2023-04-21 06:00:00 ET
Summary
- In this article, I will show you how you could allocate $25,000 among 30 selected picks for the month of April 2023.
- The investment portfolio that I will present, consists of companies that provide excellent opportunities when it comes to risk and reward.
- In addition, the investment portfolio offers you a broad diversification over industries: no industry represents more than 11% of the overall portfolio.
Investment Thesis
In a previous article for Seeking Alpha, I demonstrated how you could allocate $10,000 among my top 20 high dividend yield and dividend growth stocks for April 2023.
In today's article, I will show you how you could allocate the amount of $25,000 among 30 selected picks for April 2023. Compared to the previous article, which exclusively focused on dividend paying companies, in today's article, I have included growth companies that I currently consider to be attractive for investors.
Due to the additional integration of growth stocks into this portfolio, you are able to achieve an even broader diversification over industries when compared to the previous portfolio which focused on dividend paying companies only. In addition to that, you can benefit significantly from the growth potential that these companies provide investors with.
I have selected the following as my top 10 growth companies to invest for April 2023:
- Accenture (ACN)
- Adobe (ADBE)
- Alphabet ([[GOOG]], [[GOOGL]])
- Amazon (AMZN)
- Broadcom (AVGO)
- Danaher (DHR)
- S&P Global (SPGI)
- Salesforce (CRM)
- Tesla (TSLA)
- UnitedHealth (UNH)
I would like to remind you of my top 10 dividend growth companies that I selected for April 2023:
- Apple (AAPL)
- Bank of America (BAC)
- Bristol-Myers Squibb Company (BMY)
- Charles Schwab (SCHW)
- Deere & Company (DE)
- JPMorgan (JPM)
- Mastercard (MA)
- Microsoft (MSFT)
- Taiwan Semiconductor (TSM)
- Visa (V)
In addition to that, here is a reminder of my top 10 high dividend yield companies that I selected for April 2023:
- 3M (MMM)
- AbbVie (ABBV)
- Altria (MO)
- Johnson & Johnson (JNJ)
- Mercedes-Benz Group AG ([[MBGYY]], [[MBGAF]])
- Suncor Energy (SU)
- TotalEnergies (TTE)
- The Toronto-Dominion Bank (TD)
- U.S. Bancorp (USB)
- Verizon Communications (VZ)
Overview of the 30 selected stocks to invest in for April 2023
Company Name | Sector | Industry | Country | Dividend Yield | Dividend Growth 5Y | Proportion | Amount in $ |
3M | Industrials | Industrial Conglomerates | United States | 5.88% | 4.09% | 2% | 500 |
AbbVie | Health Care | Biotechnology | United States | 3.72% | 16.92% | 3% | 750 |
Accenture | Information Technology | IT Consulting and Other Services | Ireland | 1.48% | 10.48% | 2% | 500 |
Adobe | Information Technology | Application Software | United States | 0% | 0% | 2% | 500 |
Alphabet | Communication Services | Interactive Media and Services | United States | 0% | 0% | 5% | 1250 |
Altria | Consumer Staples | Tobacco | United States | 8.56% | 7.18% | 5% | 1250 |
Amazon | Consumer Discretionary | Broadline Retail | United States | 0% | 0% | 4% | 1000 |
Apple | Information Technology | Technology Hardware, Storage and Peripherals | United States | 0.56% | 7.87% | 8% | 2000 |
Bank of America | Financials | Diversified Banks | United States | 3.13% | 14.87% | 4% | 1000 |
Bristol-Myers Squibb | Health Care | Pharmaceuticals | United States | 3.14% | 7.04% | 3% | 750 |
Broadcom | Information Technology | Semiconductors | United States | 2.75% | 25.72% | 3% | 750 |
Charles Schwab | Financials | Investment Banking and Brokerage | United States | 1.80% | 21.22% | 2% | 500 |
Danaher | Health Care | Life Sciences Tools and Services | United States | 0.41% | 11.95% | 3% | 750 |
Deere & Company | Industrials | Agricultural and Farm Machinery | United States | 1.27% | 14.44% | 3% | 750 |
Johnson & Johnson | Health Care | Pharmaceuticals | United States | 2.99% | 6.11% | 6% | 1500 |
JPMorgan | Financials | Diversified Banks | United States | 3.14% | 12.91% | 4% | 1000 |
Mastercard | Financials | Transaction & Payment Processing Services | United States | 0.59% | 17.66% | 5% | 1250 |
Mercedes-Benz | Consumer Discretionary | Automobile Manufacturers | Germany | 6.85% | 11.54% | 2% | 500 |
Microsoft | Information Technology | Systems Software | United States | 0.89% | 9.92% | 6% | 1500 |
S&P Global | Financials | Financial Exchanges and Data | United States | 1.01% | 16.04% | 2% | 500 |
