In the middle of 2010, I purchased this blog mainly because I wanted to switch my portfolio from an aggressive growth model to a dividend investing model. I took me about 6 months to trade my non dividend paying stocks in order to rebuild my portfolio. Since then, I’ve kept only one stock that doesn’t pay dividends (and it’s down sharply now). When I look at the rest of my portfolio (i.e. the dividend stocks), I can say that I’ve made some good trades. In a few weeks, I’ll add another $5,000 to my portfolio and now it’s time to set my dividend investing goals for the year.
Overall Look at my Dividend Investing Strategy
Building a dividend portfolio doesn’t happen overnight. At first, I was simply picking stocks that would fit my dividend investing model regardless of the sector. Since I had no dividend stocks at first, it was easy for me to simply pick any decent stock with good dividend growth potential. Throughout 2010 and 2011, I made most of the trades to build my core portfolio. I am now more diversified and gradually included sector diversification while moving forward with my dividend investing strategy.
I also made the choice of building a 100% stock portfolio with no bonds or other fixed income. I had previously written that I think a 100% dividend portfolio is a safe investing model and I still believe it today. Companies such as Coca-Cola (KO) and Johnson & Johnson (JNJ) are so diversified and well established that they are as safe as term deposits in my opinion. The low rate environment is the other factor why I don’t consider bonds for my investing approach. I don’t find it very appealing to buy a bond that pays less than inflation!
So far, I have focused a lot of my money into three sectors: financials (BNS, NA), resources (VNP, CVX, HSE) and techno (INTC, STX, T). I also wanted to build a solid core with the consumer sector with the addition of KO and JNJ. Since I acquired these stocks, each of them has increased their dividend regularly which is also interesting.
Dividend Investing Goals for 2013
Since I’m pretty happy with my portfolio, my main investing goal in 2013 will be to continue buying dividend growth stocks. Since I’m already taking some risk with techno stocks, I will look towards businesses with more “sustainable” model. I’ll definitely pick 1 or 2 stocks from my Best 2013 Dividend Stocks eBook. Since I beat the index last year with my 2012 picks, I think it will be a good idea to re in this short list of 30 stocks to improve my portfolio. I’m seriously thinking of buying McDonald’s (MCD).
I already know that I’ll be looking to sell STX later on as I’m not sure how long the company can continue in the techno environment. INTC will also be on my sell watch list for this year. I’ve noticed that techno stocks show strong metrics but their environment can change rapidly. In the meantime, I’m ready to take an extra risk as the short term potential growth is quite interesting.
My Next goal will be to increase the existing positions in my holdings. I will start looking into DRIPs to buy stocks and save on fees. Stocks like KO, T (Telus), BNS, NA, JNJ, CVX will be part of my portfolio for a very long time so I will definitely increase my position. I previously used their dividend to add more stocks to my portfolio as diversification was more important to me. Now that I’ve reached a better level of diversification, I can look into “boosting” my good picks.
My third goal will be to look into index investing. I’ve been doing some research lately about the mix of index investing through ETFs combined with dividend growth stocks. While the dividend growth stocks provide stability and regular yield in your portfolio, index investing can offer a more diversified and growth approach. This investing model seems very appealing to me right now and I’m doing some research to see how I can build a stronger portfolio with this approach.
Therefore, my next $5,000 may be divided into two parts: half in a new stock and the other stock in an index. I’ve recently bought a small US index fund with my dividend payouts. I will most probably sell this fund and buy a bigger part in a different index. I should start 2013 with roughly 10% of my portfolio invested in a US index.
Readers, What are Your Dividend Investing Goals?
I have set three major priorities for 2013:
#1 Adding a “stable” dividend growth stock (most likely from the consumer sector)
#2 Increase my existing positions through Dividend ReInvestment Plans (DRIP)
#3 Invest 10% of my portfolio in a US index ETF.
I believe my portfolio will be stronger and more diversified with these moves. I would like to know what have you done lately in your portfolio and what your dividend investing goals are for 2013? Are you moving away from dividends? Are you buying more or simply playing the Dripping game?