The Rest of the Barbell

Today I will wrap up my quick refresher course on income investing. My barbell approach is probably different than most of the income suggestions you will run across but, as John Templeton warned us, it is tough to excel by doing what everyone else does. I prefer buying a wide variety of alternative higher yielding income assets, including Business Development Companies (BDCs), private equity related firms, undervalued real estate investment trusts (REITs) and high yielding common stocks. By owning a lot of them and buying below asset value, you set up accidental diversification and certain margin of safety for the portfolio. Stay small in individual position size and move slowly by only buying when they dip below asset value. This should be about half of your income portfolio.

The other half of the portfolio needs to be devoted to dividend growth stocks. The stocks must be paying some sort of dividend but the key element is the level of dividend growth that can be expected from your stocks. While all future events are difficult to predict I have found that the projections form the mathematical models in Value Line are as accurate as any analyst projections I have seen over the years so I rely on those. They may not have the magnitude exactly right but the growth rate of the dividends has followed along the approximate trajectory most of the time....513 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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