I’ve always been big on investing into high yielding stocks or mutual funds. I am a big proponent in investing in something that gives constant rewards. It just makes me feel good to get new shares of my investment every month or every quarter for doing nothing. This is where my high income investment account comes into play.

In the future this high income investment account will hopefully sustain my retirement needs when I no longer desire to work. Another reason I am going this route is to set up my very own high yielding mutual fund, but with more risk. This will hopefully provide greater returns in the future.

On average over the last 10 years, mutual funds have only averaged a dividend yield of 2-3%. But with these individual stocks, depending on the price you buy it at, and with the consistent yearly dividend increases, I know I can have a 7-10% yield on cost investment.

My High Income Investment Account:

BP

O

KMI

GOV

T

PFE

ED

TGT

OHI

BBL

Granted I will also invest in low costs index funds, other blue chip stocks like JNJ and PG, and bond funds. I will not let the media dictate what’s in my portfolio, and I will stay the course to one day compound all my investments immensely. Also if any of these companies begin to lose a hold on its business revenue, then I will substitute a stock for another comparative stock. The average yield for all 10 stocks is a respectable 4.4%, which is mid range between a high and low risky stocks. The highest position is about 7% and the lowest is 3% yield.

On a side note Dividend Mantra owns 7 stocks out of the 10 on my list above, and he delves a bit deeper with extensive research into a company’s future business outlook.

I feel I am taking a bigger risk with GOV and OHI, as they have a high dividend payout ratio. Also they do not have a long time history in business like O and Con Edison. I am very comfortable with dividend payers who at least have a ten year history of paying and increasing dividends. But the risk will pay off if those companies reach the 10 year milestone, and just imagine my yield on cost (YOC) returns after that point.

Break Down by Sector:

2 of my holdings are International Stocks

4 of my holdings are REITS

4 of my holdings are US Blue Chip Stocks

Given the allocation by sector is this portfolio risky? Heck yes. But that is the whole point to gain as much investment income now, so that my investments can compound faster by giving me plenty of free shares as soon as possible. When I’m ready to retire these investments should cover a big amount of my future income. Also at a later date in the future, I will add new capital and dividends to new individual stocks in the healthcare and Consumer staples industry.

Dividend Income Risk:

Companies can stop or eliminate the dividend

A Company can go bankrupt

A company can lose business, and transition into a penny stock

The High Yield Stocks have been rumored to not rise enough in price in comparison to other growth stocks.

All of these risks are protected by the fact that I will attempt to keep each position less than 10% total within my after tax brokerage account. Also as I add new positions after I reach the 200 stock share count per company, the percentage will lessen to 7 or 8% for each stock.

Do you have a great investment that pays you while you sleep?

Comment on my high income investment account?

Rich Uncle EL

Pic provided by Target Inc.

As always the information contained here is my opinion only and should not be taken as financial advice, please consult with a financial professional.