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Portfolio Thoughts

I posted this on Dividend Board as well.  Thanks for any thoughts..

Long time lurker and first time poster in new format.  I have a few random questions – primarily regarding dividends.

I have a portfolio that WAS about 60/40 with about 40 individual high quality, long term dividend paying stocks. A few CEF’s…PCI,PDI,PTY and a few Reits and Pfd’s. I consider all those to be equity.  Bonds made up of a number of funds…PIMIX,IOFIX,PIGIX,PMZIX,DBLSX,JGIAX.  Average port beta about .60.  Overall avg yield 4+%.  83% of port is in sheltered accounts.

Home  up north and Florida condo.  No mortgage or other debt.  No pension.  Port yield + Soc Sec provides a good bit more than I need without touching principal. I have been very comfortable with things since retiring in 2015. 

Age 73, wife 70. Health good for our ages and remain active, 

All equities have been paying dividends for LONG time.  Probably averaging about 30 + years, with a couple only 10 yrs.

I have recently sold a few holdings to raise dry powder.

Since the proverbial “XXXX hit the fan”, my current allocation is now about 50/40/10.

I was able to ride out 08/09 without selling anything…but had income back then.

Quite sure CEF’s will reset payouts significantly, and relatively soon…RIGHT?

Bonds…not sure where they will settle out???

Equity dividends are my biggest concern.  Like I said I hold a well diversified eq port with long term dividend payers. Big concern is dividend cuts or termination.

What to do...

1-Nothing…If I could get over my anxiety and felt more comfortable I would love to keep things as they are…but unsure of future cash flow. 

2-If I went to ULTRA conservative and/or CD’s, I could live fine for 20-30 years by just drawing down principal.

3-Go to almost all cash/CD’s or ?? in sheltered accounts and wait tiil the smoke clears…and then go back to something like what I have currently.

If I thought the “XXXX” was REALLY going to hit the fan-I would be all over option 2…but would want to do it soon before that scenario was not an option.

Would love to hear any and all thoughts.  Any questions…just let me know and I’ll fill in the blanks.

Many thanks for all the conversations and sharing I read every evening!

 

 

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Valued Contributor

Re: Portfolio Thoughts

How about a couple questions first, Ivyman.

If your portfolio plus ss covers expenses, what is your current portfolio yield...approx?

What is approx size of your portfolio...like less than $150,000?  More than $400000; over a million?

Is your cash from sales more that $25000?  Accounts at Vanguard?  IRA?

Your marginal income tax rate?

TIA

R48

 

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Follower ○○○

Re: Portfolio Thoughts

Thanks for the questions...here you go:

Portfolio dividends plus soc sec more than covers liv exp.  

Prior to all of this the overall yield was about 3.7%.  

More than 1M.

Cash from recent sales was more than 25k ...but not huge % of tot port.

Just cleaning up a few under performers and pulling some bond $ out...again just to get a few $ to pick up some things on the cheap.  All things sold were within sheltered accounts.

Accounts at TD.

For 2018, paid in 2019...Overall marginal rate about 13%...includes SS, RMD, all dividends....Total Tax/AGI.

Hope that helps.  Any other questions...ask away.

Appreciate your time and consideration!

 

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Explorer ○○

Re: Portfolio Thoughts

I presume you invested in dividend paying shares as opposed to bonds for a higher yield. A larger exposure to bonds would have been much better, but they are now paying nothing. If you have substantial gains, realizing some of them can substitute for income. People forget realizing 'gains' is income as well. Place an amount in an account and set up monthly payments to yourself. You can stop payments anytime as better opportunities come along to reinvest. And you will be in cash, the safest possible place to be. Just my tuppence worth.

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Valued Contributor

Re: Portfolio Thoughts

If you are “comfortable” with your holdings, I wouldn’t sell any, unless it cuts it’s dividend. I hold a large number of individual dividend growers, and all have long streaks of dividend increases. There may be a few that cut dividends (financials, airlines (I do not own), travel/ leisure, etc.). I try to diversify my individual stock holdings- never hold more than 5% in one stock, spread them out across industries, strongly prefer 10 or more years of dividend increases, investment grade credit/ low payout ratio, etc. I personally am NOT selling, UNLESS an individual stock has severe problems like a dividend cut, etc. I’m sitting tight, have sold a few bond funds that performed poorly, have about 85% equity, rest is cash and bonds. Not adding to bonds here!

