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I add new capital to my dividend income portfolio every month – regardless of market conditions. On some occasions this may be in the form of a lump sum investment. These types of investments are generally made with at least $1,000 or more and only occur a few times per year when market conditions allow.
Lump sum investments are difficult for me to sustain month to month. This is because they require larger amounts of capital to invest to keep costs low. For bigger investors, this is probably no more than a blip on their screen but for me it is a significant investment.
The other way I invest is by leveraging automated monthly investments. Automatic investment plans (aka – AIP) are made with smaller amounts of capital on a regular interval – in this case monthly. It provides investors (like myself) the opportunity to buy partial shares of stock with small amounts of money. It is a great way to dollar cost average and build sizable positions over the long term.
Both types of investment options (lump sum and automatic) have their advantages and disadvantages – which is why I leverage both.
I have started publishing both my lump sum and automatic investments on this site under the title – Money Sprout Dividend Income Index.
In order to build a more diversified portfolio, I recently made a few changes to my monthly automatic investments which are explained below.
3 Recent Changes to My Portfolio
After first publishing the stocks that make up the Money Sprout Index, I realized that my portfolio was out of balance. It was over weighted in some sectors (i.e. Industrials – 22.1%) and non-existent in other sectors (i.e. Materials and Telecom both at 0%).
While I own 18 stocks (at the time of this writing) in total, they are not spread out across sectors evenly. For example, I own 5 stocks in the Consumer Staples sector and only 1 in the Utilities sector. I don’t own any stocks in the Materials or Telecom sectors.
I recently made 3 slight modifications to the portfolio that should help start to re-balance everything.
- Increase to Information & Technology Sector – It was time to bump up my monthly automatic contributions a little, so I increased my allocation to IT stocks. Starting next month, I will invest another $50 in both Intel (INTC) and Microsoft (MSFT). This will bump my contributions up to $100 per month in these stocks from $50.
- Decrease to Consumer Staples Sector – I am lowering my monthly automatic contributions by $100 in the Consumer Staples sector. I had been contributing $150 every month to Clorox (CLX) through Computershare. My original goal was to build this position up so it would earn $100 in annual dividends. However, I have realized it is more important to diversify my money across other positions. My new monthly contribution for CLX will be $50.
- Increase to Energy Sector – At the time of this writing, the Energy Sector accounted for less than 7% of my holdings in the Money Sprout Index. I decided to use that $100 I took away from CLX to invest in Exxon Mobile (XOM). It was an easy switch since I purchase shares of this Energy company every month from Computershare as well.
The recent changes I made above are minor but should help me diversify a little more in my portfolio. I also plan to start screening more stocks in the Materials and Telecom sectors so I can eventually get some exposure to these industries as well.
I am a big proponent of building a diversified investment portfolio. It wasn’t until I actually published my holdings that I realized I wasn’t all that diversified with my dividend stock investments.
I am even a bigger proponent of building diversified income streams – which follows the principals laid out in the Money Sprout Blueprint. Dividend stocks are just one part of an overall strategy to build long lasting, sustainable sources of income outside of my real job.
For more information on my portfolio holdings, please check out The Money Sprout Index page.