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Tomorrow the Compounding Dividend High Yield Portfolio with launch.
Our first stock has a net cash balance sheet, strong management, and a leading market position with room to grow.
Today I want to tell you about the portfolio and how it will work.
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The High Yield Portfolio
Even though this portfolio will be focused on High Yield Companies, we’re still looking for good businesses.
Sustainable competitive advantages
Quality management
Healthy balance sheets
Attractive histories of growth
“The prime purpose of a business corporation is to pay dividends regularly and, presumably, to increase the rate as time goes on.”
- Benjamin Graham
Why High Yield Companies Are Interesting
Over time, the High Yield Portfolio should provide attractive returns.
Here’s 3 reasons why:
1️⃣ High-Yield Companies Perform Well
Wellington Management found that companies in the top 40% of dividend yields outperform the S&P most often:
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2️⃣ High-Yield Doesn’t Mean High Payout Ratio
Investors think that a high yield automatically means the business is risky, or that it doesn’t reinvest enough capital to grow.
The same study found this isn’t always true.
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3️⃣ Reinvestment
The beautiful thing about High Yield Companies is that they’ll reliably provide you income.
This allows you to retire comfortably.
But until you retire, you can reinvest your dividends.
This fuels compounding over time.
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Portfolio Rules
Good agreements make good friends.
Because we are Partners, I will treat you the same way I would like to be treated.
“We have an attitude of partnership. Charlie Munger and I think of our shareholders as Owner-Operators.” – Warren Buffett
Here are the Portfolio Rules:
You can follow the Portfolio 24/7 with 100% transparency
Every month we’ll invest a fictional amount of $5,000
This could be in an existing holding, or a new one
No front-running