Introduction

For a certain type of investor, income/dividend type portfolios are a perfect fit. Perhaps you have calculated your monthly outgoings already and are looking for a portfolio that will help you to cover one or more of your bills so that you can live comfortably and stress-free.

This portfolio that I will be managing aims to provide reliable income on a quarterly basis that you can spend in any way that you choose.

Unlike alternative dividend ETFs or ‘copy portfolios’ that you might see here on Etoro, this portfolio does not sacrifice capital appreciation growth for focus on dividend income.

Simply put, if you wish to invest your money somewhere that will provide regular income far greater than a bank’s average interest rate, experience lower volatility than the typical growth stock fund yet still have a sustainable capital appreciation over the long run, then you are aligned with my own aims and this portfolio will be a good fit for you.

Due to the hedging nature of this portfolio, the monthly returns are very unlikely to shoot the lights out with sky-high percentages. With this in mind, the portfolio should make a more stable investment and is aiming for lower drawdowns than the majority of offerings on this platform.

If you are looking for even higher (and riskier) returns, this portfolio would make a good complement to other Popular Investors™ that are copied by Copytraders and can be thought of as the ballast in a ship keeping your overall holdings steady as well providing regular income.

Dividends

Yield

The portfolio is aiming to pay out around 4% per annum. Due to the fact that copiers can copy at any time and therefore can’t be calculated in the way that companies would conventionally pay out dividends to shareholders, this is instead calculated by taking the current portfolio holdings and paying 1% of that figure.

Payment dates

The payments out to copiers will occur 4 times per year. The dividends will be paid out at the middle of the month, although this is not a set day due to weekends or other interfering factors the rough target is on the 15^th of the month.

The months that you can be expected to be paid are:

• January
• April
• July
• October

There is no ex-dividend period as you would find with normal stocks so if your copy investment with me has been finalised then you are entitled to the dividend payment.

Please allow a couple of days for the transaction to go through, the copy dividend is not a simple administrative process and can take longer for some copiers than others.

I will send a message on the eToro Newsfeed as I initiate every dividend transaction and I will also send out an email when it has been paid so that you can go and check your available cash balance.

Target Allocation:

• Large-cap dividend-paying stocks:
  • High dividend paying ETF – 20%
  • Dividend Growth ETF – 10%
• High-quality REITs – 15%
• Discretionary Conviction picks: – 15%
• Commodities and energy (dividend-paying commodity extraction firms): 10%
• Business development Companies -10%
• Covered call ETFs – 10%
• Emerging market focus – 5%

Rebalancing will occur semi-annually or when allocations have drifted too far from this range.

Cash

My personally philosophy is that more often it is better to invest available cash rather than trying to time positions or waiting for an opportune moment. That being said, there have been and likely to be occasions where the portfolio is holding a larger than expected amount of cash and this is simply waiting to either be distributed to copiers, used in the next investment, or in the process of rebalancing.

Volatility

This portfolio is designed to be a replacement for investors that find banks aren’t giving suitable returns for their needs. Of course, there is no way to guarantee the capital invested will be the same as copiers invest but there has been an attempt to minimise volatility so that copiers can begin coping at any time with no major risk.

My aim in terms of risk I am aiming to keep the risk level to between 3-4 on the eToro risk score.

The reason for this is that I think it doesn’t expose us to excessive risk (remember the aim is a sustainable income portfolio) yet this score is still enough risk to provide a superior regular return than a simple bank deposit.

ESG Concerns

Due to the already imposed limitations of providing income at an above market level rate coupled with the limiting amount of investing instruments available on eToro, sadly no adjustments will be made in concern to ESG.

This also means that the portfolio is unlikely to be fully compliant with sharia law or Halal investing requirements.

Apologies in regards to this but I am currently working on a solution.

Final Considerations

Due to the nature of this portfolio, it is reasonable to begin copying at any time, however, the minimum investment period should be one year (preferably longer) to receive the full benefit of this type of portfolio.

It is possible and you are free to stop copying at any time, however.

Withdrawing early puts you at risk of short-term price fluctuations which are not accounted for during portfolio construction.

The minimum copy value is now $200. Investing more in this portfolio will naturally provide a higher income.

Hope you enjoy your time copying this portfolio and gaining value from it.

If you have further questions please email me at:

TheDividendExperiment@gmail.com

eToro disclaimer:

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

eToro is a multi-asset platform that also includes investing in stocks and crypto assets, as well as trading CFDs. CFDs are administrative financial instruments. Because of the leverage, they run some risk of losing money quickly. 67% of private investor accounts lose money when trading CFDs with this provider. You’ve heard if you understand how CFDs have become and if you can afford to take the high risk of losing your money. CopyPortfolios is a portfolio management service from eToro Europe Ltd. CopyPortfolios should not be classified as Exchange Traded Funds (ETFs) or as hedge funds. Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk. Past performance is not an indication of your results.

Affiliate disclaimer:

Some of the links on this page are affiliate links meaning that I may be compensated if you were to follow the link and sign up. This comes at no extra cost to but helps to run The Dividend Experiment website and YouTube channel