KMLM - How I Built A $20 Million Dividend Portfolio With 7 Amazing Blue Chips

2023-11-24 07:25:00 ET

Summary

• Amina, the most incredible woman I've ever met, just sold her real estate business for $20 million after taxes. She's 47 and looking to become a professional philanthropist.
• She wants to harness the power of dividend stocks to create a perpetual charitable portfolio to donate millions each year and eventually billions to save lives.
• Here's how I created a high-yield dividend growth portfolio for her, capable of 15% annual returns for this real-life black panther-like superhero.
• Using just seven world-beater blue chips, this high-yield portfolio falls 50% less than the S&P 500 during the average bear market and is 94% likely to beat the market over the next 50 years.
• All while generating rivers of safe income and cash beyond anyone's wildest dreams.

I love helping people achieve their financial dreams by focusing on safety and quality first, and prudent valuation and sound risk management always.

I've been blessed with the opportunity to help family and friends to rescue their dreams, like my father, uncle, and best friend, from costly mistakes.

I've also been fortunate to work with many incredibly successful people who want to make a difference in the world through effective philanthropy.

• How I Built A $1 Million High-Yield Retirement Portfolio With 6 Dividend Blue Chips
• How I Built A $3 Million High-Yield Portfolio With 11 Blue-Chips
• How I Built A $5 Million 6% Yielding Portfolio With 9 Blue Chips
• How I Built A $10 Million Dividend Portfolio With 13 World-Beater Blue Chips

Each time I work with someone, I am careful not to violate SEC rules and merely guide each individual (for free) through the tools we've created to make their own decisions about how to build the portfolio of their dreams.

• In each case I change enough specifics about names and where they live to protect their privacy.

In recent weeks, I've been working with another incredible woman who gives hope to a hopeless world with her journey to achieve her American dream and now wants to harness the power of AI and dividend stocks to help save millions of lives and even the world.

Amina: A Woman Whose Dividend Portfolio Now Matches Her Philanthropic Dreams

I've recently met a woman who has inspired me and filled my heart with hope. With people like this in the world, humanity will come through our current crises and rise like a Phoenix from the ashes to soar to new heights.

Amina is 47 and was born in rural Kenya. She grew up in a world where life for women was simple, often hard, and her fate would not be her own.

She was widowed at 23 with two young daughters after her husband was killed in a motorcycle accident, and she decided that this was a sign from God that she must seek out a new life...in America.

She had spent her time dreaming of a better life for herself and her two young daughters. She knew there was no greater land of opportunity for a hard-working woman willing to grind and never say die.

Arriving in New York City, she and her daughters shared an apartment with her cousin. Seven people shared two bedrooms and a single bathroom for several years, but she and her daughters were thrilled to have the chance to accomplish something amazing.

Amina ventured into real estate, starting modestly, her ventures echoing the communal spirit of Nairobi's neighborhoods. She renovated old buildings, transforming them into welcoming homes that mirrored the warmth of her homeland. Her real estate portfolio grew to eventually include over a dozen buildings.

A few months ago, Amina's empire, a symbol of cross-cultural unity, perseverance, and success, sold for $20 million after taxes.

But her story didn't end there. Amina now wants to become an effective philanthropist, driven by a desire to give back. She wants to fund educational programs in Kenya, nurturing the dreams of young girls.

In the U.S., she supported community initiatives, bridging the gap between her two homes.

And she's inspired by one of my own favorite charities, Give Directly , which started in Kenya.

Amina Looks Similar To Lupita Nyong'o

What Amina Needs And How AI Dividend Stocks Can Help

Amina has a very interesting situation because, unlike many of the people I've helped, she's still relatively young but now wants to pivot to a career as a philanthropist.

She's 47 but had $20 million to invest. She's passionate about AI, having spent the last year reading not just my articles about the best AI blue-chips but has become engrossed in this incredible technology.

She knows that many AI stocks are overvalued and that there is a high risk of a recession next year, and thus, she is nervous about buying anything right now.

And she has one specific goal: to support her family and philanthropy while being fully invested.

A Foundation To Make Her Dreams Come True And To Help Save The World

Amina plans to start a foundation that will be able to invest and compound 98% tax-free.

She plans to pay herself a $200K salary to support her family (1% of starting assets) and donate the 5% annual requirement to her favorite charities.

What's unique about Amina's plans, and thus important to her portfolio construction goals, is that she doesn't want to sell any shares...ever.

