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- เผยแพร่เมื่อ 12 มิ.ย. 2024
- A great dividend portfolio will be diversified across sectors/industries to help provide stability and consistency. Dividend growth stocks are inherently larger and less volatile, so the question becomes how many dividend growth stocks to hold? The answer is at least 10, and ideally 15 according to the venerable CFA institute. We're holding 30 DGO stocks because we'd like to ultimately build an ETF off our Quantigence strategy. To do so, we need a systematic method of trimming our positions to ensure a relatively equal weight across our dividend stock portfolio. After a thorough review of the academic research out there, we believe that a value-weighted dividend portfolio trimmed using a quarterly systematic method is the optimal configuration.
RESEARCH PIECES USED IN THIS VIDEO:
1. The Best Dividend Stocks | How to Find Them • The Best Dividend Stoc...
2. Living Off Dividends | The Power of Dividend Growth
• Here's How Powerful Di...
3. Dividend Growth Investing | The Best Dividend Growth Stocks
• How to Find the Best D...
CHAPTERS:
Intro
Why pay dividends
Capital allocation strategies
The importance of industry diversification
How many dividend stocks to hold
Steps to building a great dividend portfolio
Dividend champions by sector
Equal vs market cap weightings
Rebalancing your portfolio
Objective trimming rules
Conclusion
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the dividend series is my fav by far!
Good to hear. Lots of people love our dividend content, and this channel affords us some leeway to explore that topic and others. Going into next year we'll be developing our dividend strategy - Quantigence - a lot more in terms of marketing it as a separate product. Joe P.
Thanks for this. This is great info. So glad I found this channel.
We're glad you found us too!
I will watch this episode again every month to remind myself of mistakes I make , tanks , I just subscribed to your newsletter
Thank you for the sub! We'll have more dividend content coming out in the future.
Liked and comment for algo. Thx again for another vid
Thank you kindly for the support! Your likes and comments help increase YT's engagement score which forces those seedy little algos to yell our messages a bit louder ;)
As always a great video.
Off topic question: what do you think of Solaredge, especially in relation to demand drop warnings.
Thank you for the feedback! Great question to pose on our Discord server. ;)
Great lesson on portfolio weightings
Glad you found this useful!
Informative! Thanks. Some sectors had 6 stocks in them, so I chose 3, and some sectors had 3-4 options, so I chose 2 from those. I ended up with 25 stocks. I used screening tool to choose stocks with faster growth and solid years of dividend growth. Put ythe lot into M1, and I'll start with 1k, and add to it from there.
That's great to hear! You're most welcome. We can't vouch for M1 as we usually recommend retail investors stick with major brokerage firms to reduce systemic risk.
Great video, clear and actionable rules for portfolio construction!! On the capital allocation model I believe prior to FCF available for shareholders an assessment and decision on capital structure to reach optimal debt level is needed. It will be also great to have something more recent on the small vs large cap performance. I guess the academic world can help on that. Thanks again!!
Good point on considering debt as well. The small vs large cap performance topic could use a refresh - it' has become a "it's always been that way" sort of thing.
Great content, but I'd appreciate a comparison with SCHD, DGRO, or similar dividend growth accumulating ETFs. I have a feeling it might be challenging to outperform these ETFs with a privately managed dividend growth portfolio...
Additionally, I have a question: Would it be advisable for a passive investor to hold both an S&P 500 ETF and a dividend growth ETF, or would it not be worthwhile due to potential overlap and associated costs?
We barely touched the contents of the paper which examines the strategy extensively including performance. It will become available in due time. Remember, you can always torture the data and make it say anything you want. Your last question would require an examination of the constituents of each ETF to find overlap. You should be able to do that easily with Excel.
Depending on your age I would do:
40 or younger 1/3 SCHG, 1/3 SCHD, 1/3 VOO.
There will be some overlap and you could do also 2/3 VOO and 1/3 SCHG.
That sounds terrible. LMAO @@henrik4438
Regarding re-balancing: what if few positions increased to 6.66% in your portfolio, but not by gaining so much, but rather due to other positions loosing/decreasing in value? Would you be selling better performing stocks to add to not the worse performing (less gaining) but to actual loosers?
Great questions! When you have a large portfolio (our DGI portfolio is 30 stocks) that doesn't happen too often (everything loses so a few "winners" get propped up. Regarding selling winners and purchasing laggards, we did a paper on this strategy and it showed that this effectively generates alpha over time. Covered here: th-cam.com/video/jr8YlUduTD4/w-d-xo.html
Magnum opus!
It's our favorite place to invest money for sure. Quantigence is a great strategy that's only getting better as it ages - like a magnum of Opus One. ;)
Interesting. While I do care about diversifying across industries, my main diversification strategy has more to do with different business qualities.
For example: part of my portfolio is "slow revenue growth, but high cash flows and bought cheaply".
Another category for my portfolio is: "fast growers, not yet profitable, but likely a strong moat".
I also have a specific one for REITS only.
That's another way to look at it. This analysis was largely concerned with a very small universe of stocks and the methods one might use to diversify within the set - number and industry mainly.
Business qualities diversifications is good, I think it will resemble a kind of of factor’s diversification approach. Having a look on the industries distribution of the portfolio can be still useful. There are studies that 50% of a stock’s movement can be attributed to its industry.
I like to rebalance by never selling ever (unless something breaks in the profit-earning model)
Good idea! That's the best time frame according to Buffett. Our approach for DGI is to only sell for one reason only: when dividend growth stalls. That said, we might revisit that based on research described here: th-cam.com/video/jr8YlUduTD4/w-d-xo.html
So setting up a portfolio composed of around 30 dividend champion stocks, three from each sector, equally weighted and trimmed quarterly in a Roth IRA account? Hmm. Sounds like fun.
Hah! Good point. It can be as complex or as simple as you like. For example, we have a 30-stock portfolio that's mixed among the 11 sectors and we trim occasionally based on excessive weighting (not quarterly). The paper mentioned in the video takes a more holistic look at performance using a different method, but the same Q-score methodology. For those who don't want to get their hands dirty, there are plenty of decent dividend ETFs out there. We'll look to launch one for Quantigence eventually.
@@Nanalyze Hey, thanks for writing back! I meant 'sounds like fun' very positively, with relish. It does sound like fun to pick from the champions, balancing between sectors, and regular trimming. I will read the paper you mentioned in the video. I've got a roth through an employer at a brokerage I don't like, so I want to take the reins of my own first of next year. In my research, I'm torn between index funds, dividend ETFs or the method you've outlined, or a combo. I really appreciate your videos. I'm a regular watcher. Plus great travel tips ... if I get ripped off by one more Bangkok taxi driver ... maybe I'll learn my lesson? 😀
@@jasonhesseltine3520 Joe here, the guy blabbing away in the video. :) You sound like me. I love this stuff and don't mind managing a more complicated strategy.. Our paper isn't quite finalized yet, though we'll be - at the very least - making it available on our website. We'll let everyone know when that happens. While we'd like to publish it, both the authors are beginning some great jobs now and it's a matter of time and resources. Taking control over your Roth is a great idea when you're prudent as you are. We talk to many people doing the same thing. If you have time, the management can actually be enjoyable and you learn a lot. Glad you appreciate our videos and my occasional travel tip! Good to hear you're plying the streets of Bangkok and enjoying some of the great food "Asia" has to offer.