Your investment approach centers on focusing on dividend-paying companies with strong histories of dividend increases and relatively high yields. Here’s a distilled summary of your strategy:
Key Elements of Your Investment Approach:
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Focus on Dividend Stocks:
- Preference for companies that increase dividends regularly and have historically high yields.
- Examples from your portfolio include Realty Income, PepsiCo, Black Hills, and Enbridge, representing diversified sectors like real estate, consumer staples, utilities, and energy.
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Diversification Strategy:
- Acknowledgment that owning a large number of stocks alone does not ensure true diversification. You target a mix across different sectors and asset classes.
- Incorporation of pooled investments, such as mutual funds, closed-end funds, and ETFs, to enhance sector coverage and reduce individual stock risk. These investments help diversify beyond your selected individual stocks.
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Realistic Portfolio Size:
- You have determined that managing around 34 individual stocks is optimal given your capacity and investment goals, opting not to extend to 50 stocks as advised by some sources.
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Disciplined Investment Approach:
- You approach stock purchases with a predefined investment size and do not add to existing positions once fully invested, limiting potential downside while managing risk.
- Buy opportunities arise when yields are historically high, and cash is maintained for flexibility and selectivity in investment decisions.
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Awareness of Limitations:
- Recognition of your capability to manage investments effectively without overextending, which includes outsourcing certain strategies like options trading and healthcare investments to funds.
Conclusion:
Your diversified approach balances income generation and capital appreciation while being mindful of personal limitations. By leveraging pooled investments and being selective, your strategy aims to achieve stable investment growth without excessive risk. Cash is viewed as a valuable resource, providing flexibility to seize opportunities when they arise.
