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Investors, who are still in active accumulation phase, can also benefit from being subject to inherently more stable investment progress, which is predicated on steadily growing the portfolio’s cash income streams quarter by quarter. With that being said, there is still some due diligence that has to be put in. What we do not want is to fall into value traps, chasing high yields with an attempt to reach our investment goals sooner.
Service Properties Trust (NASDAQ:SVC), a REIT that specializes in the ownership of hotels and triple net lease retail properties has seen its shares take a nosedive in recent weeks. Back in October, the company announced a major cut to its dividend along with plans to sell more than half of its hotel properties. I had been a major proponent of investing in Service Properties Trust’s debt back in 2023, but slammed the brakes this year after cash flow erosion created significant concerns. Now, after reviewing the company’s asset sale plans and recent financial data, I’m still avoiding both the shares and the debt as I’m not convinced this transaction will significantly improve its situation.
In a recent post, I showed mathematical valuations of Coke (KO) and PepsiCo (PEP) based on their last 15 years of price and fundamental data. As it turned out for both companies, dividends alone had the highest correlation with their prices over this period. I chose Coke and PepsiCo for my first valuation calculation because both are powerful brands that have won over our taste buds, grocery shelves, and portfolios. Since they are so dominant and so similar in their products and marketing, most people assume they are both always about fairly valued because they are so large and their products are a staple of everyday life for many people.
In this article, we aim to select 10 investments, including some ETFs (Exchange-Traded Funds) and some CEFs (Closed-End Funds), for folks who are going to retire in the next 10 years. Furthermore, this portfolio is for someone who is not very active in the stock market and rather believes in a buy-and-hold approach. Even though our target investor may not need income today, our focus is to build a portfolio that will generate sufficient income on day one if so required. So, it should suit even retirees as well. Investors who do not require income today should obviously reinvest all their income, and they will likely have a 10% income yield on a cost basis in 10 years. That being said, ideally, such a portfolio should preferably be started 8–10 years before likely retirement.
Altria (NYSE:MO) is one of the largest producers and marketers of tobacco in the world, with a $90 billion market capitalization. The company has a dividend yield of more than 7%, and it’s heavily outperformed since we last recommended it. The company has continued to achieve strong earnings, and as we’ll see throughout this article, it represents a valuable long-term investment.
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