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3 Features of Stock Portfolio Management

By Jerry Grzegorzek on February 28, 2024 |

PERSONAL FINANCE


As I work full-time again, I am preparing to grow our dividend stock portfolio in the next few years.

Investment assumptions for my stock portfolio

Here are my general investment assumptions about our portfolio management:

A. PORTFOLIO VALUE: Total investment in individual common stocks to be around RMB3,000,000 (~USD15,000 per year in earning assuming a modest 3.5% net dividend yield.

B. PORTFOLIO COMPOSITION: To own around 30 stable and reliable companies, manly large caps because they have robust final accounts and provide healthy profitability, efficiency and liquidity. For instance, Dividend Kings and Dividend Aristocrats give stable and growing dividends. Focus mainly on buying dividend stocks with good dividend yield and dividend growth – companies that I can easily hold forever.

C. PORTFOLIO STRATEGY: Buy when prices drop for high yields to capture value investments opportunities:

a. Sharp decline in the stock market. Increase investments when there is 20% correction. If the decline continues, increase investments again.

b. Declining sector and industries. Pay attention to good companies in those sectors. They can gain the most in the following year.

Buy stocks with preferably with low P/E (Price/Earnings) at the time of purchase <20. Weak months for equities are generally September and October each year. Reinvest all dividends.

STEP 1: INITIAL STOCK PORTFOLIO (NOW):

To build the initial portfolio, I have invested around USD10,000 through <a href="https://ibkr.com/referral/jaroslaw195" target="_blank" rel="noreferrer noopener">Interactive Brokers</a> where I had opened my brokerage account earlier last year. You can monitor such an account using <a href="https://www.marketlog.com/" target="_blank" rel="noopener" title="Marketlog.com">Marketlog.com</a>, which has integration with Interactive Brokers. <!-- /wp:paragraph --> <!-- wp:paragraph --> My strategy for building stocks portfolio boils down to purchasing shares of well-established multinational businesses with long traditions of paying and increasing dividends. My expectations are very modest. I expect around 8% annually on average for share price to grow and receive 4% after TAX in dividends. Shortly, predictable dividends plus moderate growth. <!-- /wp:paragraph --> <!-- wp:verse --> <pre class="wp-block-verse"><strong>NOTE: </strong>My investment strategy boils down to <em>'predictable dividends (4%) plus moderate growth (8%)'</em>.</pre> <!-- /wp:verse --> <!-- wp:paragraph --> Currently, there are 14 companies in my initial portfolio (AQN, MMM, UL, SO, SON, D, ED, GIS, KO, PEP, JNJ, PG, CL, MCD) and one Real Estate Investment Trust (REIT) which is O. More than half of these companies are either Dividend Kings or Dividend Aristocrats. <!-- /wp:paragraph --> <!-- wp:paragraph --> I prefer the most investing in the following three sectors of the economy such as <em>Consumer Defensive</em>, <em>Utilities</em> and <em>Healthcare</em>. And, when it comes to industries, I focus on Household & Personal Products, Regulated Utilities and Drug Manufacturers - General<em>.</em> We all need to eat and drink every day, look after our households, use water, gas and electricity, and visit a doctor when falling sick. Right? <!-- /wp:paragraph --> <!-- wp:paragraph --> The initial portfolio has Yield on Cost (YOC) of 3.66% before TAX and 3.33% after TAX. As I am based in China, the TAX on dividends paid by the US companies is only 10% and on dividends paid by the Canadian companies is 15%. When it comes to Predicted Annual Dividend Income (PADI), my portfolio pays USD318.70 before TAX and USD15,000 after TAX. I wish to invest around USD400,000 in stocks in total over the next couple of years to finish building the 4th passive income stream for my family.




Jerry Grzegorzek

I am the Founder and Editor-in-Chief of the SuperBusinessManager.com website. I am the EU citizen with approximately 20 years of experience in secondary and higher business education in both public and private sectors. Currently living with my wife and our two adorable children in China where I teach Business Management and Economics at K-12 international schools. Professionally, I am an experienced Lecturer and Researcher in Business Management and Economics, as well as IB Examiner for DP Business Management at International Baccalaureate (IB). Privately, I enjoy reading and collecting books on business management, personal finance and investing. You can contact me at jerrygrzegorzek@hotmail.com

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