Personally I would identify my strategy as 90% dividend investing, 10% speculative investing.
The reason is because I want a consistent and sustainable monthly income stream next to my full time job which, over time, will increase and compound.
I look for companies that have:
- A proven track record of not only maintaining but also increasing it’s dividend over time.
- A proven track record of increasing profits.
- A (relatively) low payout ratio so it also has enough cash leftover for investments etc.
- Are on a discount compared to historical levels due to no fault of their own (market crash etc.).
- Generally I look for value.
By adhering to these requirements I not only pick up good stocks for a relatively cheap price but also ensure that on top of dividends I get price appreciation as well.
My portfolio consists of stocks of companies and REIT’s for the most part: “Blue-Chips”, Utilities, Financials, Defense companies, pharmaceuticals and various types of REIT’s in a variety of sectors.
The majority of these stocks are US stocks as US stocks simply tend to pay consistent dividend.
For some reason paying a dividend doesn’t seem to be liked very much by EU companies and they also tend to cut their dividend frequently for no good reason.
I’ve also got some ETF’s for Chinese stocks as well as Emerging markets next to single securities that I also own on the Hong Kong stock exchange.
As for speculative positions, these are mostly turnaround stories and small positions in pharmaceuticals.
I simply hunt for what I perceive to be value and great companies that trade at a discount through no fault of their own. Because it’s no fault of their own, the price will always (rather swiftly) recover again.