Income Investing Strategy
A dividend portfolio provides regular cash payments while still offering growth potential.
Selecting Dividend Stocks
- Dividend Yield: Look for sustainable yields, not just high ones
- Payout Ratio: Under 60% is generally healthy
- Dividend Growth: Companies that regularly increase dividends
- Dividend Aristocrats: S&P 500 companies with 25+ years of consecutive increases
Portfolio Construction
Aim for 20-30 stocks across different sectors. Avoid overconcentration in any single industry like REITs or utilities.
Reinvesting vs. Taking Income
Early in your investing career, reinvest dividends for compound growth. Later, you can switch to taking the income for living expenses.