MSFT - Strategically Building A $100000 Dividend Portfolio With 1 ETF And 10 Individual Picks

2024-07-04 18:00:00 ET

Summary

• Significantly overweighting high dividend yield companies can result in market underperformance.
• In my view, a balanced approach of dividend income and dividend growth provides the most benefits for those who invest over the long term.
• For the construction of this dividend portfolio, I have selected one ETF, one closed-ended equity mutual fund, five dividend growth companies and five high dividend yield companies.
• The portfolio reaches a Weighted Average Dividend Yield [TTM] of 4.50% in combination with a 5-Year Weighted Average Dividend Growth Rate [CAGR] of 8.01%.

Investment Thesis

Reaching a balance between dividend income and dividend growth is one of the main objectives of the portfolios I am documenting here on Seeking Alpha.

Disproportionally overweighting high dividend yield companies in your dividend portfolio may limit the growth perspective of your dividend payments and lead to underperformance relative to the broader stock market. This can particularly be the case if one of the high dividend yield companies experiences a dividend reduction, thereby significantly impacting the Total Return of your investment portfolio.

Disproportionally overweighting dividend growth companies on the other side may result in insufficient dividend income to meet your current financial needs....

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