My first post, please be gentle. I would like to start documenting my investment journey along with others who have started doing it on this forum. Historically I have dabbled with stocks, CFDs (forex, commodities, indices, foreign stocks), hedge funds, mutual funds, index funds and ETFs. I have found that I suck when using leverage and perform better when I don’t have to worry about any margin calls. I also haven't performed too well in other financial assets and have decided to just stick with stocks for the time being.
My strategy is centralized around large capital high dividend stocks which shows the power of dividends along with a moderate buy and hold strategy, details below:
• ASX 20 stocks universe.
• Must have increased dividend each year for the past 3 years and also forecast consecutive dividend increases each year for the next 2-3 years.
• Sort by highest dividend yielding stocks (taking into account franking credits).
• Pick the stocks whose dividend yields provide a ratio of approximately 1.75 or greater versus that of the nearest cash deposit rate (currently UBank @ 3.77%).
• Average dividend growth rate should be greater than CPI.
Note that these are just guides that I follow personally which may change depending on economic conditions, interest rates, etc.
My current portfolio:
The P/L does not include dividend returns (as I do not participate in DRPs).
Basically this is a modified version of the Dogs of the Dow strategy that takes into account dividend growth and a risk premium vs current interest rates.
My personal philosophy behind this strategy:
• Only large cap stocks because prices of these stocks are supported by index funds and ETFs that have to follow certain guidelines and rules.
• I prefer dividends as my main source of return on investment versus share buybacks or retained earnings (reinvestment back into the company) because I feel that there is a certain element of market timing (which I also suck at) in order to realize profits with the latter.
• If you look at Forbes billionaires list, the top 10 are always filled with people who own companies/stocks (except George Soros). Not with people who got rich through property, trading commodities, forex, bonds, etc.
Stocks were bought during 01/14 – 03/14 while VAF was bought ~1 month ago.
If current economic conditions stays the same, will re-organize my portfolio next financial year (due to tax incentives) into CBA, NAB, ANZ, WES, BHP & RIO.
Will see how far ahead (or behind) I will get vs the ASX Accumulation Index using this strategy...