My Portfolio: I Hope This Works Fund (2015)

I’m investing in individual stocks again, and I have my reasons why I am doing so. Over the course of the last few weeks, I’ve been doing some research to try and figure out not only which stocks I want to buy, but to also determine how I want to construct the overall portfolio.

As I mentioned in the previous article, my underlying goals for this portfolio are two-fold: sustainable passive income with a generous blend of growth mixed in.

Although it is still early in the process, I’ve put together a preliminary shopping list for the near future. When opportunities arise, I will try and allocate some capital to buy more shares in the following companies:

Screen Shot 2015-02-20 at 3.03.07 PM

The above list is sorted by market capitalization, with Apple (AAPL) leading the charge as the most valuable company. Pulling up the rear, we have Tesla Motors (TSLA), with a still respectable market cap of $26 billion.

For this portfolio, I’m going to stick primarily with large cap stocks.

The following screen captures will sort the stocks by industry, and include the current dividend yield, if applicable.

Highlighted in green are companies I currently own in my portfolio:



There are a total of 22 stocks. Initially, I wanted to keep the number of holdings to less than 20, but in the interest of further diversification, I decided to add a few more companies into the mix. For instance, when it comes to telecoms, I included both AT&T (T) and Verizon (VZ)…

Again, the goal of this portfolio are to serve my own individual needs, which may be different from your own. This is not a pure growth portfolio, nor is it a pure dividend portfolio.


The Aim for each holding is divided into three categories: Defensive, Aggressive, and Mixed.

To get started, let’s analyze the Defensive stocks:


These holdings need to be the rock of the portfolio, and have the ability to withstand the absolute worse of market recessions. When picking out these stocks, I primarily wanted to focus on the tried-and-true Dividend Aristocrats — companies that have managed to not only pay a consistent dividend, but to also increase it every single year for at least the past 25 years.

The Dividend Aristocrats:

Chevron (CVX); 3.9% yield; 27 consecutive years increasing
Exxon Mobil (XOM); 3.1% yield; 32 consecutive years increasing
Coca-Cola (KO); 3.2% yield; 52 consecutive years increasing
Pepsi (PEP); 2.6% yield; 42 consecutive years increasing
Johnson and Johnson (JNJ); 2.8%; 52 consecutive years increasing
Emerson Electric (EMR); 3.2% yield; 58 consecutive years increasing
AT&T (T); 5.5% yield; 31 consecutive years increasing

The Dividend Players:

Caterpillar (CAT); 3.3% yield; 20 consecutive years increasing
Union Pacific (UNP); 1.8% yield; 8 consecutive years increasing
Verizon (VZ); 4.5% yield; 8 consecutive years increasing
The Southern Company (SO); 4.5% yield; 13 consecutive years increasing
Kinder Morgan (KMI); 4.3% yield; 18 consecutive years increasing (previously KMP)

The Dividend Players are comprised of individual companies that have a solid track record of paying out dividends, but may have suspended raises at one time or another. For instance, UNP has been paying out a dividend for 116 consecutive years, but momentarily stopped increasing payouts between 2003-2006. With the recession out of the way, UNP has not only resumed increases, but done so at an astounding rate. All these Players have a robust history of issuing out a consistent dividend payment, so my overall concerns with investing in them are limited. Long-term, I believe that each one of these companies also has what it takes to become a Dividend Aristocrat someday.


On the flipside of defensive holdings, we have the more aggressive plays that present a much higher risk. Again, I’m a fan of growth, so I’m willing to roll the dice to try and unearth some goldmines!

From a growth standpoint, the defensive holdings were yesterday’s big-time winners, but that does not necessarily imply that they will deliver the best returns in the future. And that’s not why I’m investing in them in the first place. With the defensive stocks, I want a reliable dividend I count count on in dark times. With the aggressive stocks, I want some big-time gains!

Tomorrow’s Superstars:

Google (GOOG)
Facebook (FB)
Tesla Motors (TSLA)
Alibaba (BABA)
Apple (AAPL)
Gilead Sciences (GILD)
Amgen (AMGN)

Well, actually, a few of those companies on the list are already superstars today. For instance, the best time to get into Google (GOOG) was during the IPO of 2004… Today, the share price is obviously more expensive, but I still believe in the company long-term and have a hard time envisioning a future where Google isn’t still an industry leader and earning a ton of revenue.

I’m not a particularly huge Facebook (FB) fan myself, but there’s no denying their grasp in social media and all the innovation that’s brewing behind the scenes over there in Menlo Park. I think there’s definitely more than meets the eye with this company, and if I had to place my guess, I’m going to bet on them succeeding in the future. So, I’m comfortable with owning perhaps a few hundred shares of FB. Just gotta be patient and buy on the dips since the valuation is always so high with this stock…

When it comes to Tesla Motors (TSLA), it’s the complete opposite. I love the company, I love their product, and I hope they are massively successful in the future and can bring electric vehicles to the masses. I was an early buyer of the stock, when it was still stuck in the low $50’s, but sold out prematurely. These days, the stock is insanely overpriced, and the current valuation makes no sense. But if Tesla does deliver, and delivers brilliantly with: Model X, Gen 3, and Gigafactory, then the sky really will be the limit for this hyper-growth story. Just like with FB, I’m not in a rush to gobble up as many shares as possible right now, but I’m going to be eyeing this one carefully for future opportunities to snatch up a few shares.