Win
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Follower ○○○

Re: Portfolio Thoughts

Thanks for the reply Winn.

Agree completely about diversification and I'm good there. In a taxable account I hold an SP500 ETF that is a little north of 5%, but have held so long that there are huge gains I don't want to realize.  Otherwise everything else is well south of 5%.  

It is the potential for big div cuts that I am concerned about.  When the govt effectively shuts everything down for even a little while, cash flowing between business will stop as well.  Seems it wouldn't take long for that to turn into a real mess.  You said more or less "I'm Not selling unless dividend cut, etc"...my concern is that if things shut down for too long, div cuts are almost inevitable-and the stock price will as well, creating a double whammy.

I realize I sound like I'm panicked...maybe just a little bit.  Like I said I could go to cash and live the rest of my life off of cd's...but that's not what I want to do.

Thanks again for your thoughts-truly appreciated.  And for letting me whine a bit-sorry.

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Valued Contributor

Re: Portfolio Thoughts

Ivyman...you still around?  If so, I will try to post

R48

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Follower ○○○

Re: Portfolio Thoughts

R48...Funny I was just thinking about a little bump as a reminder.  
in a word, yes I’m here, and look forward to your thoughts.

Thx.

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Valued Contributor

Re: Portfolio Thoughts


@Ivyman wrote:

R48...Funny I was just thinking about a little bump as a reminder.  
in a word, yes I’m here, and look forward to your thoughts.

Thx.


OK Ivyman...tomorrow.(wed)

BTW as a longtime lurker, are you familiar at all with my posting  portfolio reviews?

R48

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Follower ○○○

Re: Portfolio Thoughts

Yes for sure.  Looking forward to hearing from you R48...

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Valued Contributor

Re: Portfolio Thoughts


@Ivyman wrote:

Yes for sure.  Looking forward to hearing from you R48...


Sorry, very busy preparing for seizing this opportunity.

Other key questions though:

--Do you have heirs?  children? approx ages?  any charities of major consideration as heirs?

--With 83% of portfolio in tax sheltered, what percentage is in Trad IRA?  Roth IRA?  other such as 402.K?

Thanks

R48

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Follower ○○○

Re: Portfolio Thoughts

I have two children ages are 40 and 36.  

No significant Charities other than church and Salvation Army.

All sheltered funds are in traditional IRA's.  No Roth's no 402.

Thanks and anxious to Hera from you and any others.

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Valued Contributor

Re: Portfolio Thoughts

OK Ivy...

Thanks, I got everything I need, except "time."

Me , and Warren Buffett :-), very busy adjusting portfolio and assessing future...and giving guidance off-forum to past members who followed my posts!

Will absolutely reply, as I think I have a lot for you.  But if not these next two open market days, surely by this weekend.

R48

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Valued Contributor

Re: Portfolio Thoughts

Ivy...question.

Are you aware of the provisions of the recent SECURE retirement act, especially the provisions relating to the loss of "stretch"...And that inherited IRAs must be liquidated within 10 years of receiving.

R48

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Follower ○○○

Re: Portfolio Thoughts

Yes I am.

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Valued Contributor

Re: Portfolio Thoughts


@Ivyman wrote:

I posted this on Dividend Board as well.  Thanks for any thoughts..

R48 in bold...my replies herein, in bold.

General comment: Ivy, you are in great financial shape...good job.  You don't rely on your portfolio for retiree spending needs.  At the end I will have some big-hitter recommendations.

Long time lurker and first time poster in new format.  I have a few random questions – primarily regarding dividends.

I have a portfolio that WAS about 60/40 with about 40 individual high quality, long term dividend paying stocks. A few CEF’s…PCI,PDI,PTY and a few Reits and Pfd’s. I consider all those to be equity. 

