When I started investing in dividend stocks for income, I did as most new income investors - I chased yield. To make things worse, I had success early on. At one time I had a portfolio consisting of Real Estate Investment Trusts (REITs), Master Limited Partnerships (MLPs) and high yield, high risk stocks. The portfolio’s yield was consistently in the low to mid-teens. I remember once being disappointed in buying a stock that only yielded 8%.
As I continued to read and learn about investing in dividend stocks, it became apparent that I was doing it the wrong way. I started to unwind my high-yield strategy and move into more traditional dividend stocks. However, the high-yield strategy was still experiencing some success so I did not move as fast as I should and ultimately suffered some unnecessary losses.
My portfolio still carries some remnants of my high yield investing days with stocks such as:
- Integrys Energy Group Inc. (TEG) - Yield: 7.62% - Div. Growth: 1.5%
- National Retail Properties (NNN) - Yield: 6.75% - Div. Growth: 1.4%
- Realty Income Corp. (O) - Yield: 6.33% - Div. Growth: 2.1%
- Health Care Property Investors, Inc. (HCP) - Yield: 6.12% - Div. Growth: 1.1%
The focus of my income portfolio is now on blue chip dividend stocks with a long record of growing their dividends. Examples of companies I now follow include:
- Johnson & Johnson (JNJ) - Yield: 3.18% - Div. Growth: 7.5% - Analysis
- The Coca-Cola Company (KO) - Yield: 3.05% - Div. Growth: 7.9% - Analysis
- Abbott Laboratories (ABT) - Yield: 3.48% - Div. Growth: 8.4% - Analysis
- Emerson Electric Co. (EMR) - Yield: 3.21% - Div. Growth: 6.4% - Analysis
That is not to say I have completely walked away from high yield investments. Like salt and pepper, I use them to add a little flavor to my income portfolio, but in limited and controlled portions. Here are some high yield securities that I hold that have performed well for me:
- Alpine Total Dynamic Dividend Fund (AOD) - Yield: 15.74%
- Eaton Vance Tax Advantaged Global Dividend Fund (ETO) - Yield: 7.33%
- CenturyLink Inc. (CTL) - Yield: 8.86%
Full Disclosure: Long ABT, AOD, CTL, EMR, ETO, HCP, JNJ, KO, NNN, O, TEG. See a list of all my income holdings here.
(Photo: Gravity X9)
Tags: [ABT] [AOD] [CTL] [EMR] [ETO] [HCP] [JNJ] [KO] [NNN] [O] [TEG]