Balanced dividend-focused portfolio with concentrated exposure to U.S. large-cap stocks

Report created on Jan 24, 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 in the Schwab U.S. Dividend Equity ETF, which comprises half of the total allocation, with the rest distributed among nine individual U.S. stocks and a growth-focused ETF. This composition leans heavily on dividend-paying stocks, reflecting a preference for income generation. While the portfolio is concentrated, it aligns with a balanced risk profile. However, its low diversification score suggests room for improvement, particularly by including other asset types like bonds or international equities to mitigate risk.

Growth Info

Historically, the portfolio has performed impressively with a CAGR of 15.40%, indicating strong growth potential. However, it also experienced significant volatility, with a maximum drawdown of -35.59%, highlighting the inherent risks. Comparing these figures to a benchmark can provide context, but it's important to remember that past performance does not guarantee future results. To enhance stability, consider strategies that can reduce drawdowns, such as diversifying across more asset classes or sectors.

Projection Info

Forward projections using Monte Carlo simulations suggest robust potential, with a median return of 712.8% and a significant number of simulations yielding positive outcomes. This method uses historical data to project future outcomes, but it's crucial to note that these are estimations and not guarantees. The portfolio's projected annualized return of 19.18% is promising, yet it's essential to remain cautious of market changes that could impact these projections, such as economic shifts or policy changes.

Asset classes Info

  • Stocks
    100%

The portfolio is exclusively invested in stocks, which limits diversification and increases exposure to equity market volatility. This allocation may lead to higher potential returns but also amplifies risk. Incorporating other asset classes, such as bonds or real estate, could enhance diversification and provide a buffer during equity market downturns. Comparing this single-asset class focus to more diversified benchmarks could highlight potential areas for improvement.

Sectors Info

  • Consumer Staples
    17%
  • Consumer Discretionary
    16%
  • Industrials
    16%
  • Financials
    14%
  • Health Care
    14%
  • Technology
    13%
  • Energy
    6%
  • Telecommunications
    3%
  • Basic Materials
    1%

Sector allocation is relatively balanced, with significant weights in consumer defensive, consumer cyclicals, and industrials. However, this distribution is less diversified than typical benchmarks, as it lacks exposure to utilities and real estate. The concentration in sectors like consumer defensive may offer stability, but the absence of others could limit growth opportunities. Consider adjusting sector weights to align more closely with broader market trends or personal investment goals.

Regions Info

  • North America
    100%

The portfolio's geographic exposure is entirely focused on North America, which limits its diversification and increases vulnerability to regional economic fluctuations. While this focus may benefit from the stability of the U.S. market, it misses out on potential growth opportunities in other regions. Expanding into international markets, including emerging economies, could provide diversification benefits and reduce reliance on a single economic region.

Market capitalization Info

  • Large-cap
    59%
  • Mega-cap
    23%
  • Mid-cap
    15%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's market capitalization is skewed towards large-cap stocks, with big and mega caps comprising the majority. This focus on established companies may provide stability and lower volatility but could limit growth potential compared to smaller, more dynamic firms. Including a mix of mid, small, and micro-cap stocks might enhance growth prospects, though it may also introduce additional risk. Balancing these factors can help optimize the risk-return profile.

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.

This portfolio has room for optimization on the Efficient Frontier, which represents the best possible risk-return ratio for a given set of assets. Adjusting the allocation between current holdings could enhance efficiency without necessarily increasing risk. While this optimization focuses on maximizing returns for a given level of risk, it's important to balance this with other investment goals, such as income generation or capital preservation.

Dividends Info

  • AbbVie Inc 2.70%
  • Broadcom Inc 0.90%
  • American Express Company 0.60%
  • The Coca-Cola Company 3.20%
  • Lowe's Companies Inc 1.30%
  • Altria Group 7.90%
  • Schwab U.S. Dividend Equity ETF 3.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Snap-On Inc 2.20%
  • Waste Management Inc 1.40%
  • Weighted yield (per year) 2.84%

With a total dividend yield of 2.84%, this portfolio emphasizes income generation, appealing to investors seeking regular cash flows. The Schwab U.S. Dividend Equity ETF and Altria Group significantly contribute to this yield, providing a steady income stream. While dividends can enhance returns, it's important to balance them with growth opportunities. Consider reviewing the dividend policy of each holding to ensure it aligns with long-term financial goals.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Weighted costs total (per year) 0.03%

The portfolio's costs are impressively low, with a total expense ratio (TER) of 0.03%, primarily due to the efficient ETFs included. Low costs are beneficial for long-term performance as they reduce the drag on returns. Maintaining this cost efficiency is advantageous, but it's also important to ensure that the low costs do not come at the expense of diversification or potential returns. Regularly review expenses to ensure they remain competitive.

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