Your Money
Since it's Valentine's Day, I thought we'd talk about loving dividends and their role in the recent portfolio rebalance. To be clear, we don't favor just any stock that pays a dividend; rather we like businesses that are so productive, they have a history of continuously raising their dividend payout rates to owners.
The dividend grower strategy has been a key pillar in large and international stock exposure at PWM for years now, but so has tech and momentum. However, with inflation already here and interest rate hikes coming, real earnings growth will be a challenge. This should affect how much people are willing to pay for an investment and likely put pressure on the most expensive areas of the market like some areas of tech and momentum.
Last week's rebalance lightened up on the more expensive areas of the market and embraced the dividend grower philosophy even more. We added it in the mid-size company allocation, the small company allocation, and even the emerging market allocation.
This interview does a great job of discussing the big picture. It also highlights one of your key holdings: the Vanguard Dividend Appreciation Index Fund (VIG).
VIDEO: Dividend ETFs are getting more attention. Here’s a key distinction to understand when investing
by Lizzy Gurdus
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