A concentrated equity portfolio with a strong dividend focus and minimal diversification

Report created on Jul 13, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards US equities, with a significant emphasis on dividend-yielding stocks. The allocation is split between the Schwab U.S. Dividend Equity ETF (50%), Vanguard S&P 500 ETF (25%), and Vanguard Total Stock Market Index Fund Admiral Shares (25%). This composition suggests a focus on generating income through dividends while participating in the broader market's growth. However, the portfolio's diversification is low, concentrating risk in the US market and within a few sectors.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 13.08% and a maximum drawdown of -33.70%, the portfolio has demonstrated strong historical performance. However, it's important to remember that past performance is not indicative of future results. The days contributing to 90% of returns being so few indicates that much of the portfolio's gains come from short, significant bursts, highlighting the impact of market volatility on returns.

Projection Info

Monte Carlo simulations, which project future outcomes based on historical data, suggest a wide range of potential portfolio values. With the 50th percentile at a 439.6% increase, there's optimism for growth. Yet, the 5th percentile at 88.4% warns of potential downside risks. These projections are useful for understanding possible future scenarios but should not be the sole basis for investment decisions, as they rely on past trends that may not repeat.

Asset classes Info

  • Stocks
    100%

The portfolio's assets are entirely in stocks, with no allocation to bonds, real estate, commodities, or cash. This singular focus on equities enhances potential returns but also increases volatility and risk. Diversifying across different asset classes can mitigate risk and smooth out returns over time, especially in turbulent markets.

Sectors Info

  • Technology
    22%
  • Consumer Staples
    12%
  • Health Care
    12%
  • Energy
    12%
  • Financials
    11%
  • Industrials
    10%
  • Consumer Discretionary
    7%
  • Telecommunications
    7%
  • Consumer Discretionary
    3%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation shows a balanced spread across technology, consumer defensive, healthcare, and energy, each representing a significant portion of the portfolio. This sectoral balance is positive, as it spreads risk and potential for growth. However, the heavy concentration in technology, a sector known for its volatility, could increase the portfolio's sensitivity to market swings.

Regions Info

  • North America
    99%

The geographic allocation is almost entirely in North America (99%), with no exposure to international markets. This geographic concentration limits diversification benefits and exposes the portfolio to country-specific risks, such as economic downturns or political instability in the US.

Market capitalization Info

  • Large-cap
    46%
  • Mid-cap
    26%
  • Mega-cap
    22%
  • Small-cap
    5%
  • Micro-cap
    1%

The market capitalization breakdown shows a preference for big (46%), medium (26%), and mega (22%) cap stocks, with minimal exposure to small (5%) and micro (1%) caps. This tilt towards larger companies, which are typically more stable and less volatile, aligns with the portfolio's dividend focus but may limit growth potential compared to more aggressive allocations.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund Admiral Shares
    Vanguard S&P 500 ETF
    High correlation

The high correlation between the Vanguard S&P 500 ETF and Vanguard Total Stock Market Index Fund Admiral Shares indicates redundancy. Both funds cover large segments of the US equity market, leading to overlap in holdings. This redundancy dilutes the benefits of diversification, as both assets are likely to react similarly to market conditions.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

Click on the colored dots to explore allocations.

The portfolio could benefit from an optimization process to improve its risk-return profile. Currently, the high correlation between some assets suggests an opportunity to reduce overlap and enhance diversification without necessarily sacrificing returns. Utilizing the Efficient Frontier could identify an asset mix that achieves the best possible risk-return ratio, potentially improving the portfolio's overall performance.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund Admiral Shares 0.90%
  • Weighted yield (per year) 2.38%

The portfolio's dividend yield is notable, with an average yield of 2.38%, driven primarily by the Schwab U.S. Dividend Equity ETF. Dividends contribute to the portfolio's income, providing cash flow which can be reinvested or used as income. In a low-interest-rate environment, dividends are especially appealing, though they should be balanced with growth prospects.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund Admiral Shares 0.04%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, which is beneficial for long-term growth as lower costs translate to higher net returns. Keeping costs low is crucial in maximizing investment returns, especially in a concentrated portfolio where each basis point of cost can have a significant impact.

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