Ramping Up The Dividend Income Retirement Past The 4% Rule (Part 2 of 2)

By: ispeculatornew
Date posted: 05.04.2012 (5:00 am) | Write a Comment  (1 Comment)

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Today, following up on yesterday’s post, I wanted to try to create a portfolio that would have a dividend yield closer to 5% while also having sustainable picks that could increase their dividends over time (as well as sales and profits). Clearly, when comparing such a portfolio with one such as the Ultimate Sustainable Dividend Portfolio, I would expect there to be some downside because of the higher yield but as discussed yesterday, this portfolio could end up doing very well for those looking for a higher dividend yield.

Basically, my criteria consisted of US stocks that:

Have a 4% dividend yield or more
Payout ratio of 75% or less
Dividend growth of 2% per year or more over both 1 and 5 years
Sales growth of 2% or more per year over 5 the last 5 years

Here are the average portfolio stats assuming a 5% investment in each name:

Dividend Yield: 5.0325%
Average Payout Ratio: 52.4945%
Sales Growth Annual Average (5Y): 11.74%
Dividend  Growth Annual Average (5Y): 11.68%
EPS Growth Annual Average (5Y): 19.96%

Anxious to see the names? We’re almost there. But before, let me list the beenfits and downsides of such a portfolio, especially compared with a more traditional, portfolio:


-High dividend yield (over 5%)
-Decent dividend growth!


-Not very diversified (energy and banks are a material part of the portfolio)
-A lot of unknowns (I do know a few of these names but others are ones I’ve never heard of)

I’m sure you could come up with more benefits and downsides, I’d love to hear them. In the meantime, here is the list of 20 stocks. The High Yield Sustainable Dividend Portfolio:

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1 Comment

  1. Comment by Bernie — May 4, 2012 @ 8:51 am

    Excellent post! Unfortunately, Canadians like myself rarely invest in U.S. Limited Partnerships do to the severe witholding taxes. It would be interesting to see your list include Canadian & Int’l stocks.

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