047 - Why You Need To Invest In These Evergreen Stocks To Start Your Portfolio

If you’re in the process of building a new portfolio or improving the one you already have, this episode is for you.

Tim outlines what he considers to be the best evergreen stocks for everyone to start investing.

Yes prices vary, but if you wait to pick up shares when a stock’s P/E is below its peers, you’ll hedge in a margin of safety.

You'll pick 1 stock in each sector, working your way down the list. All the options and details are covered in this post. 

If you follow my suggested stock recommendations, your portfolio will look like this. 

• JEPQ 
• UTF 
• PDI 
• XOM 
• ABR 
• MAIN (but HTGC or ARCC works too)
• MO or MMM

If you disburse your money equally (14.3% of your total into each), your portfolio would yield about 10%. 

Want FREE weekly market updates, Tim's top 10 dividend picks, and our portfolio updates delivered right to your inbox? Subscribe to our email list.

Stay connected. Follow us on social!

**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

Episode music was created using Loudly.

Transcript

Welcome to Roaming Returns, a podcast about generating a passive income through investing, so that you don't have to wait till retirement to live your passions.
If you're in the process of building your portfolio, this is the episode for you. Tim outlines what he considers to be the best evergreen stocks for everyone to start investing. Yes, prices vary, but if you wait to pick up shares when a stock's PEs below its peers, you'll hedge in a margin of safety.
So start with the first sector and work your way down. Welcome back, guys. Oh, are we live? Hello.
As promised, we're back with the best stocks to buy right now. Well, she has it worded that way, but I think if you're just starting out in an income investing portfolio, these are my recommendations to start with and then branch out once you have a pretty good position in these. Tricky part when it comes to funding an income portfolio is you've got to find undervalued investments across a few sectors.
The sectors that I like for income investing would be REITs, obviously, BDCs, obviously, utility, bonds, energy, technology, and consumer staple, which I guess is just like an all-encompassing thing that people use, like toilet paper and shaving cream and things of that nature. But we'll start with technology because technology has been like one of the hottest sectors for aeons, it seems like forever. I was going to ask you, why did you pick those sectors? Well, because it's what generates the most income.
Okay. You're trying, like I just said, you have to find undervalued investments and the ones that keep popping up are the utilities and bonds because they've been, and BDCs and REITs because they're ass-kicked because of interest rates. You just said bonds? Bonds isn't on there, is it? Yeah, the bonds are.
Bond sector. Oh, I'm parted. You are.
I obviously wasn't paying attention. I tune you out when you speak. You do.
Now, with technology, what I do, I differentiate than most investors with tech. I like funds. Closed-ended funds is what I like or ETFs.
I don't do individual stocks because individual stocks are difficult. You don't know which one's going to take off and then even if you are able to find one, majority of the time it's going to be a growth stock, you're not going to get a dividend from it. Yep.
Because we're a different kind of investor than the people chasing growth. If you're chasing growth, you shouldn't be here. I'll illustrate here in a hot minute.
JEPQ is my favorite. It yields around 9%. It has a monthly variable dividend, but the dividend doesn't really deviate too much from around 9%.
So some months you'll have 43, some months you'll have 41, some months you'll have 39, some months you'll have 47. So you're around that area. So you have like a somewhat reliable income coming in.
Year to date, it's up 10.1% and it's up 33.02% for one year. And since its inception in May of 2022, it has annualized returns of 16.33%. So when I say I like JEPQ, it's literally you just buy your shares, turn your drip on and you just let it, that's a set it, forget it type thing. Set it, forget it.
You don't have to worry about it. And the reason I like the closed-ended funds, JEPQ has like NVIDIA, it has Tesla, it has Apple, it has Microsoft in it. So you don't have to worry about buying the individual stocks, you're getting a fund that's paying you 9%.
Yeah, I was going to say the individual tech stocks don't pay crap for dividends. That's one that I like in the tech sector. There is NBXG, which is pretty much similar to JEPQ when it comes to holdings.
It yields 10.3%. So you get a higher yield, but it has a, this one is consistent. It's 10% or 10 cents monthly per share. That has went up I think once in like the last two years.
So like even if it goes up, it's going to go up to 11 cents or if they cut it, it's going to go down to 9 cents. So it's going to be around that 10 cents per month. It's only up 8.3%, 3% year to date and 20.67 for one year.
But since its inception in May of 2021, it's down three, negative 3.67 annualized per year. It hasn't recovered from the sell-off in 2022, remember 2022 was a shit year. Everything went crazy and went down, but it's working its way back up.
We've actually had this one for a while now and we're up 36% with a 15% share increase. What that means is we actually have increased our share amount by 15% in the year we've had. I forgot to mention JEPQ.
We've had that one since September of 2022 and we're up 34% with a 26% share increase. So you see like with those two, with the set and forget it technique, you're accumulating more shares, thus increasing your monthly income because they're monthly dividend payers. And it's pretty fucking sick actually, I like it.
And my third fund for technology is HRZN. This one's a little bit different. They will invest in startup companies that are nearing their public rollout, something like that IPO rollout.
They have an 11% yield and they pay 11 cents monthly. Only has a 7.7 PE and its peers have an average of 20.04, so it's a little bit undervalued compared to its peers. It's down 11% year to date, but it's only down 1% for one year.
