performance of any portfolio slice all-time, but is my only slice in the first quarter of the year that has had a positive return.

As a reminder, my portfolio each year consists of five portfolio slices that serve different purposes. Within each of these slices the strategy is consistent, but the companies that make up that slice can vary.

If you want an in-depth explanation of each portfolio slice and its purpose, take a look at my Roth & Roll Manifesto post here.

As a reminder, here are the portfolio slices that make up my Roth IRA every year:

• Growth + High Yield (30%)
• Moonshot Growth (20%)
• Stable Yield (20%)
• Growth 1st, Dividend 2nd (15%)
• REIT (15%)

Here are the investments that make up my Stable Yield portfolio slice for my 2022 Roth IRA:

Overall Slice | Dividend Yield: 4.56%

• Lyondell Basell (LYB) – 15% | Dividend Yield: 4.15%
• JPMorgan Equity Premium Income (JEPI) – 15% | Dividend Yield: 6.98%
• AT&T (T) – 10% | Dividend Yield: 8.51%* to be reduced after Warner Media Spinoff
• Enviva (EVA) – 10% | Dividend Yield: 1.1%
• 3M (MMM) – 5% | Dividend Yield: 3.89%
• ADP (ADP) – 5% | Dividend Yield: 1.79%
• Clearway Energy (CWEN) – 5% | Dividend Yield: 3.69%
• Consolidated Edison (ED) – 5% | Dividend Yield: 3.31%
• Dominion Energy (D) – 5% | Dividend Yield: 3.01%
• IBM (IBM) – 5% | Dividend Yield: 4.90%
• Johnson & Johnson (JNJ) – 5% | Dividend Yield: 2.37%
• PPL Corp. (PPL) – 5% | Dividend Yield: 5.14%
• Unilever (UL) – 5% | Dividend Yield: 4.40%
• Verizon (VZ) – 5% | Dividend Yield: 6.10%

You’ll notice that a lot of these companies are not very exciting. These stocks aren’t expected to get huge share price appreciation gains, or to lead the market on its next leg up. The purpose of this slice of my portfolio is to provide steady income in the form of dividends, as well as to provide downside protection in the case of a market drop.

This thesis has worked well so far – during the market drop so far in 2022, this portfolio slice is actually up compared to the overall market being down.

Let me talk a bit about my two most heavily weighted portfolio position in this slice and why I chose them.

Lyondell Basell is a chemical processing company who trades at a very low P/E ratio of under 7. In this year’s portfolio, I wanted to focus on companies that could do well in an inflationary environment, and companies with manufacturing prowess and a low P/E ratio top my list.

Second, I chose the actively managed income ETF – JP Morgan Equity Premium Income (JEPI). This fund holds dividend yielding stocks, and also uses an options trading strategy to generate income from options as well as the fund’s underlying dividends. It yields just about 7% in dividends with an expense ratio of 0.35%. I was drawn to this fund because I thought it would be a great hedge for a down-turn in the market. The dividend yield is high, and options trading strategies tend to do better when there’s volatility in the market, which typically happens on market drops.

So far, these top two holdings have beaten the market in overall returns in the trailing three months, which has contributed to this slice’s outperformance.

Overall Returns:

• Lyondell Basell: +11.57%
• JP Morgan Equity Premium Income: -1.45%
• S&P 500: -3.82%

I’m hoping to continue to get dividends flowing in from this portion of my portfolio, and in the case of a market underperformance in 2022, my Stable Yield slice will need to carry its weight if I’m going to outperform the market.

How are your guys’ self-directed investments doing? Let me know in the comments.

Thanks, and happy investing!