Creating a High-Yield Stock Portfolio for $50,000: Boosting SCHD's Income with August's Top Dividend Stocks
In an effort to create a more balanced dividend portfolio, investors may consider complementing the Schwab U.S. Dividend Equity ETF (SCHD) which lacks exposure to the Real Estate, Materials, Utilities, and Communication Services sectors.
The SCHD portfolio, valued at $50,000, includes a diverse mix of companies such as Alphabet (NASDAQ:GOOGL), PepsiCo (NASDAQ:PEP), Chevron, Altria (NYSE:MO), Verizon (NYSE:VZ), The Toronto-Dominion Bank (NYSE:TD), VICI Properties (NYSE:VICI), Comcast (NASDAQ:CMCSA), Microsoft (NASDAQ:MSFT), Rio Tinto (NYSE:RIO, OTCPK:RTPPF, OTCPK:RTNTF), Canadian Natural Resources (CNQ), Brookfield Renewable Partners (BEP), and Deutsche Post (OTCPK:DPSTF) and Enterprise Products Partners (NYSE:EPD) [1]. No single company accounts for more than 5% of the overall portfolio, reducing company-specific concentration risk.
To diversify this portfolio, a practical approach might be:
- Keep around 60-70% in SCHD for the core dividend growth and yield.
- Allocate 10-15% to a REIT ETF or real estate stocks.
- Allocate 5-10% to utilities dividend stocks or ETFs.
- Allocate 5% to materials stocks or dividend ETFs.
- Allocate 5% to communication services dividend-paying stocks or ETFs.
This blend maintains the core strengths of SCHD while covering its sector gaps to create a more balanced dividend portfolio [1][3]. Selection should focus on high-quality dividend payers with stable payout histories to align with SCHD’s income objective.
The SCHD has a reduced Annualized Volatility of 16.31% and a strong buy rating according to the FM Global Invest Risk-Reward Rating. Additionally, most of the selected companies in the portfolio have positive EPS Diluted Growth Rates [FWD] and elevated EPS FWD Long Term Growth Rates [3-5Y CAGR], with Canadian Natural Resources (CNQ) having the highest EPS FWD Long Term Growth Rate [3-5Y CAGR] at 16.00% [2].
When compared to investing in the Schwab U.S. Dividend Equity ETF alone, the portfolio offers increased exposure to the Communication Services, Real Estate, Materials, and Utilities sectors, providing a more balanced portfolio. However, it should be noted that the portfolio offers a superior amount of dividend income but an inferior dividend growth potential when compared to the actively managed Dividend Income Accelerator Portfolio [4].
[1] Alphabet (NASDAQ:GOOGL), PepsiCo (NASDAQ:PEP), Chevron, Altria (NYSE:MO), Verizon (NYSE:VZ), The Toronto-Dominion Bank (NYSE:TD), VICI Properties (NYSE:VICI), Comcast (NASDAQ:CMCSA), Microsoft (NASDAQ:MSFT), Rio Tinto (NYSE:RIO, OTCPK:RTPPF, OTCPK:RTNTF), Canadian Natural Resources (CNQ), Brookfield Renewable Partners (BEP), Deutsche Post (OTCPK:DPSTF), and Enterprise Products Partners (NYSE:EPD) make up the SCHD portfolio.
[2] The portfolio presented in the article consists of the Schwab U.S. Dividend Equity ETF, two closed-end funds, and ten high-yield dividend companies.
[3] Canadian Natural Resources (CNQ) has the highest EPS FWD Long Term Growth Rate [3-5Y CAGR] at 16.00%. Alphabet and Microsoft also have high EPS FWD Long Term Growth Rates [3-5Y CAGR] at 14.97% and 11.33% respectively.
[4] The portfolio offers an attractive amount of dividend income with a Weighted Average Dividend Yield [TTM] of 5.88% and a 5-Year Weighted Average Dividend Growth Rate [CAGR] of 5.56%. When compared to the actively managed Dividend Income Accelerator Portfolio, the portfolio offers a superior amount of dividend income but an inferior dividend growth potential.
- To create a more diversified dividend portfolio, one may consider allocating a portion of investments to REIT ETFs or real estate stocks to cover the sector gap in the Schwab U.S. Dividend Equity ETF (SCHD).
- It's sensible to retain around 60-70% of the portfolio in SCHD for its core dividend growth and yield, while allocating 10-15% to real estate stocks or REIT ETFs.
- The blend of SCHD and diversified investments can offer increased exposure to the Communication Services, Real Estate, Materials, and Utilities sectors.
- In the context of technology and personal-finance, the SCHD portfolio includes Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), which both have strong EPS FWD Long Term Growth Rates.
- The selection of investments for a diversified dividend portfolio should focus on high-quality dividend payers with stable payout histories, as seen in companies like Canadian Natural Resources (CNQ) with a high EPS FWD Long Term Growth Rate.
- One can utilize investment in the SCHD portfolio to contribute to their general-news awareness, as the portfolio consists of global companies like Canadian Natural Resources and Deutsche Post.
- For entertainment, sports enthusiasts may find interest in the portfolio's holdings, such as The Toronto-Dominion Bank, which has a strong presence in numerous sectors, including finance and real estate. Additionally, VICI Properties owns and manages entertainment and hospitality destinations across the U.S.
