High Yield Model Portfolio Performance Remains Solid

The Enhanced High Yield Model Portfolio continues to perform almost exactly as designed.

Remember this is simply an educational tool–one that demonstrates LONG TERM performance of a portfolio of relatively high yield preferred stocks and baby bonds. The intent is to not ‘trade’ the account–simply purchase and hold, unless substantial bad news is known or suspected about a issuing company.

This model was formed on 1/25/2018–so it will be 2 years old in a few weeks. To date the portfolio has a total return of 16.11% and holds a cash position of about 10%. We currently have goal of an annual return of 7.50%.

Initially the model had only about 10 issues, but we have worked to continue to expand holdings and now are up to 13 issues in a portfolio of $116,000 – I will be adding 2 more positions in the next 60 days and then will hold the portfolio in the 15 issue area – helping to spread the risk.

This model has the ability to hold a REIT or MLP, but with REITs running to sky high level we have not held other holdings for quite some time–likely this will only change if REITs set back in pricing.

The portfolio is here (page loads slow).

The Medium Duration Model Portfolio has NOT performed as well because of 1 disastrous holding–we will wright a bit on this soon.

5 thoughts on “High Yield Model Portfolio Performance Remains Solid”

  1. Hi Tim & others. I just found this “leave a reply” section & thought I’d say “hello”. We’re fairly heavy with “baby bonds” & am relatively pleased with how they’ve done. I’m not particularly good @ “timing” the buys, but over the long haul, it’s not that critical.
    I prefer the website just left of “baby bonds”, which shows all the baby bonds & their preferreds. It’s very helpful IMO.
    I’m considering adding one or more income generator (BB preferably). My one rule is it must have a dividend paying common stock. Also, ratings from S&P, etc are helpful. I wish you folks could offer advice. All of our BB’s are obviously in the 3 IRA’s. Too bad they don’t have a counterpart that pays qualified dividends. I’d be all over them.

  2. Tim/Matt, an observation. I see that each of the positions is a round lot which would fit with the buy and hold approach you set out at the beginning. Some of the portfolios we manage are at a large national brokerage that allows automatic dividend reinvestment of preferreds/baby bonds. Other brokerages that offer this on common stocks, do NOT offer it on preferreds. When the dividends are automatically reinvested it makes for an easy decision on how to deploy the cash. As opposed to deciding what to do with a drib here and a drab there. Since all of the brokerages went to free trades, it is less of an advantage. But my observation is that the automatic reinvestment accounts have grown faster than the non-automatic accounts, both in annual income and in net value. This is clearly due to having less cash sitting around earning next to nothing , waiting for additional shares to be bought. You might consider this for your accounts.


  3. Tim,
    Not that it is important, but I found 2 possible typos in the portfolio posted
    (no need to publish this message, but I don’t know if there is a way to write to you not publicly):

    1. The current price of GNL-B is listed as $24.75, but as far as I can tell, GNL-B has been >$25 since mid Dec, ~$25.64 on Dec. 31 and $26.36 today ( I don’t know on what date you “cut” the prices in the table)

    2. Simply a typo: RIYLZ instead RILYZ


    1. Dan–got them done. 1 bad formula–actually raised the return by a couple 1/10%s.

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