So she wants to fund everything with dividends, right? Nope, she wants to reinvest all the dividends via DRIP.

So how can she donate $1 million annually to charity and live on $200K?

She plans to borrow against the value of the foundation's portfolio to fund the effective giving and salary with safe amounts of leverage.

Amina's Inspiring And Audacious Plan To Change The World With AI Dividends

Inflation-Adjusted Effective Charity Plan

This is Amina's plan, assuming 15% annual returns, 2.4% long-term inflation (the bond market's 30-year forecast), and paying herself a 1% salary (she doesn't plan to, but for the purposes of the spreadsheet, I just assumed she would.

And keep in mind this is all adjusted for inflation, so in today's dollars.

If Amina can achieve those audacious 15% long-term returns, then by the age her mother died at 107, she would be donating almost $4 billion (today's money) annually to charity. And have donated almost $10 billion cumulatively.

Amina is inspired by David Sinclair (Geneticist and anti-aging expert at Harvard), who thinks that with an optimal diet, exercise, and money, humans might be able to live well past 120 or even 130.

By age 130, if Amina can execute her audacious donation plan, she would be donating $17 billion per year and hit $150 billion in cumulative donations.

And that's all adjusted for inflation.

For context, the Bill and Melinda Gates Foundation has donated $71.4 billion since its inception. This is the largest inflation-adjusted philanthropy in the history of the world.

And if Amina lives to 130, she will live to have donated more than twice this amount.

• enough money to save the lives of 43 million children
• or enough to lift 375 million people out of poverty for a year
• or offset 119 billion tons of carbon or 3.3 years of current global emissions.

My goodness, can you see why Amina so inspires me?! Someone who wants to become the philanthropy GOAT (greatest of all time) and actually has a plan to do it.

To save lives change the world, and who, given enough time, could almost single-handedly solve so many of the world's problems?

Of course, first, she has to live long enough...and earn 15% annual returns for decades, which is not exactly an easy task.

Amina's Family Is Blue-Zone Vegan, And Her Mother Lived To 107: This Is How To Live Long, Die Fast, And Love Every Second of It

Ok, her lifestyle is optimal, but how can you invest to get anything close to 15% long-term returns? With the help of an AI dividend portfolio and the power of ZEUS.

ZEUS AI MAX Return: AI + Dividends = Saving The World

ZEUS stands for ZEN Extraordinary Ultra SWAN (Sleep well at night), based on Nick Maggiulli's research at Ritholtz Wealth Management.

• Nick Maggiulli is the Chief Data Scientist for Ritholtz
• he found that historically, 67% stocks and 33% hedging assets are the long-term recession-optimized retirement portfolio
• good returns and minimum downside in even the most extreme bear markets.

The ZEUS portfolio is 33% ETFs, 33% hedges, and 33% individual blue-chips.

So, how could I help Amina design a 15% long-term return target portfolio that is safe, prudent, and built to survive anything the economy or stock market can throw at her in the coming 80 years? By using seven world-beater AI blue-chip stocks to create a 3.3% yielding portfolio.

(Source: DK Zen Research Terminal, FactSet Research Terminal, Morningstar.)

• SCHG (50% fastest growing S&P 500 companies): If I Could Own Just One Security Forever, This Would Be It
• KMLM (Buffett of managed futures) deep dive
• Amazon: The Hype Is Right
• ASML: The World-Beater Dividend Chip Stock
• Brookfield: Why I Trust The Buffett Of Money Managers And So Should You
• 3 Shocking Reasons Nvidia Is A Good Buy
• The Most Important Thing Google Investors Will Ever Read

Wow, those consensus forecasts are just spectacular.

Portfolio Fundamentals

The average hedge fund charges 5% in annual fees. This ZEUS AI portfolio, which yields 3.3%, is 10X cheaper.

• portfolio is 9% historically undervalued vs. S&P 12% overvalued

ZEUS AI Max Return Holdings

What evidence is there that AI stocks like these can deliver incredible returns? Doubling every five years?

Why AI Could Change The World

AI is all about productivity, which is the key to stronger economic and corporate profit growth.

• labor force growth + productivity growth (output per hour worked) = GDP growth.

Bank of America estimates that for every 1% GDP growth, corporate America generates 4% per year of earnings growth, driving 4% stock price returns.

The Fed and Congressional Budget Office's long-term baseline productivity growth estimate is 1.5%.

Every 0.25% faster productivity growth could boost stock returns by 1% annually.

