DVY - How To Allocate $15000 Among My Top 10 High-Dividend Yield Companies For July

2023-07-07 16:01:13 ET

Summary

• My investment strategy aims to achieve an attractive Average Dividend Yield and Dividend Growth Rate in order to help you increase your additional income via Dividend payments annually.
• In this article, I will show you how you could allocate the amount of $15,000 among 2 ETFs and my top 10 high dividend yield companies for July.
• This investment portfolio offers you a broad diversification and a reduced risk level, while at the same time delivering a Weighted Average Dividend Yield [TTM] of 3.90%.

Investment Thesis

A dividend income oriented investment portfolio that provides investors with a broad diversification, a reduced risk level, an attractive Weighted Average Dividend Yield and Weighted Average Dividend Growth Rate is attractive for investors, particularly when prioritizing the achievement of an attractive Total Return.

The investment portfolio that I have built and that I’m presenting in this article, fulfills this criteria. I will demonstrate in greater detail how this portfolio reaches a broad diversification that can help you to reduce the risk level of your investment portfolio.

At the same time, it helps you to reach an attractive Weighted Average Dividend Yield [TTM] of 3.90%. Furthermore, it is worth mentioning that the 2 ETFs and 10 selected companies have shown a Weighted Average Dividend Growth Rate [CAGR] of 9.33% over the past 5 years, which raises my confidence that the selected picks should be able to provide you with significant Dividend Growth.

The following are my top 10 high dividend yield companies that I have selected for July 2023:

• Altria ( MO )
• AT&T ( T )
• BHP Group Limited ( BHPLF )
• Energy Transfer ( ET )
• Rio Tinto ( RIO )
• Société Générale ( SCGLF )( SCGLY )
• Swiss RE ( SSREF )
• The Bank of Nova Scotia ( BNS )( BNS:CA )
• United Parcel Service ( UPS )
• Verizon Communications Inc. ( VZ )

Overview of the 2 ETFs and the 10 Selected High Dividend Yield Picks for July 2023

Source: The Author, data from Seeking Alpha

Portfolio Allocation per Company/ETF

The Schwab U.S. Dividend Equity ETF ( SCHD ) (40%) and the iShares Select Dividend ETF ( DVY ) (30%) represent the largest positions of the investment portfolio that I am presenting in today’s article.

By providing them with the highest percentage of the overall portfolio, we achieve a broad diversification over sectors and industries while reaching an attractive Weighted Average Dividend Yield and an appealing Weighted Average Dividend Growth Rate.

I consider a relatively high Weighted Average Dividend Yield and Weighted Average Dividend Growth Rate to be important for investors, since they allow you to earn an extra income right away while increasing this amount annually at an attractive level.

Below you can find the companies that I have overweighted in this investment portfolio:

• Altria (4%)
• The Bank of Nova Scotia (4%)
• United Parcel Service (4%)
• BHP Group (3%)
• Energy Transfer (3%)
• Rio Tinto (3%)
• Verizon (3%)

I have particularly overweighted companies such as Altria, The Bank of Nova Scotia and United Parcel Service. This is because they allow you to combine Dividend Income with Dividend Growth:

Source: The Author, data from Seeking Alpha

In addition to that, I consider these three companies to be excellent choices when it comes to risk and reward. This is due to the fact that I believe the risk factors that come attached to an investment in them are not particularly high while I consider the reward (in form of the expected compound annual rate of return) to be attractive.

Illustration of the Portfolio Allocation per Company/ETF

Below you can find the portfolio allocation per Company/ETF. No company has a higher proportion than 4% of the overall portfolio, indicating that the portfolio has a broad risk diversification.

Portfolio Allocation per Sector

As mentioned previously, the Schwab U.S. Dividend Equity ETF (40%) and the iShares Select Dividend ETF (30%) have the highest proportion of the overall portfolio.

When excluding these two ETFs, the Financials Sector is the one with the highest percentage of the portfolio representing 8%. This Sector is represented by Société Générale (2%), Swiss RE (2%) and The Bank of Nova Scotia (4%).

The second largest Sector is the Materials Sector with 6%. This is represented by the BHP Group and Rio Tinto, which each account for 3% of the overall portfolio.

The Communication Services Sector makes up 5% of the overall portfolio (with Verizon accounting for 3% and AT&T for 2%).

The Consumer Staples Sector (represented by Altria) and the Industrials Sector (represented by United Parcel Service) each make up 4% of the overall portfolio.

The Energy Sector (with Energy Transfer) represents 3% of the overall portfolio.

The fact that each of the Sectors (excluding the ETF Sector) represent less than 10% of the overall portfolio demonstrates that this investment portfolio is broadly diversified over Sectors.

