This month we’re celebrating the 10th anniversary of my Dividend Hunter high-yield investment service. Over the years, I found that the recommended investments (portfolio) list carried an average yield of around 8%. I recently took another look at the current average yield and was quite surprised that it was above 10%. Let’s see what’s changed.
The Dividend Hunter portfolio has constantly evolved. One example was the addition of individual preferred stocks during the pandemic-triggered selloff. The start of the pandemic triggered a massive decline in all of the high-yield categories. Preferred stocks with $25 par values traded down into the mid-teens, so I added a dozen to the portfolio. Currently, there are six individual preferred stocks on the Dividend Hunter portfolio.
For many years, I avoided high-yield investments with variable dividends. However, I found that certain types of investments that I wanted to include almost exclusively paid variable dividends. Investments with variable payouts have become an important aspect of the Dividend Hunter portfolio.
Here is the current structure of the portfolio:
Stable Dividend Investments
The Stable Dividend Investments category currently has 17 stocks and ETFs. This group is very similar to the full Dividend Hunter portfolio for the service’s first five to six years. You can count on the investments in this category to pay dividends month after month and quarter after quarter. More than half of the Stable Dividend Investments are growing their dividends. The average yield for the category currently sits at 8.75%.
Variable Dividend Investments
Eight investments are in the Variable Dividend Investments category. The list includes a shipping stock, energy royalty companies, and option strategy ETFs. While these are variable dividend payers, I look for a moderate level of payout stability and above-average yields. 2024 started with the goal of increasing the average yield in this category. By changing out a few of the recommended variable investments, the average yield increased by about 3%, and the current average is 13.8%.
Fixed Income Investments
The Fixed Income Investments category includes six individual preferred stocks and six Invesco BulletShares bond ETFs. The BulletShares funds have fixed maturities, allowing a bond ladder strategy to be used. The funds also provide predictable yield-to-maturity returns. The Fixed Income Investments group has an average yield of 7.6%.
A simple average of the yields from the three categories calculates to 10.05%. The 37 investments provide a high level of diversification and were chosen to provide a stable cash income. The fact that the income could approach or exceed 10% per year should excite any investor.
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