VNQ and BRT have performed very well for me this year? Will they continue to?
Simon Properties (SPG) has not performed on the other hand. I think their woes are overblown as weakness in the retail space, leading to empty storefronts, is a short term challenge as other industries will move in and utilize the spaces (gyms, call centers, data storage, etc).
Is the risk worth it?
The MIP portfolio for over the past couple of years (well, a portfolio that was a precursor to the MIP) held the SPDRs High Yield ETF (JNK) for its over 5% yield. As fears of increasing rates continued to mount, I sold out of the position. My reason was I could swap out of that position and expand my positions into other existing positions, such as the Eaton Vance Buy-Write Opportunities Fund (ETV), which has an approx. 8% yield and is arguably less volatility than the S&P 500. So I felt the swap of the two was a better position to be in since I am not particularly of the opinion that the MIP has to have bond exposure to be successful, at least not high yield exposure at this time.
I also used the opportunities to expand the portfolio into some beaten down areas as well. As an example I started positions into the International Select Dividend ETF (IDV), the International Developed Real Estate ETF (IFGL), and lastly the Chinese Real Estate ETF (TAO). Main attraction here was to diversify away from U.S. real estate and increase exposure to international dividend payers. At their beaten down price, I believe I can start building a position at attractive pricing.
The majority of the proceeds from the sale of JNK were allocated to ETV throughout the past couple of months, so the new positions are relatively small at this time. As the MIP continues to generate cash, I will continue increase my holdings where the most opportunity is within the portfolio. The concern I do still have at this time however is that the main underperforming position in the MIP is the energy MLP exposure, which is still down about 1% this year within the portfolio. Very concious to try and not throw good money after bad, however I still view my position here very favorable, especially with the lack of infrastructure needed to transport all of the shale crude that is getting produced. I hold MLPA in this space.
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When I first started investing I of course knew of the bellwether General Electric. Industrial conglomerate with a storied history and a great dividend yield. Alas, the market is unforgiving. It was announced today that GE would be pulled out of the Dow Jones Industrial index and be replaced by Walgreens (WBA).
GE Stock Price GE Replaced in the DOW GE Cut by Finch
Viewing it’s stock chart you just see a straight slide down over the past year. Before GE cut it’s dividend earlier this year, GE was yielding an about 4.5% dividend yield. Since then, the stock has been about halved and is now yielding about 3.5%. It’s definitely been a rough ride, but what will the future hold?
The MIP Portfolio doesn’t aim to hold individual stocks, unless there is a compelling reason to do so. I have been considering over-weighting some of the better performers within an ETF in the MIP Portfolio, but have not begun to do so. Currently, the only single stock holding I have in this portfolio is Apple (AAPL). I’ve held this one as an income growth story, with the view dividends will continue to increase as Apple transforms from a hardware only company to a more diversified company with greater focus on services. Should this warrant holding it within the portfolio when the mission of the portfolio is to be the best income portfolio ever created? Let’s discuss (please comment below).
I write this post to just ponder whether GE is at a point to start adding to an income focused portfolio, however I think it best for the MIP Portfolio to stay away when there are much better opportunities to deploy capital elsewhere.
Would love to hear your thoughts!
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