Proctor & Gamble gave me a raise this month. The dividend increased from 1.007 to 1.057. A 5% increase. I’ll take it.
When I began this experiment, I wanted to earn an income. A monthly payout. I did my best to balance yield with quality and diversify as much as I could with the income I pulled in on the side each week. As I got better at earning I became more sophisticated in my strategy, expanding the list of equities and sectors in the portfolio. Now that I’ve reached $100 dollars a month in dividends I want to continue growing the portfolio, but further mitigate risk.
Looking at my portfolio, I can immediately see a concentration of U.S.-based large cap stocks. The big companies that everyone knows. These are also held in the ETFs I’ve chosen. About 11.5% of the portfolio is in bonds. And the sector or industry breakdown of the portfolio is roughly like this:
| Sector | Approx. Portfolio % |
|---|---|
| Technology | 12.3% |
| Consumer Staples | 11.3% |
| Fixed Income | 12.3% |
| Financial Services | 26.0% |
| Healthcare | 4.9% |
| Real Estate | 16.2% |
| Energy | 1.8% |
| Industrials | 4.7% |
| Utilities | 3.4% |
| Consumer Discretionary | 1.8% |
| Communication Services | 0.9% |
| Other / Diversified | 4.4% |
Even without a quantitative analysis I can see that in order to diversify and de-risk, I need to increase international and emerging market holdings. It will help future proof the portfolio. I should also increase holdings in Healthcare, Energy, Industrials, Utilities, Consumer Discretionary, and Communication Services. I can increase my positions in CL, JNJ, and PG, and perhaps add positions like ABBV, CVX, EMR, MKC, and maybe MO.
Lastly, I can increase both my international exposure and bond holdings with something like BNDX. I may aim for a 20% bond exposure with a fund like that.
The last big consideration now is taxes. This portfolio is not a huge tax burden… yet. But it may be one day. Perhaps I can add a fund that provides a monthly income without taxation, like VTEB or a more local one to my state, or both.
These are all ideas I’m playing with in addition to closing my positions in NVDY and GOF. Ideas that will still allow to me to collect a roughly equal payout on a monthly basis through dividends, get raises every year, and decrease risk. Nice, slow, and steady.