Dividend Portfolio Sector Allocation May 2017

About once a quarter I like to take a look at my portfolio holdings and examine my overall sector allocations to see if they meet my comfort level as to how my capital is distributed. As we all know, market forces affect certain sectors at different times throughout business cycles which can often throw many portfolio balances out of sync. Not only can portfolio balances be thrown out of sync but dividend distributions can as well. Positions may grow over time because of fresh capital being added, the inevitable dividend cut may occur or recent stock sales can all affect the flow of our dividend distributions. As a dividend income portfolio matures I think it’s very important for one to see which stocks and which sectors are paying out their dividend distributions and see if the current flow matches ones investing risk tolerances. Of course, this is all a matter of personal preference.

 

Below you will find my recent asset allocation for my dividend stocks from all three of my accounts. As you can see I still favor the consumer sector a lot and will continue to add to that space as weakness in certain stocks permit. In recent weeks it seems that General Mills, Inc. (GIS) has fit that bill perfectly as I have added to that name for the last couple of months along with many of our investing peers. Other consumer names that continue to look weak are V.F. Corporation (VFC) and Hormel Foods Corporation (HRL) which have also been added to my portfolio in recent weeks. Of course, even with the market at all time highs there are still quite a few individual stocks trading at much better levels these days when compared to just a few months ago. Stocks like W.W. Grainger, Inc. (GWW) and Cardinal Health, Inc. (CAH) come time mind. I will continue to watch these names and nibble from time to time all the while making sure my overall allocation does not go beyond my comfort levels for any one of these stocks.

 

In all, the end game remains the same for me… Continue to grow my passive income stream and make sure that no one stock or sector that I’m not comfortable with long term becomes too large and responsible for the majority of my dividend income.

 

I look at my portfolio diversity from a total perspective meaning that I look at my taxable, ROTH and IRA account as one. Some might question my beliefs in diversity seeing only REITs in my IRA 🙂

 

Brokerage Account

SectorSector %Market Value
Consumer Defensive28.22%$49,562.00
Industrials25.80%$45,320.25
Healthcare14.31%$25,141.22
Financial Services9.60%$16,859.01
Consumer Cyclical8.73%$15,329.04
Utilities7.40%$12,996.75
Basic Materials5.95%$10,449.27

ROTH Account

SectorSector %Market Value
Financial Services39.13%$22,744.98
Consumer Defensive29.18%$16,963.11
Industrials20.06%$11,661.22
Consumer Cyclical9.70%$5,637.42
Healthcare1.94%$1,126.34

IRA Account

SectorSector %Market Value
Real Estate100.00%$12,933.89
Welltower Inc. (HCN)31.71%$4,101.13
HCP, Inc. (HCP)26.26%$3,396.39
Ventas, Inc. (VTR)23.76%$3,072.63
Care Capital Properties, Inc. (CCP)12.06%$1,560.02
LTC Properties, Inc. (LTC)3.74%$483.89
Quality Care Properties, Inc. (QCP)2.47%$319.82

 

One thing to note about this update is how my IRA account “diversified” as a result of two health REIT spin offs. In general, I welcome spin offs, especially if both parent and offspring stock continues to pay a dividend but I must constantly reevaluate how those spin offs affect my dividend distributions as well as overall stock allocation. Just one more thing to think about.

 

How are your stocks allocated? What is your largest sector holding(s) and how do you feel about having a relatively high overweight sector in your portfolio? Please let me know below.

 

Disclosure: Long GIS, VFC, HRL, GWW, CAH

23 thoughts on “Dividend Portfolio Sector Allocation May 2017

    • Hi BHL,

      While I will always maintain the most exposure to consumer staples I do realize that I need to beef up my health exposure too. Believe me, I’m watching JNJ, ABT, ABBV, and others, waiting for an opportunity to add to my holdings. I do agree that the health sector will see major growth in the coming decade or two. You can see I already feel this way by my REIT exposure in my IRA as I only hold health REITs there. Thank you for sharing your thoughts.

  1. Thanks for sharing! This is really interesting to see, as not many dividend investors share their sector allocations like this. Overall, I’m a bit more overweight tech than you – but there are still some great dividend payers in that space so I’m happy! Good luck with the bargain hunting this week.
    Jay recently posted…Trend Following Trading Ideas for May 2017 Part 3My Profile

    • Hi Jay,

      Reviewing your portfolio allocations is important from time to time. I do it three or four times a year, at most, just to make sure that I’m still comfortable with my sector exposures. While we are constantly reading about stock buys and sells among our investing peers we rarely get to see how large or small each sector exposure is within their portfolios. I’m still at zero tech in my portfolio but considering a new name this month. Thank you for commenting.

  2. It is smart on your behalf to keep all of your REITs in a tax beneficial account instead of having them in a brokerage account. Especially if you see all accounts as one. The allocation percent still stays the same even though they are in a different account. It’s good to review from time to time and adjust accordingly because of risk tolerance or being overweight on a specific sector. Need to make sure the allocation sticks to your overall market strategy. Thanks for sharing.
    Dividend Daze recently posted…How to Decide Between Paying Off Student Loans Early Or Investing (Or Both)My Profile

    • Hi DD,

      That IRA account was a legacy account and instead of converting it to a ROTH I simply kept it and started loading it with REITs. The same goes for putting my Canadian banks in my ROTH account as there is no withholding tax there. I like to do these reviews every three or four months. I figure after all my monthly buys and the gyrations in stock prices during that time period it becomes important to do a ‘check up’ and see if I’m still comfortable with my allocations. Thank you for stopping by and commenting.