Illustration of the Portfolio Allocation per Sector when allocating SCHD and DVY to the ETF Sector

Below is a list of the sectors and their corresponding companies/ETF:

ETFs (70%)

• Schwab U.S. Dividend Equity ETF (40%)
• iShares Select Dividend ETF (30%)

Financials (8%)

• Société Générale (2%)
• Swiss RE (2%)
• The Bank of Nova Scotia (4%)

Materials (6%)

• BHP Group (3%)
• Rio Tinto (3%)

Communication Services (5%)

• AT&T (2%)
• Verizon Communications (3%)

Consumer Staples (4%)

• Altria (4%)

Industrials (4%)

• United Parcel Service (4%)

Energy (3%)

• Energy Transfer (3%)

Portfolio Allocation per Industry

In the graphic below you can find the portfolio allocation per Industry when allocating the Schwab U.S. Dividend Equity ETF (40%) and the iShares Select Dividend ETF (30%) to the ETF Industry.

Excluding these ETFs, the Diversified Banks Industry (6%) and the Diversified Metals and Mining Industry (6%) represent the largest proportions of the overall investment portfolio. They are followed by the Integrated Telecommunication Services Industry (5%), the Air Freight and Logistics Industry (4%), and the Tobacco Industry (4%).

The Oil and Gas Storage and Transportation Industry has a proportion of 3% of the overall portfolio while the Reinsurance Industry accounts for 2%.

The fact that each Industry (beside the ETF Industry) represents less than 6% of the overall portfolio can be interpreted as an indicator that this investment portfolio has reached a broad diversification over industries.

Illustration of the Portfolio Allocation per Industry when allocating SCHD and DVY to the ETF Industry

Portfolio Allocation per Country

The graphic below shows us that this investment portfolio is also diversified geographically. This is underlined by the fact that 86% of the companies are from the United States while 14% come from outside the U.S.

When taking a look at the companies located outside the U.S., it can be highlighted that 4% are from Canada (represented by The Bank of Nova Scotia), 3% from the United Kingdom (Rio Tinto), 3% from Australia (BHP Group), 2% from France (Société Générale), and 2% from Switzerland (Swiss RE). This allocation implies that my geographical diversification requirements are met: the majority of the companies are from the U.S. while a small percentage are from outside the country.

Illustration of the Portfolio Allocation per Country

How to achieve an even Broader Diversification

If you would like to achieve an even broader diversification than this investment portfolio offers , you might consider invest ing in an additional ETF: you could take a closer look at the iShares Core Dividend Growth ETF ( DGRO ) , since it provides you with a relatively attractive Dividend Yield [TTM] of 3.37% and a Dividend Growth Rate [CAGR] of 10.32% over the past 5 years.

In case you ask yourself if it makes sense to only invest in SCHD, I would like to highlight some advantages of picking stocks individually over only investing in ETFs:

• It provides your portfolio with more individuality and flexibility
• You can protect your investment portfolio against the next stock market crash by adding companies with a low Beta Factor
• You can overweight industries with which you are more familiar and you can avoid others you do n’t want to invest in
• You can select stocks which you think are able to beat the market or you can select ones to raise the Weighted Average Dividend Yield or Weighted Dividend Growth Rate of your investment portfolio
• You can also achieve an even broader geographical diversification of your portfolio

In my article 10 Dividend Stocks To Show The Advantages Of Investing In Individual Stocks Over ETFs I discuss the advantages of the selection of stocks over ETFs in greater detail.

Conclusion

Generally speaking, the goal of my investment analyses is it to help you build a dividend-income oriented long-term investment portfolio that has a reduced risk level (in order to help you achieve excellent investment results with a high probability) and that helps you earn an extra income via Dividend payments while being able to increase this amount annually.

In addition to that, I aim to create investment portfolios in such a way that the main objective is to achieve an attractive Total Return (which includes Capital Gains and Dividends). In this way, you can implement a buy-and-hold strategy while continuously adapting your portfolio in order to increase your wealth.

The portfolio that I have described in this article provides you with an attractive Weighted Average Dividend Yield [TTM] of 3.90%, while the 2 ETFs and the selected 10 high dividend yield companies have shown a Weighted Average Dividend Growth Rate [CAGR] of 9.33% over the past 5 years. This indicates that you should be able to increase your additional income via Dividend payments on an annual basis.

Author’s Note: Thank you very much for reading and I would appreciate hear ing your opinion on this investment portfolio and its allocation! Do you own or plan to acquire one of the selected picks? Which are currently your favorite high dividend yield companies? If you would like to receive a notification when I publish my next analysis, you can click the 'Follow' button.

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