ETFs or top 3 stocks?

Dear community, in building the ultimate income portfolio, is it better to use ETFs and CEFs, or to use the top three of a particular industry? For example, the top three healthy, high dividend paying utility stocks, or top three mortgage REIT players, etc.

Let me know what you think.

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The Beginning

My mission here is to tap into the wisdom of the crowd, and work with the investment community, to create a high-powered, all environment income producing portfolio. I believe the portfolio should meet the following criteria:

1. Produce consistent invested yields of between 5% – 10%

2. Be well diversified with low correlations

3. Be created with as few securities needed to reach the above two objectives.

Now the above could be completely wrong, so I am reaching out to the community to help optimize. I am attempting to develop this environment with as few constraints as possible, although investments that are not easily accessible should not be considered (i.e. high-net worth investments).

Below are the current holdings I have in the Millennial Income Portfolio (MIP). I have listed them out by their current % of the portfolio, their % of income contribution within the portfolio, and the current dividend yield relative to the cost basis at acquisition. The holding or income weights are by no means target percentages. I am looking towards the community to help me craft the right target weights to meet the objectives of the portfolio.

Currently, the portfolio produces a little over 6% yield on invested capital. In a follow up post I will list some additional tickets I am considering for the portfolio, but would of course love suggestions.

Ticker Description Holding Weight Income Weight Yield at Cost
REM Mortgage REITs 16% 23% 8.4%
VNQ U.S. Property REITs 15% 10% 3.8%
DVY U.S. Dividend Stocks 14% 8% 3.6%
JNK U.S. Junk Bonds 13% 13% 5.4%
MLPA Energy MLPs 10% 15% 8.2%
AAPL Tech Stock 10% 3% 2.6%
PSP Listed Private Equity 7% 12% 9.8%
ETV S&P 500 Buy-Write 6% 9% 8.8%
SPFF Preferreds 6% 7% 7.0%
VYM U.S. Dividend Stocks 4% 2% 3.1%

The Millennial Income Project

What am I doing here?

For a long time now I have been trying to build the “best” income producing portfolio. Think of it as an “all-weather” portfolio like Ray Dalio’s Bridgewater created but that focuses on income producing assets.

Why is this type of portfolio important to me?

I want to invest my money in a way that will generate frequent, consistent income over time so that I can redeploy that capital best in my portfolio. I have most of my wealth in diversified market etfs through 401k and other retirement vehicles. Therefore my desire in having a supercharged income portfolio is to help me pay bills before retirement.

I hope to build a following on this blog so that together we can design the best income producing portfolio available.