    • Hi Stockles,

      I wouldn’t say that I’m low on financial stocks as I do have good exposure to the sector between all three of my accounts. I don’t ever plan to make my financial exposure so great as to be one of my top three sector holdings though. As you can see I favor the consumer staples, industrial and want to grow my health exposure instead. As always, I appreciate your comment.

  3. DHut,

    I agree with you, I look at all of my holdings as ‘1 portfolio’ as I intend to have them all work for me at some point. I like the diversity, and focus on defensive in your taxable holdings, but being perhaps more aggressive in your IRA and Roth.

    Keep up the good work,
    Gremlin
    Dividend Gremlin recently posted…April Review / May Preview 2017My Profile

    • Hi DG,

      I think ‘bundling’ the portfolios makes the most sense since as it does represent my total dollars invested. If you just looked at my IRA account you’d think I was crazy to invest 100% in real estate but know that it’s just a small portion of my total investment amount. You hit it on the head with my three portfolios. The taxable is most defensive with the ROTH and IRA being a little more aggressive. Thank you for commenting.

  4. My brokerage account is kind of like that but with different ones tech and financials lead the way with Apple really growing but as I add to other stuff it will even out over the long haul as I find value in other areas. Big spurts from BAC and UVE helped the finance areas grow but my largest dividend area comes out of real estate which is about 12 percent of my portfolio of course I want to try to keep it around there but know as I add to it via OHI and others it will grow massively also. As I bring up my lowest stocks the areas will even out in 2 to 3 years it will be interesting to see how much the others come up.
    Doug recently posted…AAPL Dividend increaseMy Profile

    • Hi Doug,

      Many are telling me to jump into the tech sector with my own portfolio as there is tremendous growth in the space for the foreseeable future. At least I have QCOM as a potential buy in May. That’s a step in the right direction. AAPL seems to be the tech growth play many of our peers have exposure to. With prices climbing ever higher it becomes important to make sure that your exposure to the stock matches your tolerance for risk. Thank you for sharing your thoughts.

  5. Still holding on to the consumer staples I see 😉 Very solid sector though. We’re still high in tech and healthcare. Try to tune in on real estate by getting into the rental property market. I believe tech will make up for some growth in the coming 10 or 20 years, while other sectors will benefit from the same developments, concerning the internet of things.

    • Hi Divnomics,

      The consumer staples are my favorite sector to invest in long term. I realize that growth will not be robust in that sector, especially when compared to tech, but it does offer a lot of predictability and reliability when it comes to dividend payments which is my primary goal. I need to boost my health exposure too going forward. Thank you for stopping by and commenting.

  6. Keith,

    I’m heavy healthcare, reits, and consumer defensive. Telecommunication is mid range but that’s because I own 126 shares of T. I am low on utilities, financial, and industries. Everyone is talking about this mythical crash that is supposed to happen and since I don’t have a crystal ball I’m preparing for it..just in cash. As such, I’ve been adding more to defensive and healthcare. The majority of my reits are healthcare related or heavily discounted (STOR) with low payout ratios.

    Your article reminds me. Time to go utility hunting

    • HI tbdi,

      Looks like you have a pretty good mix of sectors in your portfolio. I do want to beef up my health exposure though. Like you, I like my health REITs the most and wouldn’t mind adding to them going forward as well. A correction, crash or whatever you want to call it will happen. The big question that no one can answer is when. In the meantime, I’m staying fully invested with just enough cash to continue making my monthly buys which is typically between $500 – $3,000 in any month. As always, I appreciate your comment.

    • Hi dividendgeek,

      I’m guessing you are talking about my total sector allocation percentages across all three portfolios. While I view it as a whole it’s still nice to see how each portfolio is allocated individually. This is why I report it this way. Thank you for commenting.

  7. Good spread DivHut. My Div portfolio is more heavily weighted in Utilites and next REITs (with higher proportion of health care REITs) because I wanted a conservative tilt. Also have more staples for same reason. Rest is similar. I get a 3.75% current yield, you probably have lower current yield because of lower REITs and utilities allocation than me. But the conscious price I pay is lower dividend growth as these defensive sectors don’t grow as fast.
    Ten Factorial Rocks recently posted…The First DollarMy Profile

    • Hi TFR,

      I guess our portfolios share similar traits. I also like the health REITs the most as I think they have the best long term prospects for growth and stability and heavily favor the consumer staples too. I like a portfolio that allows me to sleep well at night. I’m still looking to potentially add another utility (PPL) to the mix for more yield and stability. Thank you for stopping by and commenting.

  8. Great breakdown of asset allocation. I try to use personal capital to do that, but because of some of my target date retirement funds it makes it impossible for me to get it because it doesn’t understand how to classify them and gives most of my 401k an unclassified bucket. This means that about 1/3 of my accounts completely show up in the “I don’t know what you own” bucket and with the other holdings I have that are VIG and VWELX in my IRA and Roth I’d have to do a lot of manual calculations as well. Great breakdown though, appreciate the interesting read.
    Duncan’s Dividends recently posted…Being frugal and charitableMy Profile

    • Hi DD,

      It’s always interesting to see how a portfolio changes over several months between stock price fluctuations, added capital and spin offs, etc. I like to see where my sector allocation stands to make sure that I’m still comfortable with my holdings. I guess it’s not always possible when using an app or site like Personal Capital though. With all the advancements that have been made in fintech over the years I find it funny that certain investments can still be classified as, “I don’t know what you own.” Thank you for sharing some of your holdings and thoughts.

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