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Author: Oforfive One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: Generating Income Date: 8/2/2013 8:50 PM
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I guess it is a basic principle for most retirement that the object is generating income. In my situation I target 2/3rds to 3/4ths of my portfolio for generating dividends and maybe 10% cash and the remainder in rule breakers type companies.

For several years I had companies such as JNJ, T, LEG, KMB, .... Then I started to add utilities (PPL, PAA, EXC,...), and later went up the yield curve to WIN, junk bond ETF JNK, ....

At one time I was concentrated in WIN, T, TEF, NYB, SDRL, and EXC and I was uncomfortable as many of these had very high yields for very good (or bad) reasons.

This process has led me to diversify more in the income portion of the asset allocations mentioned above. Here all my holdings for dividend generation:

WIN 6.3%
SDRL 18.4%
NYCB 11.6%
JNK 11.4%
T 1.6%
KFN 2.8%
PAA 0.7%
NMM 2.9%
CLMT 2.7%
ETP 2.8%
SFL 3.9%
TOT 6.5%

That should add up to about 67% and it generates 7.7% on that portion. Some of the Fool companies also generate some dividends: DIS, HAS, AAPL and others.
Those dividends produce income equaling 5.5% of the IRA which exceeds my mandatory withdrawal so I can reinvest the excess in either Fool companies or dividend generators. If I shift towards the 75% in dividend companies I have more extra dividends to put into best buys or new recommendations. I haven't decided where to settle in that 67 to 75% allocation to the dividend companies. The 75% lets me make regular, small positions in RB companies but 67% lets me make more portfolio growth now and this has certainly been a good market for growth companies recently.

There is a lot that could be critisized with this but I'm comfortable and on these dividend companies I don't look at the stock prices too much. Its a lot more annual report than today's stock quote.

KC
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