Saturday, March 15, 2014

Bonus Deposit, March 2014

On Friday, March 14, I deposited $5,000 cash into my DivGro portfolio. This bonus deposit is in addition to my regularly scheduled deposits of $2,500 per month. As I did on a previous occasion, I transferred this money from one of my other portfolios.

The main reason for this bonus deposit was to boost available cash in DivGro, particularly so I could buy units in a master limited partnership (MLP). I prefer to allocate about $5,000 when buying units in MLPs, which is double the amount I usually spend on regular stock purchases. I'll report on the MLP purchase in my next post.

The last year or so, I've slowly increased the relative size of my dividend growth and income portfolios. I believe it is important to adjust one's risk profile as you get older. When you're younger, you have time on your side and you can afford to be an aggressive investor. But as time goes by, you have less time to recover if an aggressive investment goes against you. Also, this bull market is several years old now, and I feel its time to become more defensive.

In my income portfolio, I invest in stocks that provide an income stream in the form of dividends. There are many companies that pay dividends faithfully, without necessarily increasing their dividend payments every year. These companies are not eligible for inclusion in DivGro. But I've been quite successful with investments in Main Street Capital Corporation (MAIN) and Prospect Capital Corporation (PSEC).

I transferred money out of my aggressive growth portfolio to fund the bonus deposit. I use this portfolio to invest in high risk/high reward stocks, specifically in companies that are in the early stages of growth. These companies are usually smaller and not yet household names. Often trading at higher betas, these companies can provide excellent returns in bull markets. Conversely, though, they can tumble mercilessly when the bears take over!

I need to continue to increase the relative size of dividend growth and income portfolios over the next ten years, eventually focusing on capital preservation rather than aggressively pursuing capital appreciation. With this transfer to DivGro, I'm taking another step in that direction!

Do you follow other investment strategies, or do you only invest in dividend growth stocks?

2 comments :

  1. Outside of my dividend growth portfolio, I invest in both index-type ETFs, an investment club with a variety of holdings, peer to peer lending investments, and my unintentional rental property. Although my current rental is unintentional, rental real estate will be a part of my overall investment strategy as well.

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    Replies
    1. That seems like a good, balanced strategy. The ETFs and investment club holdings probably provide solid diversification.

      I've ventured into peer-to-peer lending with LendingClub. I particularly like a new service they have, automatically investing available funds based on some criteria I set.

      Currently, I'm not invested in rental property. Until now it hasn't made sense to me, considering the cost of housing where we live. I suppose I could consider buying "elsewhere", but I'm hesitant to buy property in places I don't know.

      Thanks for stopping by and sharing!

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