06-22-2014, 05:17 PM
(06-21-2014, 10:25 PM)EricL Wrote:(06-21-2014, 08:11 PM)Ok Red Wrote: I recently subscribed to F.A.S.T. Graphs and the results were eye opening. I'm 55 and my window to retirement is 4.5 years minimum and 9.5 years maximum. It was clear that my carefully constructed portfolio of relatively low yielding high DGR stocks would be great if I was 30, but was obviously not going to get me where I would have the flexibility to retire when I wanted (really would like to have 10% return on cost). As a result, I had been branching out to REITs and BDCs to start with yields that are much closer to my desired return on cost. So far I've picked up O, OHI, STAG and DLR in the REIT area, and MAIN and PFLT in the BDC area. This thread, and Be Here Now's post above, really drives home that fact that I need to be looking harder at higher yielding lower DGR equities. I'll keep the positions I already have (UNP, WAG, CMI etc) but will be investing more of my cash stash in equities that get me a head start on my desired return on cost. I have lots of work to do, as I've not spent a lot of time in this end of the market...
The only thing I would say is to not reach for yield. The BDC's look nice with the high payouts, but neither have a very long track record so its hard to say what will happen to them in another bear market. I do like your REITs though as I own all but STAG myself.
Eric, I'm pretty conservative - I am holding 40% of my portfolio in cash right now, and have another 30% in individual issue investment grade corporate bonds. My two BDC's make up a whopping 3% of my portfolio - I'm simply dabbling my toes in the water. I picked the two that appear to be high quality and will watch them until I feel more comfortable with the businesses and can get a better feel for the DGR of each. However, the current payout for each is extremely close to my 10% yield on cost goal, so I have high hopes.
I have a much better feel for the REITs and those now make up almost 8% of my portfolio. I've tried to get a high quality holding in each sub-sector... except mREITs. I'm not sold on those at present. I'm continuing to do research and would like to get a couple more high quality holdings in that area.
Be Here Now - I can see why this migration is the subject of much debate. My current LYHG holdings are companies that most people have heard of and are fairly easy to understand. Some of these HYLG companies are... different. It's gonna take a while to make the transformation, but in the meantime I'm going to keep my current holdings and let them grow.