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.


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.