ALIZF - The Top 10 Positions Of My Personal Investment Portfolio And Their Allocation

2023-07-14 02:24:47 ET

Summary

• In this article, I will present you with the 10 largest positions of my personal investment portfolio.
• This portfolio focuses on dividend growth, and I plan to benefit from the steadily increasing dividend payments that it offers.
• I gave the companies that I consider to be particularly attractive in terms of risk and reward a high proportion of the overall portfolio.
• I have a long-investment horizon and I consider most of these selected picks to be buy-and-hold investments.

Investment Thesis

The main focus of today’s article is to introduce you to the 10 largest positions of my personal investment portfolio and to inform you about their allocation.

In my personal investment portfolio, I have given companies which I consider to be particularly attractive when it comes to risk and reward a high percentage of the overall portfolio. This means that I consider the risk level for most of these picks to be relatively low (which increases the probability of obtaining attractive investment results over the long term) and I believe that the reward (in form of the expected compound annual rate of return) for these companies to be particularly attractive.

The 10 Largest Positions of my Personal Investment Portfolio are the following:

1. Apple (NASDAQ: AAPL )
2. Alphabet (NASDAQ: GOOG )(NASDAQ: GOOGL )
3. Mastercard (NYSE: MA )
4. Amazon (NASDAQ: AMZN )
5. Visa (NYSE: V )
6. Berkshire Hathaway (NYSE: BRK.A ) (NYSE: BRK.B )
7. Nike (NYSE: NKE )
8. American Express (NYSE: AXP )
9. Walt Disney (NYSE: DIS )
10. Allianz ([[ALIZF]], [[ALIZY]])

Overview of the 10 Largest Positions of my Personal Investment Portfolio

Source: The Author, data from Seeking Alpha

The table above shows that the 10 largest positions of my personal investment portfolio represent 65.30% of my overall portfolio.

Apple

Apple is by far the largest position of my personal investment portfolio, representing 20.74%.

The reasons for the company having the highest proportion of my investment portfolio are diverse: in first place, I believe that Apple is an excellent choice for investors in terms of risk and reward, a reason for which I believe it makes sense to provide the company with a high percentage of an overall investment portfolio. Another reason for which Apple is by far the largest position of my own portfolio is due to the capital appreciation it has had since I bought the company’s shares. This capital appreciation has meant that the relatively high percentage of Apple shares on my overall investment portfolio has become even higher in recent years.

I believe that Apple investors will continue to benefit from the company’s buyback program and its steadily increasing dividend payments when investing over the long term.

I do not have any plans to significantly change Apple’s relatively high proportion of the overall portfolio in the near future. Even though I believe that it will be less likely that Apple will outperform the market in the future such as it has in the past decade (particularly due to the company’s enormous size), I continue to believe that it remains an excellent long-term investment.

Alphabet

Alphabet is the second largest position of my own investment portfolio, representing 8.08% of the overall portfolio.

I provided Alphabet with a relatively high proportion when I first started building the portfolio and the company has performed well since its acquisition, which has contributed to the fact that the proportion of the Alphabet position has become even higher. Due to the company’s relatively low Valuation (P/E [FWD] Ratio of 21.85), I believe that it has relatively low downside risk and I expect the reward to be high for Alphabet’s long-term investors.

I believe that Alphabet continues to provide investors with excellent chances when it comes to risk and reward and, therefore, I plan to continue overweighting the Alphabet stock in my investment portfolio.

Alphabet’s enormous financial health (underlined by an Aa2 credit rating from Moody’s), its current Free Cash Flow Yield [TTM] of 4.07%, attractive Valuation (P/E [FWD] Ratio of 21.85), and strong competitive advantages raise my confidence to believe that it makes sense to overweight the Alphabet stock in a long-term investment portfolio.

Since Alphabet already accounts for a large proportion of my overall investment portfolio, I currently do not have any plans to buy additional shares of the company, even though I believe its shares are very attractive at the current price level.

Mastercard

Mastercard represents the third largest proportion of my personal investment portfolio representing 7.38%. I believe that Mastercard possess of strong competitive advantages (such as the company’s strong network within the Financials Sector, its high amount of credit and debit cards, as well as its strong brand image and high customer loyalty) that could help the company to outperform the market in the next decade.

