03-13-2016, 11:15 AM
When I was in the accumulation mode and getting serious about retirement, I directed my investments towards Income generation, rather than Total Return. It's a fine line, because if one hold companies which continue to generate higher income each year, the value of the company will grow, providing higher Total Return.
The key or at least a danger, is to avoid reaching for Yield in your quest for income. Find the middle ground, above average current yield, with above average dividend growth. It's a slower process and one which can be achieved (at least in my opinion) with a smaller portfolio. I like a maximum of 20 to 25 holdings across all accounts. I also don't feel one needs to hold all sectors, in fact I think many sectors should be avoided, such as All Cyclical companies. I liked to buy the stock which was value priced even if you find your are investing more in one company or sector than the others. The goal was to increase the income, not to rebalance.
The key or at least a danger, is to avoid reaching for Yield in your quest for income. Find the middle ground, above average current yield, with above average dividend growth. It's a slower process and one which can be achieved (at least in my opinion) with a smaller portfolio. I like a maximum of 20 to 25 holdings across all accounts. I also don't feel one needs to hold all sectors, in fact I think many sectors should be avoided, such as All Cyclical companies. I liked to buy the stock which was value priced even if you find your are investing more in one company or sector than the others. The goal was to increase the income, not to rebalance.