Alibaba (BABA) is the company I’m betting big on. I already own 288 shares, and will most likely add some more before I consider my position to be full. I just see way too much growth in China’s future to not want to make a move towards that. I’m going all in with BABA!

Apple (AAPL) is sort of a hybrid growth stock and one of the best stocks you can buy right now. I sort of look at owning shares of AAPL as being the equivalent to investing in the Bay Area at a time when you can locate both cash flow and appreciation. AAPL is extremely unique in that regard — The company pays a respectable dividend, yet the company is still growing aggressively. Sure, the massive smartphone growth may be a thing of the past, but you still have a lot of new ideas coming down the pipeline: Apple Watch, Apple TV (maybe), something with electric cars, and probably a few other things that we haven’t heard about yet. Not to mention the growth in the MacBook line, as well as with Apple Pay… The growth story may not be over!

If you were asked the question, “Which company is the most likely to become the first to reach a market cap of $1 trillion?“, how would you answer it? If I was to venture a logical guess today, I would have to go with one of the following hyper-growth companies listed above: GOOG, FB, TSLA, BABA, or AAPL.

Well, I don’t really believe TSLA will be the first to get to $1 trillion, but I’m really just hoping that AAPL will buy the company… soon after I’ve accumulated a few shares! 😉

With Gilead Sciences (GILD) and Amgen (AMGN), they are also like AAPL and sort of a hybrid. Each company has appreciated like crazy over the past few years, and both will pay a dividend (GILD is starting in Q2 this year). Yes, you could argue that these two stocks are not quite as aggressive as the tech companies listed above, but I’m going to categorize them as such since the hyper-growth story for biotechs may just be getting started… There may be many more blockbuster drugs on the horizon, and if so, I want to make sure I tag along for the ride! Right now, I like GILD a lot, and thanks to Roadmap2Retire’s article, he has convinced me to take a closer look at AMGN. Of the biotechs, I also like Celgene (CELG), but will probably elect to go with AMGN since they pay a dividend… I’m still doing more research, but for now I’m riding with GILD and AMGN. Investing in the biotech space can be tricky, and it’s definitely not without risk! I expect these holdings to be more volatile, which is another reason why I’m categorizing them as aggressive investments.

What will spearhead tomorrow’s growth? It could be many things… I’m by no means an expert, but here’s my prediction: biotech and electric (autonomous) vehicles.


So, on one end of the spectrum we have the good ol’ reliable dividend stocks that will keep churning out the passive income, and on the other hand, we have the more exciting potential hyper-growth stories of tomorrow.

What do we need to do to balance out these two seemingly dissonant strategies? Well, how about finding some stocks that combine a little of both… more growth potential (both share price appreciation and dividend growth) than a traditional dividend stock, and with a higher dividend yield than the hyper-growth stories.

Some companies I really like in this space are Starbucks (SBUX) and Walt Disney (DIS). These two companies are still rapidly growing, and pay a growing dividend, albeit at a low current yield of 1.4% and 1.1%, respectively. Yes, I could have gone with a more traditional dividend growth stock like Procter and Gamble (PG), but to balance out the portfolio, I’m willing to sacrifice some dividend yield upfront for more future dividend growth potential. Over time, I am confident that SBUX and DIS will keep growing their dividends admirably, and that before long they will both become dividend powerhouses. I’m trying to get an early jump on these dividend growth stories before these companies inevitably become a staple in every dividend investor’s portfolio.

With American Express (AXP), the company pays a low dividend of 1.3%, but I consider them a Mix stock because their growth days are far from over. The credit card companies are still growing revenues at a rapid rate, and although AMEX is currently dealing with a ton of problems, I’m hopeful that they can get over these hurdles soon. Long-term, I like the growth prospects of not only AXP, but also Visa (V) and MasterCard (MA)… And there’s plenty of room to grow the dividend! I bought 70 shares of AXP recently, so I’ll roll with them for now…

Putting It All Together

With this portfolio, I’ve got the following mix:

Defensive Strategy:

  • 7 Dividend Aristocrats (CVX, XOM, KO, PEP, JNJ, EMR, T)
  • 5 Dividend Players (UNP, CAT, SO, VZ, KMI)
  • Average dividend yield of 3.57%

Aggressive Strategy:

  • 5 High-tech leaders (GOOG, AAPL, TSLA, FB, BABA)
  • 2 biotech leaders (GILD, AMGN)

Mix Strategy:

  • 3 consumer staples and strong industry leaders (AXP, SBUX, DIS)
  • Average dividend yield of 1.27%

All-in-all, I’ve put together a portfolio of 22 quality companies to help me take home the trophy! Again, this is just a preliminary list I’ve put together that lets me share my current line of thinking with readers. Like most things in life, this list is subject to change, and I reserve the right to swap out holdings at any time. After all, the markets are extremely dynamic, so I’m going to have to always continue to do more research… I may come up with new, or better ideas…

Overall, I’m pretty pleased with the mix of companies I have in this blended portfolio. Dividend stalwarts such as JNJ, KO, PEP, CVX, and XOM will give me the most peace of mind (and cash flow!), especially when the markets are misbehaving and there’s doom and gloom in the air. These companies will be the dividend anchors of my portfolio.