Funny, I consider my Pfds, PCI to satisfy my fixed income bond side of allocation!  They may have volatility or drawdown of stocks, but they have special protections (contractual) that put them above stocks on the protection class.BTW I don't own individual stocks so cant help here.

Bonds made up of a number of funds…PIMIX,IOFIX,PIGIX,PMZIX,DBLSX,JGIAX.  Average port beta about .60.  Overall avg yield 4+%.  83% of port is in sheltered accounts.

I have posted often this year of my discouragement with bond funds, and my exiting going on this year.  See posts if interested why.

Home  up north and Florida condo.  No mortgage or other debt.  No pension.  Port yield + Soc Sec provides a good bit more than I need without touching principal. I have been very comfortable with things since retiring in 2015. 

Yes..great job.

Age 73, wife 70. Health good for our ages and remain active, 

All equities have been paying dividends for LONG time.  Probably averaging about 30 + years, with a couple only 10 yrs.

Expect some companies/funds may cut dividends in next qtr or two.  Dilemma for all is how to assess this.

I have recently sold a few holdings to raise dry powder.

Hmmm...good moves.  Good strategy--focus on dry powder, with intent to buy back in sometime.  Patience though.

Since the proverbial “XXXX hit the fan”, my current allocation is now about 50/40/10.

 

I was able to ride out 08/09 without selling anything…but had income back then.

So, you are vaccinated!...used to bear markets.  Use this to your advantage.  You have clearly more than enough.

Quite sure CEF’s will reset payouts significantly, and relatively soon…RIGHT?

Probably yes...like if people have forbearance for awhile on paying mortgages, and no income received, the PCI's may have trouble paying a dividend ...b riefly.  Will they take out of capital and pay anyway--could happen.  lastly, is this not now priced into PCI already?   The key question.  I will let the price trend and market tell me when it is fully priced in.

Bonds…not sure where they will settle out???

Nor am I.  But I don't see me returning to bonds at former levels, for several years.  End of bond 40 year bull market is as big a story as stock bear market.

Equity dividends are my biggest concern.  Like I said I hold a well diversified eq port with long term dividend payers. Big concern is dividend cuts or termination.

What to do...

1-Nothing…If I could get over my anxiety and felt more comfortable I would love to keep things as they are…but unsure of future cash flow. 

I started selling stock funds in January, and posted such.  I do my mitigating action when stock market is down through 200 day Moving Average, like from down 8% to down 20%.  Then I do nothing.  We are in the do nothing (do not sell) phase for me, since down more than 20%.  However, I am doing  extensive hedging using a fund, PSTIX, for which I am making a separate post/thread on this, today.  PSTIX moves opposite the market.  This could apply to you, but it is not for everyone.  PSTIX doing great neutralizing some stock allocation portion, w/o having to sell more.

2-If I went to ULTRA conservative and/or CD’s, I could live fine for 20-30 years by just drawing down principal.

Yes...but you could do same by doing nothing.  Don't fret.

3-Go to almost all cash/CD’s or ?? in sheltered accounts and wait tiil the smoke clears…and then go back to something like what I have currently.

Not easy to do such market timing.  When smoke clears, markets likely way up.

If I thought the “XXXX” was REALLY going to hit the fan-I would be all over option 2…but would want to do it soon before that scenario was not an option.

Would love to hear any and all thoughts.  Any questions…just let me know and I’ll fill in the blanks.

Many thanks for all the conversations and sharing I read every evening!

Final thoughts.

--In your situation, where you have enough, and need no portfolio draw, I suggest thinking of having an asset allocation you would recommend for your heirs/kids.  Yes, that may be higher stock side allocation.  If so, what a better time than now to buy more stock funds.  Also, I would suggest your kids would appreciate inheriting stock mutual funds/ETFs than individual stocks.

--You have dry gunpowder...focus on when/how to use that.

--Consider the new IRA inheritance limitations on stretch.  This year RMDs are suspended.  Consider transferring some to ROTH IRAs.

-------------------------------------------------------------------------------------

Whew...best wishes Ivyman

R48

 

 


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