I also believe that the risk level for Mastercard investors is relatively low due to the company's competitive advantages, which create an economic moat against potential competitors in their business segment. Additionally, Mastercard's robust financial health, evident in its impressive EBIT Margin [TTM] of 56.92% compared to the sector median of 20.44% and its Aa3 credit rating by Moody's, further contributes to the reduced risk.

I believe that Mastercard is an excellent pick for investors seeking Dividend Growth (which is based on the company’s Dividend Growth Rate [CAGR] of 28.44% over the past 10 years). Therefore, I do not have any plans to sell any of my Mastercard positions in the near future.

However, it is also worth mentioning that I currently do not have any plans to add additional Mastercard shares to my personal portfolio, due to the fact that the company already represents 7.38% of my overall investment portfolio.

Amazon

Amazon is the fourth largest position of my personal investment portfolio (representing 7.27%) and I consider the company to be the investment that comes attached with the highest risk factor among my top 10 picks.

This is particularly the case, since Amazon currently has the highest P/E [FWD] Ratio among these 10 companies. Amazon’s P/E Non-GAAP [FWD] Ratio of 81.22 clearly indicates that high growth expectations are priced into the company’s stock price. This implies that the stock price of Amazon could decline significantly any time that the company does not meet its growth expectations.

However, it can be highlighted that the growth extractions that are priced into the company’s stock price are significantly lower than they have been in the past. This is the case, because Amazon’s P/E Non-GAAP [FWD] Ratio of 81.22% lies 57.30% below its Average from over the past 5 years (which is 190.19%). This means that an investment in Amazon comes attached to less risks than it has been on Average over the past 5 years. Nevertheless, I believe that the risk level for Amazon investors is still relatively high.

However, due to Amazon’s continuous focus on innovation, the company’s growth outlook and its leading market position, I believe that it can deliver outstanding results within the next years. For these reasons, I’m of the opinion that the reward is worth the risk and therefore I plan to continue overweighting the Amazon position in my long-term investment portfolio.

However, due to the fact that Amazon already represents a large proportion of my overall investment portfolio, I would not consider adding additional shares. Instead, I would prioritize adding companies that currently have a lower proportion on the overall investment portfolio and that come attached with a lower risk level, in order to decrease the portfolio’s risk level.

Visa

Visa is the fifth largest position of my personal investment portfolio representing 6.20%.

The reason for giving Visa a relatively high proportion of my overall portfolio is because I have a long-investment horizon and therefore I particularly focus on achieving Dividend Growth. Visa has shown excellent results in terms of Dividend Growth in the past years (the company has shown a Dividend Growth Rate [CAGR] of 19.02% over the past 10 years) and I believe that it will continue to do so in the near future due to its strong competitive advantages and enormous financial health.

I believe that Visa has the potential to outperform the market within the next decade, particularly due to the company’s strong competitive advantages. I further believe that the risk factors that come attached to a Visa investment are relatively low, making the company an excellent pick when it comes to risk and reward. This has also contributed significantly to providing the company with a high proportion of my overall investment portfolio.

Berkshire Hathaway

At this moment of writing, Berkshire Hathaway represents 4.14% of my overall investment portfolio.

If I was to build an investment portfolio today from zero, I would provide Berkshire Hathaway with an even higher proportion of the overall portfolio. The reason behind this idea is the fact that Berkshire Hathaway has shown a strong track record of outperforming the market over the long term, and, in addition to that, it provides investors with a broad diversification (due to the large amount of companies with strong competitive advantages it is invested in), thus helping investors reduce the risk level of their investment portfolio.

Among the 10 companies with the highest proportion of my overall portfolio, Berkshire Hathaway is a company from which I consider buying additional shares from, due to the reasons mentioned above.

Because of the large portfolio of companies that Berkshire Hathaway is invested in, I believe it is the one with the lowest risk factors attached among the top 10 picks of my portfolio. At the same time, it provides investors with the chance of an attractive Total Return over the long term, making the company an excellent risk/reward choice.

Nike

Nike currently accounts for 3.25% of my overall portfolio, making it the 7 ^th largest position.

I consider the company to be an excellent choice for investors due to its leading position in the sports industry, its strong competitive advantages (such as its strong brand image, its focus on innovation and its long-term contracts with the world’s leading sports clubs and athletes) and its dividend growth track record.

