🥇 Adding a Near 9% Yielder to the High Yield Portfolio
A high-yield addition with improving cash-flow quality and long-term upside 📈
In late September, we started the process of building out our High Yield Portfolio.
The goal of the High Yield Portfolio is simple:
Deliver a sustainable dividend yield of around 8%
Preserve capital (no long-term value erosion)
Provide predictable cash flow
Why 8% yield?
Because the amount of capital we would need to retire is cut in half. (based on the 4% rule).
Members of Dividendology will be able to view all the holdings of the High Yield Portfolio on Dividendology.com.
🏆 Our High Yield Portfolio
Before today’s purchase, here is how our portfolio stands:
Before today, we had added 3 positions to the High Yield Portfolio:
We added a fund with an over 9%+ yield, paying out monthly, that grows dividends over time WITHOUT selling options
We added an 8%+ yielding REIT with the potential for significant upside
We added an 8%+ yielding stock growing their distributions by double digits
The first position is one I believe our High Yield Portfolio will likely be able to hold forever.
The second one is in ‘deep value’ territory and carries a bit more risk, but has recently gone through a significant shift in structure that has allowed them to pay a much more sustainable dividend.
The third was perhaps the best combination of yield and dividend growth on the market today.
But the position we’re adding today is yielding close to 9%, plans to grow distributions at a low to mid single digit rate, and also has upside at current prices.
After today’s addition, our portfolio looks like this:
Our portfolio’s projected earnings growth goes up, our dividend yield goes up, while our payout ratio simultaneously goes down.
💰 The High Yield Advantage
The stock we are buying today has limited analyst coverage, leading to what I believe is a mispricing of the stock, which simultaneously creates a High Yield opportunity.
This is what makes me so excited about High Yield Investing.
While there are many newer funds out there yielding well over 10% in many instances, we must buy stocks that meet all three of our portfolio criteria.
Buying high yield stocks is easy, buying high yield stocks that can preserve capital, provide predictable cash flow, and still provide the yield is much more difficult.
We want to build a portfolio we can live off of and still sleep well at night.
I have no interest in buying a company where I can’t project a range of what their cash flows will look like 3 years from now.
The company we are adding today is not only growing their cash flows, but is doing so with a high degree of predictability.
Below, we will be taking a deep dive into this stock.
If you’d like to get access to the High Yield Portfolio, as well as everything mentioned below, you can do so here:
Now, let’s dive in.