Dividends4Life: To Diversify Dividend Holdings Or Not

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To Diversify Dividend Holdings Or Not

Posted by D4L | Friday, January 18, 2013 | | 0 comments »

I have been struggling with the question of diversity. How important is diversity? What is too little diversity? What is too much? It seems that some of the smartest investors in the world believe that holding a relatively few stocks works best. I certainly would never argue with Warren Buffet, and what he says concerning diversification makes sense. What Buffett has espoused is finding stocks that are undervalued, buying them, and holding them forever. He feels that it is actually fairly rare to find a stock that is really undervalued and worth investing in, so when you find one, invest heavily.

When investing, there are many things one must balance. How much diversification is right for yourself is just one of them. If you are a dividend growth investor, then I don't see any reason to hold less then about 20 stocks. Any less then that, and a dividend cut will too greatly affect your portfolio. And, to me, as long as you keep the commission costs down, and can find the time to adequately follow them, there is great benefit to holding as many as 100 stocks in your portfolio.

Source: Seeking Alpha

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