A focused income-generating portfolio with a strong emphasis on US equities and dividend yield
Report created on Jul 24, 2025Risk profile
4/7
Diversification profile
2/5
Positions
-
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 60.00% -
DG iShares Core Dividend Growth ETF
DGRO - US46434V6213 20.00% -
SC Schwab U.S. Large-Cap ETF
SCHX - US8085242019 20.00%
Your portfolio is heavily concentrated in US equities, specifically within dividend-focused ETFs, which constitutes the entirety of your investment. The allocation is 60% in Schwab U.S. Dividend Equity ETF, 20% in iShares Core Dividend Growth ETF, and 20% in Schwab U.S. Large-Cap ETF. This composition suggests a strategy aimed at generating income through dividends while maintaining exposure to large-cap US companies. However, the lack of diversity across asset classes and geographies could expose the portfolio to higher volatility and country-specific risks.
Growth
Historically, your portfolio has shown a Compound Annual Growth Rate (CAGR) of 13.08%, with a maximum drawdown of -33.78%. These figures indicate a strong performance, albeit with significant volatility, as evidenced by the steep drawdown. The days that make up 90% of returns being concentrated in just 28.0 days highlights the portfolio's susceptibility to short-term market movements, which could be a concern for investors seeking more stable returns.
Projection
Based on Monte Carlo simulations, your portfolio shows a wide range of potential outcomes, with a median projected increase of 459.8% and a notable 993 out of 1,000 simulations resulting in positive returns. This analysis, while encouraging, relies on historical data and should be viewed with caution as past performance is not indicative of future results. The projections underscore the potential for growth but also hint at the inherent risks of a concentrated equity portfolio.
Asset classes
- Stocks 100%
Your portfolio is entirely composed of stocks, with no allocation to other asset classes such as bonds, real estate, or cash. This singular focus on equities, especially within a specific region and set of sectors, limits diversification and increases the portfolio's sensitivity to market fluctuations. Diversifying across different asset classes can help mitigate risk and smooth out returns over time.
Sectors
- Technology 17%
- Health Care 15%
- Consumer Staples 14%
- Energy 13%
- Financials 12%
- Industrials 10%
- Consumer Discretionary 9%
- Telecommunications 5%
- Basic Materials 2%
- Utilities 2%
The sectoral allocation of your portfolio shows a balanced spread across technology, healthcare, consumer defensive, and energy, among others. This diversification within the equity component is positive, reducing the impact of sector-specific downturns. However, the concentration in sectors like technology and healthcare, while potentially offering higher growth, also comes with increased volatility.
Regions
- North America 99%
- Europe Developed 1%
With 99% of assets allocated in North America, your portfolio's geographic exposure is highly concentrated. This focus on the US market has likely contributed to the portfolio's strong performance, given the market's historical strength. However, this concentration also increases vulnerability to US-specific economic and political events, underscoring the importance of considering broader geographic diversification.
Market capitalization
- Large-cap 52%
- Mid-cap 28%
- Mega-cap 13%
- Small-cap 5%
- Micro-cap 1%
The portfolio's market capitalization exposure is heavily weighted towards big and mega-cap stocks, which typically offer more stability and less volatility than their smaller counterparts. This is aligned with the portfolio's income-generating strategy, as larger companies are often more likely to pay dividends. However, the small allocation to small and micro-cap stocks limits potential for high growth rates from these more volatile segments.
Redundant positions
-
High correlationSchwab U.S. Dividend Equity ETFiShares Core Dividend Growth ETF
The high correlation between the Schwab U.S. Dividend Equity ETF and the iShares Core Dividend Growth ETF indicates overlapping holdings which may not provide the diversification benefits you might expect from holding multiple assets. This redundancy can amplify risks instead of mitigating them, suggesting a need to reassess the portfolio's composition to ensure each holding contributes uniquely to your investment objectives.
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.
Considering the portfolio's heavy reliance on correlated dividend-focused ETFs and large-cap US equities, there is room for optimization towards achieving a better risk-return profile. The Efficient Frontier suggests that diversifying into different asset classes and reducing overlap in highly correlated assets could enhance your portfolio's performance by lowering volatility without significantly sacrificing returns.
Dividends
- iShares Core Dividend Growth ETF 2.20%
- Schwab U.S. Dividend Equity ETF 3.70%
- Schwab U.S. Large-Cap ETF 1.10%
- Weighted yield (per year) 2.88%
The focus on dividend-yielding ETFs has resulted in a total portfolio yield of 2.88%, which is a significant component of the portfolio's total return. This strategy aligns well with an income-focused investment objective, providing a steady stream of cash flow. However, it's important to balance the pursuit of high dividend yields with the potential for capital appreciation and the risk of dividend cuts in economic downturns.
Ongoing product costs
- iShares Core Dividend Growth ETF 0.08%
- Schwab U.S. Dividend Equity ETF 0.06%
- Schwab U.S. Large-Cap ETF 0.03%
- Weighted costs total (per year) 0.06%
The portfolio's total expense ratio (TER) of 0.06% is impressively low, which is beneficial for long-term performance as lower costs directly translate to higher net returns. This cost efficiency is a strong aspect of your investment strategy, ensuring that more of your returns are retained rather than being eroded by fees.
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