YARP 40-stock portfolio is all set!
I am now poised to continue grabbing all the dividend income I can find
It took some time and a lot of micro decisions to get to this point, but the 40-stock YARP tactical dividend portfolio is all set! Subscribers can see a very colorful display of it in the shared research deck.
Like I always say, everyone can play offense…and anyone can pick a stock or fund with a very high dividend yield and buy it. But few have really learned how to play responsible, sustainable defense. That has always been what I think has separated me from the crowd as a portfolio builder, even if it cost me a few clients over the years because I was not “aggressive” enough. Like I said, anyone can play offense, that’s the easy part. But what built a career on was the other side, the one that folks tend to only remember how important it is when markets fall quickly. Because by then, it is too late to start preparing.
The final touches on this set of 40 stocks, which I will be rotating in terms of position size (1% to 5% in each stock, depending on a range of factors) came amid a storm of dividend ex-dates and market swings, which prompted more adjustments to the stocks already in the portfolio, as well as the hedge position I always maintain.
Here’s a summary of the final steps I took to get to this milestone in the development of what I hope will be a completely unique way for investors to pursue above-average dividend income and protection of capital, while still retaining virtually uncapped upside.
Latest YARP dividend stock portfolio moves, summarized
Sold out of 2 stock positions
Added 7 new stock positions, all at the 1% minimum weighting. This is part of the discipline. Once I have what I think are the “best” 40 stocks, with all 11 S&P sectors covered, even if I don’t think they have great short-term upside potential, I want to force myself to own a little 1% position at all times.
So, I had 35 stocks, and those adds and sales gets me up to an even 40. That list of 40 will change, but as seldom as possible, and usually because something “big” happens. For instance, a company’s outlook could change dramatically, or another stock is just “banging on the door” harder to merit a spot in the “40.” This has and will be part of my ongoing notes to premium subscribers of the Sungarden Institutional service, as each specific adjustment is made.
For 4 stocks that have been in the portfolio for a while, I reduced their positions. All were between 2% and 4% and all were cut to the 1% minimum weight. Why? Different reasons, but there are a few normal reasons I do this, and this has been a typical one lately:
Stock recently went ex-dividend, I have a gain and got the dividend, but the price trend looks too weak to maintain an overweight position. This has occurred in some strange places lately, such as the utilities sector, which produced some quite strong gains for me right after I bought them. But in this market climate, that’s more of a gift horse than a signal to stay pat. The goal here is to make as much as I can from dividends and price gains, and not lose big.
I also swapped out the put option position. It is now “rebalanced” to 1% of the portfolio, and the strike price is closer to the current market. This simple yet powerful hedge would, in my estimation, protect the vast majority of the portfolio should the market go suddenly south, any time over the next several months.
Importantly, I still have a call option position as well, so if the market spikes higher from here (a.k.a. lots of stocks have their own “Nvidia”-style moves), my portfolio will get a nice upward kick from the very small investment I made in the call options.
Subscribers, please see the live sheet with these adjustments. Next week I’ll be sending the first analytical report, with sector allocations, valuation statistics, etc. This is all to help you advance up the learning curve as you see fit.
And if you are curious as to what all this is about, and want to track my specific moves in my own portfolio, for this YARP dividend account as well as my CORE ETF portfolio and more of what I do with more than 80% of my own liquid assets, consider signing up for the Sungarden Institutional service. It is $300 a month, which is $3,600 over a year. This is NOT a personalized advisory service, but it provides the research and move-by-move trades, ongoing commentary, and the ability to ask questions about what I’m doing.
For investors who are just starting out, ETFYourself.com is our $40/month (or $400/year) portfolio building and ETF research tool, at that separate website.
But for those who have been investing themselves or through an advisor/broker for a while, and want to explore a highly cost-effective and transparent investment process they can adapt on their own, as they wish, we think the Sungarden Institutional portfolio is truly unique in an industry that is long on hype and short on true insight for self-directed investors.
Thanks Rob!