The Perpetual Income Portfolio—An Example

I manage the Perpetual Income Portfolio for the Oxford Club’s Ultimate Income Letter. Normally, we have approximately 20 stocks in the portfolio, diversified across a wide range of industries.

I’m not going to mention what the stocks are because by the time you read this, the portfolio may very well have changed. For more information on the portfolio, please visit www.oxfordclub.com.

However, I will tell you how the portfolio is currently diversified. Again, this may change by the time you read this, so don’t take this as gospel. But as you’ll see, it’s a good mix of stocks that should let us participate in strong markets and keep us from getting badly hurt if any one sector or stock blows up.

As of January 1, 2012, the Perpetual Income Portfolio consisted of 18 positions. The stocks are in these sectors:

Source: The Ultimate Income Letter

Banks: 1
Consumer: 2
Energy: 3
Insurance: 2
Pharmaceuticals: 1
Preferred stocks: 1
REITs: 2
Services: 2
Technology: 1
Telecom: 1
Utilities: 2

We have a diversity of yields as well. As I mentioned, we can’t just load up on stocks paying 10% dividends, for reasons I’ll explain later in this chapter. Although we want the yield as high as possible, we need to take into account risk and the growth of the dividend.

I would rather own a stock paying a 4% yield that grows its dividend every year by 10% than one with a 6% yield and a dividend growth of 3%.

If I’m holding these stocks ...

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