Salesforce | Information Technology | Application Software | United States | 0% | 0% | 2% | 500 |
Suncor Energy | Energy | Integrated Oil and Gas | Canada | 5.00% | 8.00% | 2% | 500 |
Taiwan Semiconductor | Information Technology | Semiconductors | Taiwan | 1.99% | 9.26% | 3% | 750 |
Tesla | Consumer Discretionary | Automobile Manufacturers | United States | 0% | 0% | 2% | 500 |
The Toronto-Dominion Bank | Financials | Diversified Banks | Canada | 4.84% | 7.98% | 2% | 500 |
TotalEnergies | Energy | Integrated Oil and Gas | France | 4.88% | -5.11% | 3% | 750 |
U.S. Bancorp | Financials | Diversified Banks | United States | 5.40% | 10.14% | 1% | 250 |
UnitedHealth | Health Care | Managed Health Care | United States | 1.40% | 17.08% | 2% | 500 |
Verizon | Communication Services | Integrated Telecommunication Services | United States | 6.93% | 2.06% | 4% | 1000 |
Visa | Financials | Transaction & Payment Processing Services | United States | 0.73% | 17.55% | 5% | 1250 |
2.46% | 9.34% | 100% | 25,000 |
Source: Seeking Alpha.
The Weighted Average Dividend Yield [FWD] of this investment portfolio is 2.46%. One of the reasons why the Dividend Yield [FWD] is not higher, is the fact that several companies that are part of this portfolio do not pay a Dividend. The companies that don't pay a Dividend are as follows:
- Alphabet
- Amazon
- Adobe
- Salesforce
- Tesla.
Allocation per Company
Next I will take a closer look at the companies with the highest proportion of this investment portfolio, which are the following:
- Apple (8% of the overall portfolio)
- Microsoft (6%)
- Johnson & Johnson (6%)
- Alphabet (5%)
- Altria (5%)
- Mastercard (5%)
- Visa (5%)
- Bank of America (4%)
- JPMorgan (4%)
- Amazon (4%)
- Verizon (4%).
The companies that have the highest proportion of the overall portfolio share some factors in common: I consider the risk of investing in these companies as being relatively low and the reward (the excepted compound annual rate of return) as relatively high.
The companies that have the highest proportion on the portfolio have a significant impact on the Total Return that the portfolio provides. By overweighting companies that give us relatively low risk factors and at the same time offer an attractive expected compound annual rate of return, we significantly increase the probability of making successful long-term investments.
Out of the companies mentioned above and which represents the highest proportion, I consider Amazon to have the highest risk factors for investors. This is particularly based on the company's relatively high P/E GAAP [FWD] Ratio of 73.09, which is significantly above the other companies:
- Apple (P/E GAAP [FWD] Ratio of 27.63)
- Microsoft (30.96)
- Johnson & Johnson (18.31)
- Alphabet (21.42)
- Altria (8.93)
- Mastercard (30.54)
- Visa (28.39)
- Bank of America (8.85)
- JPMorgan (10.07)
- Verizon (8.50).
Due to Amazon having the highest P/E [FWD] Ratio (73.09) among these companies (which implies a significantly higher risk for Amazon investors) I would not give the company the position with the highest proportion of this investment portfolio.
With Apple's P/E GAAP [FWD] Ratio being at 27.63, it demonstrates that the risk for Apple investors is significantly lower and that the company has less downside risk than its competitor Amazon. This is one of the reasons for which I would select Apple as the position with the highest proportion.
All other companies that are not included in the list of companies with the highest proportion of this investment portfolio have a proportion of only 2% or 3% on the overall portfolio. This means that if one of these companies does not turn out to be a good investment, it would not have a significant impact on the Total Return of this portfolio (since each of these companies only represent a small proportion of the portfolio).
The fact that most companies only represent 2% or 3% of the overall portfolio serves as an indicator that this investment portfolio provides investors with a broad risk diversification.
Allocation per Sector
The sector, which is most represented in this investment portfolio is the Information Technology Sector (26%), followed by the Financials Sector (25%), and the Health Care Sector (17%). I suggest overweighting these sectors, since they provide investors with strong growth prospects.
