Building A Diversified Retirement Portfolio With Stocks And ETFs

At The Juice, we develop themes, building each newsletter post off of the one that came before it. 

So far, we have published the following Juices where we ultimately construct an easy-to-manage retirement portfolio of stocks and ETFs around our theme of A More Diverse View Of Diversification:

The Perfect Dividend Stock For Your Retirement Portfolio

Lessons From A Dividend Income Portfolio For Retirement

5 Stocks And ETFs For A Diversified Retirement Portfolio

At the first two links, we cover some key ground to set the stage for the portfolio construction we started in the third link. 

Today, we add three more positions to the portfolio. 

First, let’s recap what we have so far and set some ground rules. 

Total it up and, initially, our portfolio generates roughly $107 in annual dividend income. However, after the initial payouts from each, that number will increase, assuming you reinvest your dividends (thereby increasing your position size and the base from which your dividend payment gets calculated). If a dividend gets increased during the year, all the better. 

Right now, we have monthly contributions of $250 each in SPY and QQQ and $166 each in TGT, COST and META. To keep things clean and even for illustration purposes, we’ll allocate a total of $1,000 to our three new positions. 

Ultimately, we want SPY and QQQ to make up half of our holdings, with the remaining 50% split between everything else. As we add positions, we’ll have to rebalance. And, if this was a real, live portfolio, we would have to do likewise as stock prices fluctuate.  

We love dividend aristocrats like TGT, but we don’t want to buy them all separately. That’s heavy lifting. But there’s an ETF that solves this problem. 

We’ll use the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) to buy all of the aristocrats, stocks of companies that have increased their dividend payments for at least 25 years in a row. 

• Dividend aristocrat, low-cost index ETF approach
• $333 initial investment

NOBL has a nice low expense ratio of 0.35%. It yields 2.64% and pays an annual dividend of $2.03, as of the last year. It’s up about 5% YTD and 15% over the last year. 

With our initial buy, we get 3.3 shares, which, all else equal, should generate about $6.76 in annual dividend income. 

Next, we want to buy our favorite AI play to expand on the exposure we have to the space in SPY and QQQ. 

We’ll use the VanEck Semiconductor ETF (SMH), led by Nvidia (NVDA) and full of stocks that provide the power and foundation for artificial intelligence applications. 

SMH also has a low expense ratio of 0.35%. It yields 0.47% and pays out its dividend once per year. Last year, it paid out $1.04 per share. We’ll use that in our calculations. 

SMH is up roughly 34% YTD and 80% over the last year. 

With our initial buy, we get about 1.5 shares, which should generate about $1.56 in annual dividend income.

Next, we want a young dividend payer with lots of room for growth, at the company and in the dividend. Something like META. We ran a screen, using the FinViz stock screener, using META-like metrics and settled on Comfort Systems USA (FIX).

For the record, our screen was stringent and filtered to just seven stocks, including META and NVDA. We went with FIX, a HVAC company, because it has everything going for it, from revenue and sales growth to stock price appreciation and dividend growth. 

The current annual dividend of $1.00 is projected to grow by more than 20% next year. The stock yields 0.31% and is up around 60% YTD and 131% over the last year. 

Our initial buy gets us 1 share and about $1.00 in annual dividend income. 

Consider FIX closer to META, but also on the path to being like Microsoft (MSFT) in terms of dividend growth, as it rides an 11-year increase streak. 

In the next Juice where we add to our portfolio, we’ll tally up the numbers of our now eight positions, including allocation sizes. 

The Bottom Line: You can probably see our diversification theme getting more clear. 

We have the broad market ETFs alongside an even distribution of different types of dividend stocks, via ETFS and individual stocks and a dabble in AI via an ETF. 

We’ll continue to develop this retirement-focused portfolio that, once built, you can put on autopilot, checking in quarterly to rebalance. 

Stick with The Juice. Forward our newsletter to a friend. And feel free to offer thoughts and feedback at the link below.

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