In the article “Build A $100,000 Dividend Snowball With These 5 Yields Up To 14.5%” on Seeking Alpha, Samuel Smith, Vice President of Leonberg Capital and leader of the investing group High Yield Investor, explores strategies for building a strong dividend portfolio. The article is based on Charlie Munger’s philosophy of accumulating a significant initial sum to leverage the power of compounding in achieving financial independence. Below is a summary, with further details available on Seeking Alpha.

• Munger’s Advice: Achieving a $100,000 portfolio is a critical step toward financial freedom.
• Compounding Effect: At this level, reinvested returns significantly contribute to portfolio growth, reducing reliance on further active income investment.

• High-Yielding Dividend Stocks: These offer income and potential for capital appreciation.
• Selection Criteria: Focus on stocks with resilient business models, robust balance sheets, sustainable dividends, and adequate current yields.

• Utilities (XLU), midstream energy (AMLP), real estate (VNQ, RQI), and business development companies (BIZD) are preferred for their stable cash flows and high dividend yields.

1. Enbridge Inc. (ENB): $15,000 allocation, 7.1% yield.
2. FS KKR Capital Corp. (FSK): $5,000 allocation, 14.5% yield.
3. Realty Income Corp. (O): $15,000 allocation, 5.2% yield.
4. JPMorgan Equity Premium Income ETF (JEPI): $30,000 allocation, 8.4% yield.
5. Schwab U.S. Dividend Equity ETF (SCHD): $35,000 allocation, 3.5% yield.

• Total Portfolio: $100,000, average yield of 6.3%.

• Provides high current yield for immediate income.
• Balances risk with a mix of stable investments and higher-yield options.
• Aims for long-term growth and inflation-beating dividend increases.
• Suggested additional diversification options include EPD, ET, MAIN, ARCC, WPC, ADC, and PFFA.

• Following Munger’s advice, the goal is to create a self-sustaining portfolio where dividends fuel further growth.
• The combination of different income-generating assets aims to ensure stability and growth, essential for long-term financial independence and a comfortable retirement.

Read the full article on Seeking Alpha for an in-depth analysis: “Build A $100,000 Dividend Snowball With These 5 Yields Up To 14.5%”.