• 33% more inflation-adjusted wealth after 30 years.

Goldman's base case is that AI will double productivity growth to 3%, leading to 3.2% GDP growth for the next decade.

• 6% earnings growth boost.

The optimistic scenario is for a nearly 3% boost to productivity, which would mean 4.4% productivity and 4.6% GDP growth for a decade.

• 1990s-level boom times.

Real wage growth of 3% to 4.4% would be a boom time for Main Street as well, though Wall Street could be looking at around 20% EPS growth and Buffett-like returns.

Powered entirely by growth and not rising PEs or low-interest rates.

JPMorgan is also bullish on a potential productivity boom that could even set records by the end of the decade.

OK, so that's all very promising, future potential returns on par with Buffett and far above the 15% returns analysts currently expect from these AI powerhouses.

Is there any other reason to think this ZEUS AI Max return portfolio could deliver 15% returns or anything close to it?

ZEUS AI Max Return Historical Returns Since 2007

Wow, 16 years of 16% annual and 12X overall returns. 6X better returns than hedge fund legends like Ray Dalio delivered.

Consistent 15% to 16% returns from the world's best growth stocks.

That's amazing, John Templeton-like long-term returns that blew away the S&P in a raging bull market. And from a complete hedge fund, not just pure growth stocks.

Sleeping Well At Night In Bear Markets

(Source: Portfolio Visualizer Premium.)

Mind-blowing returns and lower volatility than a 60/40 and half the declines of the S&P 500 in the average bear market.

Future Return ZEUS AI Max Return Projections: 75-Year Monte Carlo Simulation

• $20 million starting value
• 6% annual withdrawal rate
• tax-free (98% for foundations)
• Amina's time horizon (perpetual foundation, so actually forever).

90% statistical probability of 10% to 16% annual returns or 7% to 14% adjusted for inflation.

• S&P's historical 7% real returns.

The safe withdrawal rate is between 6% and 13% per year, and Amina is looking at 6% in the first year and then dropping towards 5% over time.

According to Morningstar, the Nasdaq is expected to deliver 12.5% long-term returns. This 3.3% yielding AI dividend portfolio is 58% likely to outperform the Nasdaq with a fraction of the volatility.

Amina is withdrawing 6% of the portfolio to start, so in order to maintain her balance stable at $20 million over time, this requires a 6.5% return which is a 98.5% probability for the next 50 years.

Adjusting for inflation, 9% annual returns are necessary to maintain today's $20 million purchasing power for the next 50 years, which is an 88% probability.

Its 83% likely to beat the S&P and 96% likely to beat a 60/40 (and hedge funds).

A 10% percentile worst-case scenario $35 million inflation-adjusted value in 75 years, with a base-case of $345 million and best case of $3 billion.

And that's after paying out $83 million to $7.2 Billion in inflation-adjusted charitable donations.

Bottom Line: I Helped Build A $20 Million High-Yield Dividend Portfolio With 7 World-Beater Blue Chips

AI is a life-changing technology. It's not just hype. I used Google's AI life coach, Bard, to lose 82 lbs . in 4 months on my way to a 150 lb loss in 12 months.

Microsoft is potentially on track to earn $100 billion in annual AI subscription sales by 2027.

And, of course, if Goldman Sachs is right, earnings growth for the next decade could be 15% instead of 8%, resulting in a 1950s and 1990s-style stock market boom that will make all long-term investors rich.

That's as long as they focus on safety and quality first, and prudent valuation and sound risk management always.

There are a lot of stupid AI stock ideas out there based on speculation, mania, and FOMO.

But using SCHG, KMLM, ASML, AMZN, GOOGL, NVDA, ASML, and BAM, I was able to help Amina build a $20 million portfolio for her incredible foundation.

A yield on par with SCHD, but returns that blow away the Nasdaq while delivering this kind of sleep-well-at-night power in bear markets.

Sleeping Well At Night In Bear Markets

(Source: Portfolio Visualizer Premium.)

High-yield, incredible returns, and volatility so low that it's like riding over the market's worst potholes in a Rolls Royce.

That's the power of ZEUS to help amazing people do incredible things, like donate billions to charity, save tens of millions of lives, and possibly even save the world.

• $3.5 billion in cumulative inflation-adjusted donations over the next 75 years

From everyone at our Investing Groups, please have a safe, healthy, and relaxing Thanksgiving weekend!

For further details see:

How I Built A $20 Million Dividend Portfolio With 7 Amazing Blue Chips