My Holdings As A % Of Market Value And Income
As part of my full disclosure on stock analyses, I include the subject stock’s percentage of my income portfolio (market basis) for securities I own. This prompted one reader to ask if I would disclose the percentage of each of my holdings. Below is a table of my income holdings and their relative percentages based on market value and annual income generated:
| Mk Val. | Income | ||
| AFL | 1.3% | 1.0% | |
| BBT | 1.9% | 3.1% | |
| BP | 2.9% | 3.0% | |
| CAT | 0.9% | 0.7% | |
| CLX | 1.4% | 0.6% | |
| CVX | 1.3% | 0.6% | |
| CNI | 2.2% | 0.6% | |
| CTL | 2.1% | 2.9% | |
| ED | 6.3% | 4.9% | |
| GE | 1.7% | 2.7% | |
| HCP | 2.2% | 2.7% | |
| HD | 1.6% | 0.9% | |
| INTC | 1.0% | 0.6% | |
| ITW | 3.5% | 1.7% | |
| JNJ | 2.5% | 1.0% | |
| KMB | 1.3% | 0.8% | |
| KO | 1.3% | 0.6% | |
| LLY | 2.4% | 1.6% | |
| MCD | 2.7% | 1.2% | |
| MFC | 1.4% | 1.3% | |
| MTB | 0.5% | 0.5% | |
| NNN | 5.8% | 7.8% | |
| NUE | 1.5% | 0.7% | |
| O | 4.0% | 5.0% | |
| PAYX | 1.6% | 1.8% | |
| PEP | 2.2% | 0.9% | |
| PG | 2.3% | 0.9% | |
| PGN | 3.7% | 3.1% | |
| RY | 1.9% | 1.7% | |
| SYY | 4.0% | 2.1% | |
| TEG | 1.2% | 1.0% | |
| USB | 0.6% | 1.2% | |
| UTX | 1.4% | 0.6% | |
| WMT | 1.5% | 0.4% | |
| SDY | 3.6% | 3.1% | |
| AOD | 3.4% | 14.9% | |
| BLV | 2.6% | 1.8% | |
| ETO | 4.6% | 10.4% | |
| PID | 1.9% | 1.2% | |
| VFH | 1.4% | 1.4% | |
| VIG | 3.1% | 1.1% | |
| VNQ | 2.2% | 3.4% | |
| VYM | 3.3% | 2.4% |
The red highlighted items are securities that are outside of my 5% maximum allocation. In the case of market value, ED and NNN are long-term holdings that “grew” into the overallocation position (actually declined less than the other securities). As for the income percentages, this is something that I just recently started to monitor. ETO and AOD are unacceptable at their current levels. I am gradually working these percentages down via sales. NNN is close enough that it will come inline as I add new investments.
Be careful not to read too much into this table. These are not recommended allocations, instead it is just a snapshot of where I am currently at after many years of investing.
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Thanks for sharing this info. It does raise a question about my distributions and how to evaluate. I currently have most of my stock holdings in a 401k, in a S&P500 index fund, and perhaps only 15% of total holdings are in personally controlled stock accounts. Within that subset are all my income stocks. However, I have nowhere near the diversification you show with your stocks. So, my question has always been whether when examining % of holdings, I should be comparing just to the subset of my income holdings, or to the % of all my holdings, including the s&p funds. If I compare to the just the income, I end up always exceeding the 5% guideline (which I too would like to meet). Do you have any thoughts on how you would evaluate that?
Roger: In a perfect world you would take all your investments back to the lowest level (individual stock) and then evaluate your holdings in the aggregate. This is really not a good option from a practical standpoint. In the case of my S&P Index funds, I teat them as a stand alone diversified unit and don’t consider their individual holdings when evaluating my individual stock holdings. However, I do take a global approach when determining overall allocations (e.g. sector, domestic/foreign, large/small, etc.) In doing this I don’t have to go to the individual stock level, Morningstar does that for me.
Best Wishes,
D4L
Yes, thanks indeed for sharing this info! I’m wondering how long it took you to build up to a level of 42 individual stock investments? I’m assuming you wouldn’t have done this level of diversification at the start, or else transaction costs would have killed you. Although, I guess places like Zecco could have made it possible to diversify fairly quickly.
Anyway, I get the sense from reading your blog that you’re a little more careful and purposeful than shotgunning stocks at Zecco
Makes me wonder what you would recommend for someone who wants to end up at a similar place your in now, and may soon have the “opportunity” to liquidate a 401k and move it into a self-directed IRA. At what portfolio size should someone be trying to build a similar list vs. some smaller list of individual stocks vs. going with an index fund. My personal rule is never to pay more than 1% on a purchase transaction cost so that gives a rough guideline on what I think the portfolio size would be. But I’m curious what you think.
What percentage is too high for the income portion of your portfolio? 7% +?
davmp: I have been dividend investing since 2003. Yes, it took several years to build up to the number of stocks that I currently hold. I am not a licensed professional, so I can’t advise others as to what they should do. However, you can see what my thoughts are as I build an income portfolio from scratch – the pocket change portfolio (PCP). I think your 1% rule works well.
Best Wishes,
D4L
BD: I have no set limit on my income allocation. Instead, I look at overall allocations of my portfolio taken as a whole.
Best Wishes,
D4L