Weekly Newsletter   Challenge account   Weekly Newsletter   

A great opportunity to add more stocks to my dividend paying portfolio

Recent sell off in the stock market created excellent opportunity to buy more shares to my existing portfolio. At this point I am not adding new holdings to my portfolio, but adding to the existing shares only.

I made a rule on how many shares to hold in a portfolio. I searched the internet to find out how many shares to hold when you have small portfolio and keep it manageable. Some people and advisers will tell you need at least 30 different stocks to have your portfolio diversified. However all those adviser are expecting you having 500k portfolio. With $500,000 it is probably possible having 30 stocks, but I do not believe it is manageable. Watching all 30 companies to catch potential issues isn’t easy.

Then I found that it is not absolutely necessary having that many stocks in your portfolio and that actually you can do even better with lesser stocks if you are picking the best stocks. On top of that, when buying dividend payers and selecting companies who have paid dividends for decades, continuously increasing the dividend, you wouldn’t be too unlucky picking a loser.

So what I have found and now trying to follow? Here is a table of portfolio size and how many stocks to hold in that portfolio:

Portfolio size # of dividend stocks
$0 – $5,000 2 stocks
$5,000 – $10,000 4 stocks
$10,000 – $20,000 10 stocks
$20,000 – $30,000 15 stocks
$30,000 – $50,000 17 stocks
$50,000 – $100,000 20 stocks
> $100,000 30 stocks

Of course you can have a different allocation and I do not have my own allocation according this table yet, since I started practicing this recently, but with saving more money and reinvesting dividends I will get my portfolio in line with this table.

So this is the reason why I am not adding new holding, but adding to the existing ones although it is tempting to add new holdings. It is tempting because there are great companies out there which I want to own, but I want to be systematic and patient.

The sell off in the market however provides excellent opportunities to buy more shares of the companies cheaply as well as increasing my yield on cost.

I opened a new buy order for tomorrow for Armour Residential (ARR). Currently the stock was punch down severely and I believe this was an overreaction and the stock will stabilize and improve in price. The current yield is over 17% which makes it very attractive dividend for high yield hunters. You could even see it in today’s trading how strongly the stock recovered.

Buying more shares of ARR
So I am opening a contingency buy order for ARR if the stock will trade at $6.84 a limit order at max. $6.94 will be triggered. Thus if the stock pops up too much or will trade below the trigger price the trade will not be executed.

If this trade executes it will improve my current average price which is $6.96 per share and it will improve my current yield on cost which is 14.50%

MCD is very tempting too, so adding more shares to my portfolio
I actually entered this order yesterday, but it didn’t execute since the stock traded lower today. So I lowered my contingency order to buy more shares if the stock will be trading at $84.62 or higher then a limit trade at $85 per share will be triggered.

I will not be buying using all my available cash in case the market will push lower (and there is a lot of downside pressure still) and those stock fall lower. In that case I will be adding more shares to my portfolio with another portion of available cash.

Happy Trading!

2 responses to “A great opportunity to add more stocks to my dividend paying portfolio”

  1. admin says:

    At this point I was adding stocks by buying them. But I still use options as well.

  2. FlyingBirds says:

    Hi There
    I enjoy reading your blog.
    I found it after reading your review of “Generate Thousands in Cash on Your Stocks without Selling Them”. Are you still using options, or did you use regular buy orders to add to you portfolio.

Leave a Reply

Your email address will not be published. Required fields are marked *