Dividend Diversification – Update

A while back I had posted about Dividend Risks and the need for dividend diversification. Back then, 6 stocks (GE, MO, KMP, ARCP, AAPL and HPQ) contributed close to 60% of my total projected annual dividends at that time ($1,590.46) even though some of these stocks didn’t have a huge weight in my portfolio. This is little risky, since if one of the companies cuts or eliminates the dividend, it will be a huge hit to my potential annual dividends.

A course of action that I had planned was to increase the weight in stocks that I already held like PG, COP and GIS, but did not have lot of weight in my portfolio. But unfortunately I haven’t had a chance to increase my holdings in these stocks. But over the past few months, I did initiate positions in several new stocks which has helped reduce the reliance for potential dividends in the above stocks.

Based on the updated portfolio (updated as of 9/30/2014), these 6 stocks (GE, MO, KMP, ARCP, AAPL and HPQ) contribute just under 50% of my total projected dividend income of $2,039.58. This is in spite of recent dividend increases. So while 50% is still higher than I like it to be, I feel that it is good progress in 4 months. I will revisit this in the next few months and see where I stand.

Disclosure: Long on all stocks mentioned above.

Advertisements

Dividend Risks

While I was updating my portfolio page to reflect the prices as of end of May and also to include the dividend information, I noticed a big risk.

One of the things that is discussed a lot (in the dividend blogs I visit) is portfolio diversification – to make sure that all stocks are almost equal weight in the portfolio. But l have not seen any focus on dividend diversification. Dividend diversification is to make sure that all stocks provide almost equal projected dividend income.

Continue reading