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We launched the Compounding Dividends High Yield Portfolio in December.
The goal was simple: buy good businesses with a portfolio yield over 5%.
So far, we’re doing very well! Let’s give you an update.
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Honestly, the timing couldn’t have been better.
The market has been a wild ride lately.
It feels like every other week there’s a new headline causing market volatility.
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But you wouldn’t know it by looking at this portfolio.
Which is one of my favorite things about high yield investing.
The stability of cash flowing into your account makes it a lot easier to ignore market volatility.
Take a look at the exact numbers from our High Yield Portfolio as of today:
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I’m very happy with the results since we started this real-money portfolio:
An 11.58% Total Return
$2,145.57 in locked-in annual dividend income
$959.52 in cold, hard cash already in our account
Right now, the portfolio has a 6.14% yield on cost.
High Yield Isn’t High Risk
A lot of investors think that to get a high yield, you have to take a lot of risk, or buy complicated funds.
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That’s not true.
There are no covered call funds, BDCs, or MLPs in this portfolio.
We just bought durable businesses with competitive advantages that the market was overlooking, and let them pay us for owning the shares.
High Yielders Outperform
And historically? The data shows that high-yield companies actually outperform the S&P most often:
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High-Yield Doesn’t Mean High Payout Ratio
Another big myth is that a high yield means a business is fully mature and isn’t reinvesting enough capital to grow.
Again, the numbers prove this wrong.
You can lock in high starting yields with low payout ratios.