I am a firm believer that asset allocation plays a significant part in a portfolio's long-term results. Recently, I received a question asking if you could have a diversified portfolio of dividend stocks. It is an interesting question that deserves further examination.
As for my portfolio, I consider asset allocation only when looking at my holdings in total. It would be much too difficult to maintain a good allocation within individual portfolios (income, growth, 401(k), Roth IRA, etc.), while trying to maintain my overall allocation. However, an investor could build a degree of allocation into a portfolio of dividend income securities. Consider the following:Business Services Sector
Yield: 3.33% | Style: Large Growth | Analysis
Yield: 1.86% | Style: Large Growth
Yield: 1.16% | Style: Mid GrowthConsumer Goods Sector
Yield: 3.23% | Style: Mid Core
Yield: 3.04% | Style: Large Growth | Analysis
Yield: 2.85% | Style: Large Core | AnalysisConsumer Services Sector
Yield: 4.19% | Style: Mid Value | Analysis
Yield: 3.56% | Style: Large Core | Analysis
Yield: 3.22% | Style: Large Core | AnalysisEnergy Sector
Yield: 6.15% | Style: Large Value
Yield: 3.75% | Style: Large Value
Yield: 2.56% | Style: Large ValueFinancial Services Sector
Yield: 3.90% | Style: Small Value | Analysis
Yield: 2.85% | Style: Large Value | Analysis
Yield: 2.38% | Style: Large Core | AnalysisHardware Sector
Yield: 3.67% | Style: Small Value
Yield: 3.23% | Style: Mid Core
Yield: 1.90% | Style: Small Growth | AnalysisHealth Care Sector
Yield: 3.27% | Style: Small Growth
Yield: 3.08% | Style: Large Core | Analysis
Yield: 2.10% | Style: Large Core | AnalysisIndustrial Materials Sector
Yield: 3.40% | Style: Large Core | Analysis
Yield: 2.90% | Style: Large Core | Analysis
Yield: 2.58% | Style: Large CoreMedia Sector
Yield: 2.63% | Style: Large CorePharmaceuticals Sector
Yield: 5.77% | Style: Large Value
Yield: 2.97% | Style: Large Growth | AnalysisReal Estate Sector
Yield: 5.14% | Style: Mid Core
Yield: 4.29% | Style: Mid Core
Yield: 4.06% | Style: Mid CoreTelecommunications Sector
Yield: 8.10% | Style: Large Value
Yield: 6.54% | Style: Large Value | AnalysisUtilities Sector
Yield: 6.61% | Style: Mid Value
Yield: 5.59% | Style: Large Value
Yield: 4.45% | Style: Small CoreBonds
Needless to say, the above will not provide a perfect allocation, but it goes a long way to provide diversity in a portfolio focused only on income securities. In my personal portfolio, I buy the best available dividend securities and use my other investments to balance my asset allocation.
Yield: 2.74% | Style: Short-Term Bond
Yield: 4.32% | Style: Intermediate-Term Bond
Yield: 5.16% | Style: Long-Term Bond
Full Disclosure: Long ABT, ADP, AFL, BIV, BLV, BP, CLX, CTL, CVX, ED, EMR, GPC, HGIC, JNJ, KO, LLY, MCD, MMM, NUE, PG, SYY, T, TEG. See a list of all my income holdings here.(Photo Credit)
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Asset Allocation For A Well-Rounded Dividend Portfolio
Posted by D4L | Friday, February 19, 2010 | commentary | 1 comments »________________________________________________________________
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I really like your approach to creating a properly diversified equity portfolio that pays solid dividends in various sectors.
Some of the investments you mention that interest me a lot are KO, JNJ, MMM, PG, and XOM.
Nice thread.