Our Total Return Portfolio represents the core of my advice in Profitable Investing. It's our flagship portfolio, designed to meet the needs of the broadest cross-section of my subscribers.
When shopping for new investments in the portfolio, I suggest you look first at the stocks, bonds or mutual funds that are quoted furthest below our "Buy Below" price. Generally, these are the names I consider to have the greatest upside potential over the next 12-24 months. Use the percentage allocations for the different asset classes (World-Class Franchises, Emerging Markets, Utilities, Five-Year Bank CDs, etc.) to help determine how much money you should earmark for each.
It's easy to follow our balanced Profitable Investing strategy. For those who don't care to buy individual stocks, I've set up mutual fund portfolios to mirror our Total Return Portfolio.
Our Fund Supermarket Portfolio is made up exclusively of funds you can purchase through leading discount brokers (Schwab, Fidelity, TD Ameritrade, etc.).
Some readers have asked why the funds listed as Mutual Fund Alternatives in the Total Return Portfolio table aren't identical to those in the Fund Supermarket Portfolio. The main reason is that some of my favorite funds aren't available fee-free through discount brokers. The Fund Supermarket Portfolio is for folks who want the convenience of a discount brokerage account and prefer, wherever possible, to avoid transaction fees.
For investors who prefer to do all their investing within the same fund family, I've drawn up fund portfolios from three large no-load fund groups: Fidelity, T. Rowe Price and Vanguard.
With low cost and low maintenance in mind, I've drawn up a Hassle-Free ETF Portfolio to parallel our main model portfolio. We won't be tinkering with this portfolio very frequently-only when I make a strategic change in our Total Return Portfolio (by raising the weighting in Utilities, say, or lowering the percentage in World-Class Franchises).
I've drawn up a roster of stocks that will enable you to earn dividend checks every month of the year. I call it the Incredible Dividend Machine.
The plan is laid out in the table that follows. As you'll see, I've split the "machine" into sections based on time of payout: stocks that pay dividends in January, April, July and October; those that pay in February, May, August and November; and those that pay in March, June, September and December. I've also included a list of standby holdings.
To earn a check every month, all you need to do is choose at least one stock from each of the dividend cycles. Next to the company name, I've provided the ticker symbol and the current yield. The column at right indicates the maximum price I recommend you pay for each stock.
The list of standby holdings highlights stocks that we're watching until the price is right. In most cases, these stocks have appeared as buys in the Incredible Dividend Machine, but became too expensive for new money. So if you own any of my standby holdings, hold on to them and do not add money just yet (except through automatic dividend reinvestment). They will be rotated into the Machine as the market warrants.
For the active holdings, buy as many different issues (in equal dollar amounts) as you can afford. That way, you'll spread your bets and reduce the risk that a blow-up at one company might damage your portfolio. As a rule of thumb, I advise you to limit any single stock—whether drawn from the Incredible Dividend Machine or any other source—to no more than 5% of your invested wealth.
These are extra investments that go beyond our model portfolios. Use them to fill special niches in your own portfolio–for example, when you need additional income or when you're looking to diversify beyond the core investments I recommend in the newsletter. I update the comments on this page as significant events occur.
I don't really expect you to wrap up all your investment planning for retirement in 10 minutes. But as you'll see below, it's possible to construct a simple, but quite serviceable, retirement portfolio out of just a few ETFs, no-load mutual funds and closed-end funds. This plan provides enough income for many a thrifty investor to live on without ever selling a single share, and in years to come you can expect periodic increases in your "paycheck" to help offset inflation. See the May 2014 issue for more details.
Richard E. Band is the newsletter world's #1 authority on investing for low-risk growth. His flagship Total Return Portfolio has grown sixfold since its inception in 1990, while taking far less risk than the popular stock market index funds. More »
[My greatest successes with Profitable Investing have been] Buckeye Partners and Energy Transfer Partners. I bought 1,000 shares of each. Total winnings: $30K plus. I sold half of each very near the high, and am now sitting on the money and looking to repurchase at lower levels. Great ideas! Many thanks for your insight.
–RHB, Ponte Vedra Beach, Florida