Hi Steve - (Building an IRA portfolio for retirement ...)
Why did you sell Southern Union Company Common (NYSE: SUG)? The company has a decent forward PE around 12 and pays a 2.4% dividend. Although the stock has had an excellent run, I still believe the company could test new highs (perhaps at least another 20% upside) and with only a 44% dividend payout they may even raise raise their dividend in the near future.
I really like the sector too and have been buying the other competitors in the industry (like NI, ATO, DPM and LG). SUG is the best of breed and IMO has the best LT growth potential of the group.
Unless you were over weight in the position, I would have peeled off some shares from one or two of your over weight positions (perhaps whittle down some of the REITs) giving up a little yield for the potential growth kicker in SUG.
You do seem a bit heavy on REITs but this is the right time to be accumulating them. That said, they have had a good run and it might be helpful to add a few companies that can also provide some growth too.
About a year ago, I loaded up on the REIT preferreds to lock in the nice yields (averaged 20%) taking some IRA bond money. I got 100% gain and until the preferred shares are called away I maintain a yield no less than 7.5%.
Your total portfolio estimated yield is excellent at 6.0% and with the heavy REIT positions you do have a good hedge against inflation.
My IRA Portfolio History
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I started working for a company in 1981 that matched my 401K contributions. I stayed w/ them for 7 1/2 years and then left w/ a total of $45K in 401K money that I rolled over into a Schwab IRA. I never made another IRA contribution (since I did not have "earned income"). I bought individual stocks, a few zero coupon bonds and even placed some funds with the Vanguard funds over the years. The IRA portfolio is worth aprox $275K today. My goals is to double the value every 10 years so at age 65 the value s/b over $1M.
Today I have 38 positions in my IRA. Three positions are worthless or very near zero and several are multi baggers. All pay some sort of dividend. I re-balance the winning positions from time to time and generally never sell the loosers (perhaps a bad decision w/ hind sight). PFE has been a bad performer as I accumulated shares in the 90's at prices in the high $20's. My one big blow up was Washington Mutual (WM) where I thought the 5% dividend would be safe and it would be a slow grower (today's value $0.17/share and a $5K loss to the portfolio). I try to limit any one security loss to $5K by limiting my position buys to $5K. That translates to no more than 2% of the portfolio in any one security when acquiring a new equity. I generally let the winners run and begin to peel off shares when they exceed a 5% position and in a few cases, I will let them run to 10% positions.
One of my best buys was Halliburton Company (HAL) in August 1986 when the company had a judgment against them for asbestos claims. I bought 200 shares around $9.00/share (pre split). The stock split twice over the next 12 years giving me 800 shares. I peeled off shares during 2007-2008. The stock hit an all time high of $50/share in June 2008. $1,800.00 turned into over $35K (an 18 bagger!). I currently hold 100 shares.
The Vanguard 500 Index is my largest holding representing 13% of the portfolio. I hold 18% of the portfolio in three different Vanguard funds (S&P Index, International & GNMA)and 82% in individual stocks through Schwab.
CVX is my largest equity holding and represents a 10% position. Over the last five years, I have already peeled off 40% of CVX shares and redeployed the funds.
About 20 years ago, I took 10% of the IRA money and bought zero coupon bonds with maturities at 2012 and 2014. If an excellent buying opportunity presented itself, I could cash in one or more of the bonds and buy equities. This occurred w/ the crash of 2008 where I promptly sold 1/2 of my zero coupon bonds and bought REIT preferred equities with an average yield of 20%.
The top 1/3 of my IRA portfolio looks as follows.
Vanguard S&P 500 INDEX
Chevron Corporation Common (NYSE: CVX)
Pfizer, Inc. Common Stock (NYSE: PFE)
Bristol-Myers Squibb Company (BMY)
Ship Finance International (NYSE: SFL)
U.S. Treasury 2014 STRIP zero coupon Bond (originally bought around $200 per $1000 bond in 1989) current value $90.23 will be worth $100 on 8/1/2014
Transcananda Corporation(Holdin(NYSE: TRP)
First Industrial Realty Trust, (FR-PJ) 7.25%
General Electric Company Common(NYSE: GE)
SuperValu Inc. Common Stock(NYSE: SVU)
New York Community Bancorp, Inc(NYSE: NYB)
Entergy Corporation Common Stoc(NYSE: ETR)
HRPT Properties Trust Pfd Conv (HRP-PD) 6.5%
Building such a portfolio over the years (29 years for me) can be challenging, especially in the early years. You should be commended with the positions you have accumulated and the average net portfolio yield you have achieved.
Keep up the good investing. I never stop learning new investing ideas and try to apply them to my ever changing portfolio(s).
EKS
P.S. My Southern Union Company Common (NYSE: SUG) resides in my taxable portfolio but I should look at buying shares for my IRA. My most recent IRA Buys & Sells include:
03/25/2010 Confirm - ATO - Bought
03/12/2010 Confirm - F - Sold
03/09/2010 Confirm - EDE - Bought
03/09/2010 Confirm - ELP - Sold
02/03/2010 Confirm - DPM - Bought
01/26/2010 Confirm - SFL - Bought
01/19/2010 Confirm - UNH - Sold |
