Building the core of a dividend portfolio

There are many sources of information on general portfolio building using just ETFs. Those work great for what they are. But as we want focus to on maximizing dividends, we need use also stocks. Dividend stocks are great for leveraged investing as dividends eat debt away nicely and portfolio does no rely solely price rise.

Portfolio constitution

Following graph illustrates the constitution of different classes I have in dividend portfolio

Portfolio_core Building the core of a dividend portfolio

Half of portfolio is in general class which has everything that qualifies but is not either a real estate investment trust or financial sector company. Financials and REITs take 25% each of the portfolio. REITs and financial companies take up large portion because they are quite reliable sources of dividend income.

General

mixed_industry Building the core of a dividend portfolio

In general class I have ETFs and number stocks that fit to the strategy. In ETFs I have for example:

RFG(midcap growth),OUSA(Large cap Value),RZV(Small cap value). From the stocks my favorite has been “V”; Visa. Steadily rising profit and holding practically a duopoly with mastercard in credit card market.

REITS

construction-1210677_640 Building the core of a dividend portfolio

REITS are the easy way to take part in real estate market. There are two types of REITS. Ones that invest in buildings and ones that invest in mortgage related assets. I only like the REITS that actually hold real buildings and do related activity like renting. My favorite REIT has been “O”; Realty Income Corporation. No high yield but steadily rising dividend and company value.

Financial companies

money_business-300x94 Building the core of a dividend portfolio

Most of the financial related companies offer good dividends. Highest dividends are paid by Business Development Companies, BDCs. They have similar special tax handing in US a REITS but mostly they lend money to microcap companies,invest in equity in micro cap companies and offer a range of services helping other companies in financing related tasks. Favorite stocks of mine in BDCs are Main Street Capital Corporation (MAIN), Horizon Technology Finance Corporation (HRZN)

There you have it. Basics of dividend portfolio building. Of course in the end you should have 50 150 different securities but this gets you started.

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