An Income Portfolio Beats Capital Gains Every Time

As an income investor it is critical that you do the necessary analysis when building your dividend portfolio. Many investors are attracted solely by the dividend yield and end up getting stung. One such example is Dow Chemical Co (NYSE:DOW). This company paid a nice dividend yield back in the mid 2000's but because the company wasn't able to satisfy all 8 points listed above, it had to heavily cut its dividend in 2009 from $0.42 per share to $0.15 per share (63% cut) for 9 quarters straight. This illustrates that you have to do the due diligence on your underlyings to avoid scenarios such as this.

When you have a good dividend yield along with good consistent dividend growth, your portfolio is set up for success. The real message of this article is that capital gains on your stocks is not the critical issue. What we want is increasing income quarter after quarter and we get this by never selling our assets and re-investing our dividends to buy more assets. 4 excellent stocks (Along with Coca Cola) to start your income portfolio (that satisfy all points listed above) would be the following. (NYSE:CVX), (NYSE:MCD), (NYSE:K), (NYSE:MMM).

Source: Seeking Alpha

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