Editor’s Note: Thank you for reading Dividends Premium, and welcome to the issue for October!
Our income and growth portfolio has set another new high-water mark for total returns since inception at 78.6 percent. And though we’re already conservatively positioned at around 14 percent in Vanguard Federal Money Market (VMFXX), I’m taking a little more money off the table this month. The report below has the details.
This month’s top fresh money buys are discounted electricity stocks with multiple potential upside catalysts for the next 6 to 12 months. And they offer downside protection as well, should this top-heavy Tech-led stock market run out of momentum.
I’m presenting at the Orlando MoneyShow October 17-18 along with my long-time friend and colleague Elliott Gue. For more information on how to attend, visit www.moneyshow.com.
To your wealth!--RC
Bullish on Our Stocks, But It’s Time to Harvest Some Big Gains
September is often the cruelest month in the stock market. But this year, it was decidedly kind to high quality dividend paying stocks, at least in most sectors.
Adding in dividends paid, the average year to date return for my portfolio recommendations is now 27.2 percent. 23.46 percent. That’s more than 4 percentage points higher than where it was a month ago, when the average gain was up 5 percentage points from the previous month.
Our picks held their 12 percentage-point lead over the
Big-Tech laden S&P 500. And our average weighted yield of 4.6 percent is more than four times higher than what S&P ETFs pay. It’s also over half a percentage point more than money market fund yields. And that’s despite having a 14 percent position in the best of them, Vanguard Federal Money Market (VMFXX).
Let’s be clear that I don’t ever specifically target beating the S&P 500 any given year.
Yes, S&P 500 index’ ETFs dominate Americans’ stock portfolios more than ever. More money is passively invested now in Wall Street products that focus on the index and related ETFs than is actively managed. And even many investors who call themselves “active” never go beyond ETFs that mirror the S&P 500 or something close to it.
But this portfolio has the following primary objectives:
· Delivering a high, reliable and rising stream of current income.
· Stability of principal. Contrary to some of the marketing claims I’m hearing from more aggressive ETF salespeople, you can’t factor out volatility entirely when you invest in stocks. Nor should you—you can’t grow your wealth without a few ups and downs along the way.
But by seeking diversification and balance, holding cash and occasionally harvesting gains, we can keep volatility at an acceptable level. I define that as investors being able to count on accessing account funds if needed, without locking in big losses with forced sales of stocks that will eventually rebound.
· Reliable long-term capital growth. We buy businesses, not emojis or hot tips. Stocks backed by healthy, growing business aren’t wholly immune from stumbles. And sometimes a stock we own will stay cheap for an uncomfortably long time, badly lagging market leaders. But over time, growing companies become more valuable. And they build real, lasting wealth for their investors.
Our strategy is beating the S&P 500 this year. And that’s despite artificial intelligence hype providing a second wind to the 8 Big Tech stocks that now comprise over 37 percent of the index and related ETFs. But my performance benchmark every year is always to meet those three primary objectives.
3 Potential Catalysts for Q4 Gains
Will this portfolio build on those gains in Q4 and into 2026? I see three potential catalysts for further upside:
Keep reading with a 7-day free trial
Subscribe to Dividends Roundtable to keep reading this post and get 7 days of free access to the full post archives.