Following their lead, I’ve got some additional high quality dividend payers in KMI and UNP. The recent dividend growth from each company over the past few years has been nothing short of explosive! If KMI and UNP can keep up the pace, I’ll have to elevate them to the top tier above someday!

With T, VZ, and SO, I don’t expect much, if any growth. I’m treating these holdings more like bonds, and they are necessary to help me bump up the passive income. 4.5%+ dividend yield from some rock solid companies that have a proven track record? There’s definitely a place for some of that in my portfolio!

In particular, I’m not especially enamored with CAT or EMR, but I do like each company’s track record and dominance in their respective industries. They are also quality dividend payers, so that’s why they have a place in the portfolio, for now. But if I come up with a better idea later, I might have to switch out… Future growth prospects for CAT and EMR are a concern…

When it comes to the hyper-growth stocks, I’m most excited about GOOG, AAPL, and BABA. I really like TSLA as well, but feel like its overvalued at the moment. I’ll have to proceed with caution with that one… FB is another stock that looks pricey right now, but I think they’ve got what it takes to stay relevant and grow earnings well into the future. Although it’s not my favorite idea, there’s a place for some FB in my portfolio…

With the biotechs, there’s added risk, but I really like GILD, and am still deciding between AMGN and CELG. I’ve got AMGN penned in for now…

Lastly, we have the mix blend trio of SBUX, DIS, and AXP. I’ve got a lot of high-tech in my portfolio, so I think it’s prudent that I balance it out with some more predictable consumer staples. Technology can change on a dime, but I’m much more certain that consumers will still be drinking lattes from Starbuck and swiping their AMEX credit cards to pay for them for many years to come. Also, I heard they were working on another Star Wars movie? How exciting! When can I pre-order tickets??? 🙂



What do you think? Good? Bad? A little of both? What stocks are in your wallet?

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5 years ago

Solid selection there FI.

Agree with AAPL being buy out there right now. I would probably add MSFT, HRL, NKE and remove FB, BABA, and TSLA.

Tech CEOs are talking about “a world without screens”, wonder what that may mean for companies like GOOG and AAPL.

5 years ago
Reply to  Spencer

Oops… meant to say “a world without internet” (Google Chairman Eric Schmidt)

5 years ago

Solid mix of stocks, FIFighter. Thanks for the mention and am glad to have brought Amgen to your attention. I think both Amgen and GILD offer great complementary plays on the pharma/biotech field – as I have been reading up on GILD and its drug pipeline lately. The company is more focused on HepC and HIV, which isnt stepping on Amgen’s toes. Of course, it doesnt have the track record of paying dividends – but if Amgen is any indication, Gilead will continue raising its dividends for years to come.

Best wishes

Done by Forty
5 years ago

Many ways to skin the cat. I don’t begrudge anyone who invests differently than I do.

Bruce D.
Bruce D.
5 years ago

Others to consider throwing into the mix (no comment on current valuation): UA, V, MA, SBUX. I employ a similar strategy of using dividend “anchor” stocks to barbell with more growth stocks like AMBA NXPI GILD PCYC and UA. Good luck!


I like your thinking and your list. I’m sure you’ll do well long term.
Curious as to allocation to these different categories. What % of funds in the anchor stocks vs. the more risky high fliers? Maybe you could talk a little about that going forward.

5 years ago

I like the selection, great mix of dividend paying stocks and future stars. May want to consider V and MA.


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5 years ago

Check out the Dividend Champion list – much more expanded than aristocrats

Jason @ Islands of Investing

I like that you’ve gone with a good mix of stocks, and also that you’ve stated your right to change this as your own goals and plans change, which is so important! The last thing you want is to feel committed to your ideas just because they were your original ‘picks’. This is the great part about investing – being able to tailor your investments to your own unique situation and circumstances. I can’t comment on any of the specific stocks, as all mine are limited to the Australian stock market at the moment, but looks like you’ve got a… Read more »

No Nonsense Landlord
5 years ago

I have just been going with IVW, S&P growth. It’s a no cost commission, no capital gains unless I sell, and no worry about re-allocating is things get out of whack.

FXI is a great play in China, as well as Bidu. So is Coke.

Gen Y Finance Guy
5 years ago

A man with a plan, I like it!

You mentioned in the beginning of the post that:

“When opportunities arise, I will try and allocate some capital to buy more shares in the following companies”

Have you figured out what triggers an opportunity and thus a purchase/investment?


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