Which investing strategy is better, dividends or growth? To be honest, I do not know. As a blue collar factory worker the dividend strategy works best for me. It fits into my mindset for making money. My time horizon is only 10 years until I quit working so generating income for retirement is a big concern for me. That is not to say that I do not like growth. I do invest some money into growth stocks. I think everyone needs to find the balance that works for them.
Approximately 93% of my invested money is in stocks, REIT’s, MLP’s, BDC’s or ETF’s that currently pay a dividend or distribution. Just over 5% of my portfolio is invested in Disney and General Motors which suspended dividends last year. Hopefully both will reinstate the dividend payments this year. My allocation is weighted heavily toward large cap value stocks. Some of the companies that fall into the large cap value area according to Fidelity are AT&T, Verizon, Coca-Cola and 3M. I like investing in reliable, stable companies that I am fairly confident will continue to pay me a dividend into the future. Below, you can see how my allocation matches up to the Dow Jones Index.
While I am skewed heavily toward value, I do have some growth. Microsoft accounts for just over 5% of my invested money. Visa accounts for approximately 3.25% of my investments. A big part of the reason I am heavily invested in value stocks is I tend to understand those companies better. I have a better understanding of Coca-Cola than I do of Nvidia. I am sure that my age and my background as a factory worker contribute to my investment strategy. I do understand the importance of having growth stocks in my portfolio. This is why I set up the account in M1 Finance in which I mainly invest in the same companies as the Ark Invest Funds. You can see my portfolio here: https://m1.finance/enQz4omNnspo . If you are interested in opening an account with M1 Finance my referral link is https://m1.finance/ktIiFeOI5zDr . M1 offers various promotions. The current promotion is for $30 for free after you fund your account until the end of February 2021. If you use the referral link above I will also get $30. Always check the current terms before signing up.
One thing I do know is that each individual needs to develop their own investing strategy that works for them. Each person should consider their time horizon, risk tolerance, time commitment and other factors when developing their investing strategy. I have found a strategy that I am comfortable with and is working for me. As time goes on I will continue to adapt and evolve my strategy in order to meet my goals. Your investing strategy does not have to be only dividends or only growth. It is not an either or decision. It can be a blend of both. The most important thing is that you find a strategy that is comfortable for you.
*Disclaimer – I am not a financial professional. The information shared here should not be considered financial advice. I am just a factory worker sharing my experience as I strive to achieve financial freedom. Before investing or making any financial decision do your own research and due diligence and consider seeking the advice of a financial and/or tax professional.