I often receive the question here about how I go about buying net new positions in my dividend stock portfolio. Technically speaking, how do I approach a new position? Do I like to just go for it and buy the full position, or do I average in over time? Actually, I like to do a bit of both!
Today’s video starts out with a discussion of non-meaningful vs. meaningful stock positions. I cannot stand micro, ancillary positions, ones that don’t really pull their own weight in my overall portfolio. I actually view my stock portfolio as a work of art (I’m serious). I only like positions that are at least 1% of my total dividend stock portfolio (and certainly above 0.5%). If a stock is smaller, I either get rid of it, or I do everything in my power to get it to the appropriate size, fast!
My stock buying strategy is a unique one. Historically, I have been “all in”. I like my money to work for me, earning dividends, while I sleep. As such, I have not been a fan of cash. I like to have my money working for me. So, when it’s time to purchase a new stock, I often don’t have a lump sum large enough to bring it to the appropriate size (1% or more of my portfolio). As such, I typically make a smaller lump sum “starter investing”, and then I average in each and every month until it reaches the appropriate minimum size (a meaningful size).
Since my buy process takes some time (lump sum plus months of averaging in), I like to start when a stock is on sale. I like to buy values! In my early days, this was not always the case, as I was acquiring core positions that I just had to have. These days, I typically only buy into big value.
At the end of the day, I view my portfolio like my house. I keep a tidy home, and I also keep a tidy portfolio. Small, insignificant positions don’t have a place. It’s all about focus for me.
Want to learn more about my position in Southern Company? Check out this recent video:
Want to learn more about my position in Dr Pepper Snapple? Check out this recent video:
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Disclosure: I am long Dr Pepper Snapple (DPS) and Southern Company (SO). I own these stocks in my portfolio.
Disclaimer: I’m not a licensed investment advisor, and today’s video is just for entertainment and fun. This video is NOT investment advice. Please talk to your licensed investment advisor before making any financial decisions.
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