New Investment Strategy to build an Income Portfolio

I realised that I have been a trader but I really want to build a portfolio of “income” stocks to make sure it can provide me with a passive income of decent yield sustainably. However, the current way that I am doing it by mixing all the stocks up is not helping me to do so. At my age, I don’t have a lot of time to experiment and “catch up” on mistakes. Since my last blog post, I have been doing quite a fair bit of self reflection on my current investment strategy.

deep-thought

I finally decided to take steps and be deliberate in building up an income stocks portfolio. I guess there are many ways to do this. I welcome you to share your approach with me.

In this blog post, I will share my proposed approach and offer it to you for critique.

First, from all the stocks in my holding, I differentiated out the local stocks that I felt are “income stocks”.  These income stocks tend to be the large reliable and stable Reits  and blue chip companies that distribute stable and hopefully growing dividends constantly. Last but not least, these “selected” stocks have been purchased at a price with certain safety margin so that their dividend yields can be “protected” in some way.

I aim for an overall 5% yield from this portfolio and once those stocks get into this income portfolio. I promise myself that I will think once, twice and thrice times before I sell them … in other words, they are here to stay to generate passive income for me.

For the remaining local and all the foreign stocks that I own, they are grouped into a new “speculative” portfolio that I have created with a much shorter time horizon. They are for short term gain. My aim to make a quick win from them with a capital gain of at least 10% … hence the name “speculative”. For this group of stocks, when the price hits my target, I will sell and when the price falls until it is “right”, I will buy them again. Yes, it satisfies the “trader” nature in me so that I won’t have itchy hand and go and sell those income stocks 🙂

So, let’s look at my first pass “income” portfolio. Below is a list of them and their dividend  yields based on the ongoing dividend declared divided by the share price when I purchased them. Hence, the yield is not current but something that is REAL to me.

# Companies Yield
1 Ascendas 6.7%
2 Capitaland Mall Trust 5.6%
3 CDL Trust 7.0%
4 Fraser Commercial 7.8%
5 Fraser Logistics 7.5%
6 Keppel Corp 2.9%
7 Keppel Reit 5.3%
8 Manulife Reit 7.9%
9 MapleTree Commercial 6.1%
10 MapleTree Industrial 7.0%
11 MapleTree Logistics 7.0%
12 Netlink Trust 5.3%
13 OUE Commercial Reit 7.3%
14 Singtel 3.6%
15 SPH Reit 5.7%
16 ST Engineering 4.4%
17 Starhill Global 6.5%
18 Suntec 5.9%
19 Thai Beverage 2.8%
20 UOB 3.6%

The weighted average yield from this portfolio is current 5.07%, exactly on the mark of where I wanted it. In the coming months, if the price is right (i.e. the yield is right), I will purchase more of them or I will purchase other stocks that also fit the criteria for this portfolio.

From now onwards, these stocks will enjoy a special status, even if their share prices escalate significantly, I will think many times before I sell them. My investment objective for them is different. I hope by building this separate portfolio, I will have discipline to build up an “income” portfolio. I can’t leave this to chance anymore.

So in future, I have 3 portfolios to talk about in my blog : “Income”, “Speculative” and “Index/Permanent” portfolios.

It will be useful to compare the time and efforts that I spend on each of them and the returns I made as a result. The best would be to spend no effort and reap maximum returns. Is it possible to have the cake and eat it?

I welcome your comments and feedback.

And before I sign off, I like to share this lovely Chinese song from my favourite singer, known affectionately as  FanFan 范范 or 范玮琪 in formal Chinese and Christine Fan in English.

The song is 啟程, loosely translated to mean to start on a new journey.

I deem the creation of this “income” portfolio as a new start and I hope it will reward me with sustainable passive income for years and years to come.

I feel better now and I am going back to counting dividends again 🙂

Good luck to all of you, take care and enjoy the song.

Warriortan

 

 

 

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One thought on “New Investment Strategy to build an Income Portfolio

  1. Hello Warriortan,

    I personally only have 1 portfolio as you might know and I’ve not bought a new stock for 2 months now. I can’t imagine having to handle 3 at the same time, when 1 is already very time consuming! Something that you might want to consider is if you are too diversified, and also reflect on your original investment goals again which you have done in your previous post. 🙂

    Liked by 1 person

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