In addition to the sectors mentioned above, the following are also part of this portfolio: Communication Services Sector (9%), Consumer Discretionary Sector (8%), Consumer Staples Sector (5%), Energy Sector (5%) and the Industrials Sector (5%).
Below you can see the sectors that represent the highest proportion of this portfolio (including the companies that belong to each sector):
Information Technology (26%):
- Apple (8%)
- Microsoft (6%)
- Broadcom (3%)
- Taiwan Semiconductor (3%)
- Accenture (2%)
- Adobe (2%)
- Salesforce (2%).
Financials (25%):
- Mastercard (5%)
- Visa (5%)
- Bank of America (4%)
- JPMorgan (4%)
- Charles Schwab (2%)
- S&P Global (2%)
- The Toronto-Dominion Bank (2%)
- U.S. Bancorp (1%).
Health Care (17%):
- Johnson & Johnson (6%)
- AbbVie (3%)
- Bristol-Myers Squibb (3%)
- Danaher (3%)
- UnitedHealth (2%).
Communication Services (9%):
- Alphabet (5%)
- Verizon (4%).
Consumer Discretionary (8%):
- Amazon (4%)
- Mercedes-Benz (2%)
- Tesla (2%).
Consumer Staples (5%):
- Altria (5%).
Industrials (5%):
- Deere & Company (3%)
- 3M (2%).
Energy (5%):
- TotalEnergies (3%)
- Suncor Energy (2%).
Allocation per Industry
In the following, I will have a closer look at the industries that are part of this portfolio: the industry with the highest proportion is the Diversified Banks Industry (JPMorgan, Bank of America, The Toronto-Dominion Bank and U.S. Bancorp represent 11% of the overall portfolio), followed by the Transaction & Payment Processing Services Industry (Mastercard and Visa represent 10%), the Pharmaceuticals Industry (Johnson & Johnson and Bristol-Myers Squibb make up 9%), the Technology Hardware, Storage and Peripherals Industry (the Apple position has a proportion of 8%), the Systems Software Industry (Microsoft has a proportion of 6%) and the Semiconductors Industry (Broadcom and Taiwan Semiconductor represent 6%).
Due to the fact that no Industry has a proportion of more than 11% of the overall portfolio and most of the industries have a proportion of less than 6% (as you can see in the graphic below), it can be stated that the portfolio provides you with a broad diversification over industries.
Allocation per Country
The majority of companies that are part of this investment portfolio are from the United States (86%). A minority are from Canada (The Toronto-Dominion Bank and Suncor Energy represent 4%), France (TotalEnergies represents 3%), Taiwan (Taiwan Semiconductor represents 3%) and Germany (Mercedes-Benz represents 2%). The investment portfolio that I am presenting in this article clearly overweights companies based in the U.S., but also incorporates companies based outside the country in order to achieve a geographical diversification.
How to achieve an even Broader Diversification?
In order to achieve an even broader diversification with your own investment portfolio , compared to the one I have buil t and am discussing in this article, you could also add an exchange-traded fund, or ETF. One example of an ETF that would fit perfectly in to this portfolio and which aims to combine a high Dividend Yield with Dividend Growth is SCHD ( SCHD ) .
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 (an example of a company with a low Beta Factor would be Johnson & Johnson, which is part of this portfolio)
- 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
The investment portfolio that I have presented in this article provides you with several benefits: I consider the companies, that represent the highest proportion of the overall portfolio to be excellent choices when it comes to risk and reward. This means that the level of risk that comes attached to an investment in these companies is relatively low, while their expected annual rate of return is relatively high (when investing with a long investment-horizon).
In addition, the investment portfolio that I have presented in this article, provides you with a broad diversification over sectors and industries: proof of this is the fact that no industry is represented with more than 11% of the overall portfolio. At the same time, Apple is the only individual position that represents more than 6% (making up 8% of the overall portfolio).
Furthermore, most of the companies that are part of this portfolio make up only 2% or 3% of the overall portfolio. This helps to additionally decrease the level of risk of your portfolio: if one of the picks performs badly over the long term, it would only have a minor impact on the overall performance of the portfolio.
The portfolio also provides investors with a geographical diversification: 86% of this portfolio consists of companies that are based in the United States and 14% outside the U.S., thus meeting my requirements for geographical diversification to overweight U.S. based companies while underweighting companies based outside the U.S.
Author's Note: I would love to hear your opinion on this investment portfolio and its allocation! Do you own any of these positions?
For further details see:
How To Allocate $25,000 Among My Top 30 Picks For April 2023