If you watch CNBC for long enough, you will notice that even the smallest events on the dullest trading days can seem like they are really important. It is the most public example of how Wall Street writ large benefits from keeping investors’ emotions elevated. The one time of year when there’s a bit of a reprieve is summer. It is a good time for you to review your retirement income strategy. Here’s what you should consider doing this summer.
The summer lull can let you think more clearly
Summer! The kids are out of school, and families are taking vacations. There aren’t as many people working on Wall Street or trading. Perhaps you’ll even have the pleasure of hosting the grandkids for a spell. Enjoy time with your family, but also recognize that this lull in the frenetic pace of life is an opportunity to slow down and think strategically about your investments.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
For example, if you are using your individual stock portfolio to generate investment income to supplement your Social Security checks, you may want to make some adjustments. If a stock you own has rocketed higher, your portfolio may no longer be as diversified as you think.
A rebalancing may be in order, such as shifting assets to an underperforming area like consumer staples, which is home to many reliable Dividend Kings. Companies like Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), and Hormel (NYSE: HRL) have increased their dividends annually for at least five decades, and their stocks offer attractive yields and valuations right now.
Maybe consider stepping back from active management
That said, you may also want to take a moment to consider the value of your time. The summer may remind you that spending time with family and friends is often much more enjoyable than spending it with spreadsheets and annual reports. If that is true for you, then getting your retirement income strategy back on track may mean buying dividend-focused exchange-traded funds (ETFs).
One of the most popular dividend ETFs is Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). It uses a complex screening process to select 100 financially strong, well-run companies with high yields and growing dividends. It is essentially doing what most dividend investors aim to do with their portfolios. The yield is 3.2%, and the expense ratio is a surprisingly low 0.06%.
Leave a comment