The Dividend Income Accelerator Portfolio aims to provide you with a mix between a relatively high dividend yield and dividend growth. This can help you to generate extra income in the form of dividends while increasing the amount from year to year.
At the same time, one of its objectives is to obtain an attractive Total Return. This is because a high dividend yield is not worth much if you don’t obtain at least an attractive overall return for your investment. However, I would like to highlight that the main objective of this portfolio is not to outperform the market, but instead to represent a diversified investment portfolio with a reduced risk level, which provides you with stable and annually increasing income streams while aspiring to achieve an attractive Total Return when investing over the long term.
It is also worth mentioning that the objective of this investment portfolio is not to try to time the market. However, I will still show you that you can obtain attractive investment results over the long term when investing continuously in any market condition and with a long-investment horizon. I personally don’t believe in market timing, but I do think that it’s necessary to invest over the long term in order to achieve attractive results.
Another objective is to one day receive 100% of your initial investment back in the form of dividends due to the steadily increasing dividend payments of the companies we plan to invest in.
This kind of investment strategy, which focuses on a combination of dividend income and dividend growth, helps you to become increasingly independent from the stock market price fluctuations. When focusing on the dividend payments you receive from the companies you invest your money in, you are able to care less about the ups and downs of the broader stock market.
The Dividend Income Accelerator Portfolio is built for all investors that want to generate a significant amount of extra income via dividends and to raise this amount annually (this is possible through the selection of companies that pay a sustainable dividend while being able to raise it from year to year). At the same time, it’s for investors who aim to achieve an attractive Total Return.
In addition, it has been designed for long-term investors that want to invest steadily for their retirement.
This portfolio is not for people who want to speculate over the short term. All of the selected picks will be investments based on the companies’ fundamental data, their competitive advantages and financial health. When investing, you become a business owner of the companies you select and can therefore benefit from the profits they generate and the increasing dividend payments paid to you as a shareholder.
Below you can find the characteristics of The Dividend Income Accelerator Portfolio:
In general, each of the selected picks included in The Dividend Income Accelerator Portfolio should fulfil the following requirements:
I believe that it’s particularly important for companies to possess strong competitive advantages. This is because companies with strong competitive advantages have the best chance of surviving over the long term.
When selecting companies with strong competitive advantages, you reduce the risk level of your investment portfolio and decrease the probability of losing your investment.
By investing in companies with a strong Profitability, you can again reduce the risk level of your portfolio, and therefore increase the probability of reaching an attractive Total Return when investing over the long term.
The investment portfolio will include the following categories of companies:
Incorporating high dividend yield companies will enable you to benefit from the dividend payments of the selected companies starting today. These type of companies will contribute to raise the Weighted Average Dividend Yield [TTM] of your investment portfolio.
High Dividend Yield companies usually have a strong competitive position and are able to generate a large amount of free cash flow in order to pay shareholders an attractive Dividend Yield.
Examples of companies that have a relatively high dividend yield are – among others – companies from the Multi-line Insurance Industry, the Tobacco Industry, the Integrated Telecommunication Services Industry, or the Integrated Oil and Gas Industry.
Dividend Growth companies allow you to increase the annual dividend payments that you receive at an attractive growth rate. Moreover, they help to increase the Weighted Average Dividend Growth Rate of your investment portfolio. This will help you to increase your additional income in the form of dividends year over year.
Examples of dividend growth companies can be – among others – firms from the Pharmaceuticals Industry, the Transaction & Payment Processing Services Industry, or the Systems Software Industry.
Another characteristic of these companies is that they tend to have a relatively low Payout Ratio, which means they have plenty of room for dividend enhancements in the future.
The largest part of The Dividend Income Accelerator Portfolio will consist of high dividend yield and dividend growth companies in order to reach an attractive mix between dividend income and dividend growth (and an attractive Weighted Average Dividend Yield and Weighted Average Dividend Growth Rate).
Growth companies that don’t pay a dividend can also be part of this dividend income-oriented investment portfolio. However, they represent the lowest proportion of the overall investment portfolio when compared to high dividend yield companies and dividend growth companies.
The reason for this is that one of the main objectives of this investment portfolio is to reach an attractive mix between dividend income and dividend growth. If growth companies, that do not pay a dividend, had a high proportion of the overall investment portfolio, it would then reach a lower Weighted Average Dividend Yield.
However, I believe that some companies that do not pay a dividend, but are particularly attractive when it comes to risk and reward, can be appealing choices and therefore part of this portfolio in order to help us reach an attractive Total Return.
