Hey guys,
A lot of people have been asking what dividend ETF or stocks to invest in that pay monthly. Well this post goes over what assets I hold to get that sweet monthly passive income.
This dividend portfolio pays 5-7% per year on a monthly basis and is considered a safe investment.
Thesis:
Get your pad and paper, because here we go.
Building a good portfolio is like building a great house. You need to have a solid foundation followed by secure walls and finally a stable roof. As such outlined below is the ChillznDay Safe Stay Dividend Portfolio.
ChillznDay Safe Stay Dividend Portfolio
- Foundation: The U.S Market with little exposure to international movements.
- Secure walls: We are investing in proven assets that have a track record of dividend payments and are stable.
- Stable Roof: Our portfolio consists of ETF’s and very few stocks.
First Foundation, Here we are looking to invest in assets that have little exposure to the overall swings of the market so that we can park capital there and make a decent return while having little exposure to risk.
Second Secure Walls, For this we need assets that have a proven track record of making their payments to shareholders on time, because this is how we are going to make money. As such I only include trusted dividend producing assets.
Third Stable Roof, The roof holds everything together. For this we need to have stable assets that have little risk but are also diversified. I only hold ETF’s and one stock in this portfolio. By holding ETF’s we spread out the risk across several assets and have others manage the weight in the ETF.
Portfolio Allocation
- $BIT-25% (7.46% yield)
- $KBWD-20% (7.23% yield)
- $FOF-15% (7.86% yield)
- $EOI-20% (5.84% yield)
- $GLD-5% (Hedge)
- $O-10% (4.21%)
$BIT: Blackrock Multi-Sector Bond Income. (25%)
$BIT seeks to hold mid-tier corporate bonds and sovereign treasury bonds; $BIT has a current dividend rate of 7.46%. By holding $BIT in your portfolio you expose yourself to the U.S bond market with a little bit of secondary exposure to overseas bonds in the form of transnational companies such as Goldman, Wells Fargo, and others.
By holding $BIT you are putting your portfolio in the U.S Bonds corporate bonds market. This is a very stable asset so long as you invest in the form of an ETF, and there is no better ETF in the mid-tier bond market like $BIT. Further, by having a portfolio exposure of 25% you are essentially providing a bedrock for your portfolio as if the U.S bonds market implodes we have bigger issues then a portfolio.
Outside of the Pandemic it’s a fairly stable asset.
Here is a dividend history back almost 2 years. Its consistent.
As we can see from the above image $BIT has consistently paid out to investors. For those who are interested in learning more about $BIT check out the following info site by BlackRock.
https://www.blackrock.com/us/individual/products/249839/blackrock-multisector-income-trust-fund
$KBWD: KBW High dividend yield ETF. (20%)
The KBW High Dividend Yield ETF is a weird combination of all market tier financial companies with good management and increasing EBITDA. The financial market in the United States is a massive sector and the $KBWD ETF is spread out across the entirety of it. The goal of this ETF is to invest in low risk but high dividend yielding finance stocks, as such $KBWD’s portfolio allocation is heavily weighted towards small-cap and mid-cap financial companies.
Investing in $KBWD is going to expose your portfolio to the U.S financial market without investing in stagnant high-market cap companies. That being said it does carry some risk but we are going to hedge against that in the form of $GLD later on. Overall $KBWD is a good asset where you can park some capital for a long time and expect a monthly return that nets to around 7.23% per year.
Again, outside the pandemic $KBWD is a fairly conservative play.
KBWD has consistently paid out investors on a monthly basis.
As we can see, $KBWD has consistently paid out investors. Investing in the $KBWD ETF is going to expose your portfolio to the financial market in the mid and small tier section without you having to do all the research legwork. As such I hold around 20% allocation in this portfolio. It does carry some more risk then $BIT but we will hedge against this with our portfolio hedge $GLD later on. For those who want to know more about the $KBWD ETF check out the following link.
https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&ticker=KBWD
$FOF: Cohen and Steers Fund of Funds ETF. (15%)
Cohen and Steers Fund of Funds ETF ($FOF) seeks to invest in closed end funds whose goal is to capture as much economic opportunity through private equity and direct investment. By investing in $FOF you are entering into the world of private equity, smart management, and activist hedge funds. These types of funds are extremely profitable and with the right management can net a massive return. By investing in $FOF you are spreading out the risk inherent in this style of investing across several closed end funds. $FOF seeks to invest in income generating assets and securities.
