You may have noticed that on the right sidebar I have a list of stocks of my interest. These are the stocks I am planning to add into my portfolio.
The list contains primarily dividend paying stocks, but time to time I add a speculative stock into the list. For example right now it is Old Dominion Freight Line, which showed momentum and rapid growth in price. If this strength continues I may add this stock into my portfolio.
In my Trading account, as I call it, I would allow circa 30% of the portfolio for more risky trades but the rest will be strictly dividend investing. Those 30% will be dedicated not only for speculative and growth stocks, but for option trading as well.
Right now I am preparing for options trading and studying and maybe later I will try one small trade with real money to see how it all works.
As far as today I am still in accumulation phase, however. I am satisfied with my results. Within a year I was able to save and invest 10k in my Roth IRA account and raise my savings in Trading account up to $4000. I am using margin to buy more dividend stocks, so I purchased stocks for $10,000.
I have read an article about leveraging an account with margin by buying stock “ahead” and then paying down the balance over time. The book Lifecycle Investing: A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio by Ian Ayres, Barry Nalebuff, which writes about this strategy created a lot of controversy and negative feedback from investors as far as I could read on the Internet.
However I like the idea. It helps me to boost my investments. I believe that in combination with dividend investing I can purchase more stocks now, collect dividends and enjoy stocks appreciation. OK, I understand that margin is not for free. Currently I pay 9% for the loan from my broker. It is acceptable for me and as for now I am paying this loan down. I invested my own 3000 dollars and borrowed $7000. My monthly payment is 57 dollars. For me – manageable and acceptable. So I decided to give it a try and see if this strategy works for me.
Back to my watchlist. I added a page with watchlist in the sidebar, where you can see more details why I selected those stocks. It is not a rocket science and many dividend investors will recommend most of the stocks in the list.
What I am looking at when selecting the stock? As far as today I want to be investing aggressively, thus I am selecting stocks which pay higher dividends (high dividend yield) so I can reinvest back or accumulate to buy other stocks. Now I am OK with lower dividend growth, but I watch this item closely too. I am selecting stocks with high yield as well as higher dividend growth. I want to be in the middle range of the following:
- stocks with high yield and low dividend growth
- stocks with higher yield and higher dividend growth
- stocks with low yield and high dividend growth
Now I am buying primarily stocks from the second category as well as stocks from the first category. I am also adding riskier stocks with high yield, which do not or barely fit other criteria, such as dividend history (once it was AOD fund).
Next criteria I look at is how many years the company was increasing dividends (for example JNJ was increasing dividends for 48 consecutive years), when it started first paying the dividends and what industry and sector the company belongs to. That is not only because of my allocation, but also to see, why the company didn’t increase its dividends. For example banking and financial companies were slammed by the recession. That necessarily doesn’t mean that the company would be bad at all. For example Bank of Montreal was increasing the dividend since it started except a few moments in 2005 and obviously in 2008 – 2010 – during the crisis. I believe, banks will recover again and start paying dividends again. Thus it seems to me as a good opportunity to add some shares of this bank to my portfolio, mainly when it yields 4.2% and its growth is 8.57% (the company is in the second (middle) category as shown above.
Let’s take a look at my list of the stocks I am planning to add (it can change over time obviously) into my portfolio:
(If the table below doesn’t show up, hit reload in your browser. I do not know why sometimes it is not loading, but reloading the page helps).
View the entire spreadsheet here.
You can also find the same list on the right sidebar under Pages link.