Nike has shown a Dividend Growth Rate [CAGR] of 14.16% over the past 10 years, and I believe the company will be able to provide investors with significant Dividend Growth in the coming years. For this reason, Nike is an ideal pick for a dividend growth portfolio in my opinion.

I plan to hold my Nike stocks forever and to benefit from the company’s steadily increasing dividend payments over the long term. Nike is the ideal buy-and-hold investment in my opinion. I would consider adding additional Nike shares to my investment portfolio if its Valuation becomes even more attractive.

American Express

American Express represents 3.08% of my overall investment portfolio, which makes it the 8 ^th largest position.

Similar to competitors such as Visa and Mastercard, I believe that American Express is a great pick for investors seeking Dividend Growth. This is also one of the reasons for which it is among the companies with the highest proportion of my portfolio. American Express has shown a Dividend Growth Rate [CAGR] of 10.44% over the past 10 years, and I believe that the company will be able to provide investors with significant Dividend Growth in the years ahead. It is also worth mentioning that American Express has shown a Revenue Growth Rate [FWD] of 16.34%, increasing my confidence that the company is on track when it comes to Growth.

At its current price level, the company pays investors a Dividend Yield [FWD] of 1.40%, and its Payout Ratio stands at 22.71%.

I currently do not have any plans to increase the American Express position on my overall investment portfolio.

Walt Disney

Walt Disney currently represents 2.80% of my overall investment portfolio. The company is therefore my 9 ^th largest position.

Even though Walt Disney operates in an environment with strong competitors in the streaming business such as Apple, Amazon, Netflix (NASDAQ: NFLX ) and Warner Bros. (NASDAQ: WBD ), I believe that the company will be among the streaming winners in this industry over the long term, due to its strong competitive advantages.

Among the company’s competitive advantages are its strong brand image, its operations in different business segments (such as movies and entertainment, theme parks and consumer products), its broad product portfolio of films as well as its ability to have adapted its product portfolio successfully over the past decades to changing business environments.

I definitely plan to hold my Walt Disney stocks over the long term and currently do not have any plans to make adjustments in regards to its position.

Allianz

Allianz is the 10 ^th largest position of my personal investment portfolio, accounting for 2.36%.

I consider the German insurance company to be an excellent buy-and-hold investment due to its combination of an attractive Dividend Yield with Dividend Growth. This makes the company particularly appealing for those investors that want to earn extra income via dividend payments and which seek to increase this amount on an annual basis.

Due to the fact that the company currently still represents a relatively small percentage of my overall investment portfolio, I am considering providing it with a higher percentage. Another reason for which I am considering giving it a higher percentage is the company’s attractive Dividend Yield [FWD] of 5.46% and its relatively low Valuation (P/E [FWD] Ratio of 8.62).

By providing Allianz with a higher proportion, I could increase the portfolio’s Weighted Average Dividend Yield. Furthermore, I believe that I could decrease the risk level of my investment portfolio at the same time. This theory is confirmed by Allianz having a 24M Beta Factor of 0.72.

Conclusion

I believe that the 10 largest positions of my personal investment portfolio provide me with excellent chances in terms of risk and reward.

I consider the risk factors to be relatively low, since each of these picks is among the leading companies in its respective industry and I believe that the expected compound annual rate of return for each of these picks is attractive. For these reasons, I have given these companies the highest proportion of my investment portfolio.

However, it should be highlighted that the Amazon position comes attached to higher risk factors than most of the other picks, which is mainly based on the fact that its Valuation is relatively high and high growth expectations are still priced into the company’s stock price. However, in the case of Amazon, I think the potentially higher reward (in the form of the expected compound annual rate of return) could be worth the higher risks. Therefore, I do not have any plans to change my Amazon position in the near future.

From the 10 selected picks with the highest proportion of my portfolio, I would consider increasing the positions of Berkshire Hathaway (in order to increase the diversification of my portfolio and therefore reduce its risk level) as well as Allianz (with the objective to increase the Weighted Average Dividend Yield of the portfolio to also reduce its risk level).

It is also worth mentioning that I do not plan to sell any of these 10 positions, due to the fact that I implement a buy-and-hold strategy and plan to benefit from the steadily increasing dividend payments of the companies I have invested in.

Author’s Note: I would appreciate hearing your opinion on the selection of my personal investment portfolio. If you would like to receive a notification when I publish my next analysis, you can click the 'Follow' button.

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