Investing in $FOF is going to expose your portfolio to the world of active management across several sectors. Essentially this is going to put your portfolio in a position to capture the most economic potential in the hands of proven investment funds. $FOF invests in all parts of the economy and as such you are spread out across several sectors. It is a relatively stable asset that pays out investors in a 7.86% return per year on a monthly basis.
Outside the pandemic, $FOF is again a stable asset.
Steady dividend income.
Investing in $FOF is going to net you about 8% per year in dividends on a monthly basis and spread out the risk across the entire market. That being said, the world of active management and private equity is susceptible to political actions. That is your inherent risk in this style of investment and as such we are only limiting $FOF to around 15% of portfolio allocation. If you want to learn more see this website for a full rundown on the ETF.
https://www.cohenandsteers.com/funds/details/closed-end-opportunity-fund
$EOI: Eaton Vance’s Enhanced Equity Fund.(20%)
The Eaton Vance Enhanced Equity Fund pays out 5.84% per year on a monthly basis. The $EOI fund seeks to lower the dividend return in favor of investing in assets and stocks that have a proven track record of increasing in value. The $EOI fund exposes you to the largest P/E stocks on the U.S market. These assets for example are Microsoft ($MSFT) and Amazon ($AMZN).
By investing in $EOI you are exposing your portfolio to large growth of the principle while also raking in some decent monthly dividends. $EOI is tied to the value of the underlying asset. As such it fluctuates more than the previous mentioned assets.
Pandemic hit this bad boy hard. ITs stable outside that.
As we can see, $EOI pays out a good dividend.
$EOI is going to expose your portfolio to the larger U.S stock market and put you in some really good assets. It is a little bit more risky then the previously mentioned assets. We hedge against this with our investment in $GLD as these assets are tied to the value of the dollar. For more info check out the following link.
https://funds.eatonvance.com/enhanced-equity-income-fund-eoi.php
$GLD: The Golden Hedge.
SPDR’s Gold Shares ETF $GLD has been an age-old way of hedging against U.S inflation. This is because the U.S dollar is not tied to the value of gold. Right now the world’s economy runs off the dollar value but if the dollar ever fails gold stands a good chance to bounce back. This is why $GLD is a great way of hedging your U.S market investment.
1 day chart on $GLD. Notice how during the pandemic the value shot up.
We are not going to get any dividend payments of note from $GLD. What will happen is if any of our heavily weighted U.S assets start to fail our investment in $GLD will continue up. See the below picture for a good example.
Notice what happens during the pandemic.
As we can see, $GLD is a way for us to park 5% of our portfolio and hedge against our other assets decreasing in value. It’s a great way to hedge against downturns in the market.
$O: Reality Corp. (10%)
What, holding a stock? Yeah, while everything else is an ETF $O represents a very interesting opportunity. Reality Corp is a highly diversified REIT that invests in U.S commercial properties throughout the United States. It’s a very stable stock and is considered a dividend aristocrat. This means that $O has for the past 25 years increased its dividend % and continued to payout its investors at a 4.21%.
You will be getting a good appreciating asset with a solid dividend payout.
Investing in $O is going to expose your portfolio to the underbelly of the United States. The CVS, Walgreens, Dollar General’s, Restaurants, and other commercial entities. The risk inherent in this position is the overall U.S economy slowing down or failing, which won’t happen. Further, by investing in $O you are putting yourself in a position to capitalize on land value increasing and getting a higher dividend yield overtime. $GLD further hedges this position. If you want to learn more then check out this website.
https://www.realtyincome.com/Home/default.aspx
Conclusion.
This portfolio is going to allow you to have exposure to every part of the U.S market in some capacity while also hedging the risk through holding $GLD. I personally hold the portfolio and so far it has been a great pandemic recovery choice as I will continue to generate wealth off this investment.
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Until next time, best of luck in your investments!
Sincerely,