This is one that's been affected vastly with interest rates. When the Fed actually lowers the interest rate, this one will recoup most of its losses and I like it. It's kind of like Hercules Capital in that it has a niche that it invests in.
It's tech companies that are going public soon, whereas Hercules does the same thing with like healthcare and tech. Well, while we're on the interest rate topic, update them on what you just saw come out with those jobs reports and everything. Okay, Wednesday the job report came out and the job report was really low.
They were expecting like 200 and some thousand new jobs and it was only 175,000 new jobs. That's why the market went just ballistic and part of this week is because people are starting to see the economy soften because unemployment rate went up a little bit. There's less jobs and wage growth was lower than they anticipated, so that the experts are starting to think that there will be an interest rate cut in 2024.
I was going to say, so on the surface that looks like a bad thing, but if you understand how the interest rate changes work, they don't want to lower interest rates preemptively, but they'll lower interest rates when they start getting signals that it might actually compromise the economy and that's what's starting to happen with those metrics coming in. Well, if you think about how inflation works, the whole reason that interest rates have been held steady is because inflation is not going down as quickly as possible. If everybody has a job and everybody has a job that's paying really good wages, then there's no incentive for prices to go down.
It's only when there's less people with money that they'll start dropping prices. That's because they don't want to push things into an actual recession, so it's a delicate balance they have to walk. Those numbers are actually really good from the perspective of the interest rates actually coming down like they suggested before.
Hopefully those numbers stay consistent so that that does happen because when it does happen, if you get into some of these stocks that we're going to talk because a bunch of the other ones coming up have the interest rate problem too, if you get into these before this interest rate actually gets cut, they are going to be like popping off. You'll have a lot of price appreciation and then you'll have a different problem entirely. It's like when to turn your drip off and when to take your profits.
That's a completely different monster that I'll address once interest rates look like they're going to go down. Once things change, we'll do a dedicated episode on that. Back to HRZN, we picked this up in September of 2022.
We are break even, but we've had a 25% share increase. That means instead of $55 a month, we are now at $69 a month, which is a difference of about $150 a year. So that's just drip working.
That's why all the people always talk about compounding. Yeah, compounding is the truth. We mentioned previously in a podcast, when the market goes sideways, that's like a perfect storm for people that rely on drip.
It's ideal for dividend investors. It's ideal. Because you don't have to worry about turning your drip on and off.
You just leave your drip on. You're accumulating shares at a reasonable price and you're just piling up shares every month or every quarter. It's just an increase in your earnings.
So that's the three funds that I would like for a starter portfolio. The one that I would pick in the tech sector would be JEPQ. It might be a little high price.
I think it's like $40 some dollars. But if you want to go with a lower price, you can go with HRZN. One of those three would be a good start for your tech sector of your starter portfolio.
And when we say start, we're saying like you have a capped amount of money. So you're going to want to deviate up. So pick one in tech and one in each of the sectors coming up until you get all those covered.
I'll explain at the end how I would do this. Yeah. Okay.
The next sector I will address will be utility. And utility is like – I think it's misunderstood because people think utility, they think like power, water. But there are a lot of other things that qualify as utility when it comes to experts.
Telecommunications is one. Yeah. I found it kind of interesting that certain things are considered utilities that the average person would not, which is cool because – Like Verizon is the first one on my list.
Verizon is technically a utility stock. It has a 6.7% yield and a $0.67 quarterly dividend. It has 19 consecutive years of dividend growth, which is what you want to look for as an income investor.
You want to find income stocks that are raising their dividend when it comes to individual stocks. Like with funds, they'll cut them. They'll raise them.
They're sometimes variable. But when you're looking at individual stocks, you want a stock that will raise its dividend every year. That's sick when it happens like that.
Verizon's PE is 8.6. Wallace Pierce have an average of 18.65. So it's undervalued. It's up 4.7% year to date and it's up 5.8 for one year. We bought this in 2023.
I remember beating the table on the podcast saying Verizon, Verizon, Verizon. We're up 26% and we've only had a 2% share increase because we've only collected the one dividend. We're about ready to collect the second dividend.
So that'll be up to about 3% to 3.5% share increase. So that's pretty funny that we have a 26% value increase with only one dividend payout. If you remember though, I said- That was the thing we said.
Those cables. Verizon is severely mispriced. It's undervalued.
People went into panic mode and were too scared to buy when- It was trading at like $18, $19 a share when it should have been like $40 a share. That's really cheap. The second utility stock is BKH.
That's Black Hills something another. Holdings. It has a 4.8% yield, 65% quarterly dividend.
It's grown its dividend 54 consecutive years. It sports a 13.9 PE while its peers have an average of 16.3. So it's slightly undervalued still. It's only up 1% year to date, but it's down 16.66 for one year.
So that would make me think that might be a time just to get into it. And we sure as we did get into it when I saw that that was like that. We got into BKH in January.
We're only up 1.75 and we've only collected one dividend for a 1.7 share increase. Really? We haven't held that one that long. Oh, we've only got one dividend.
I really like that one just because it has 54 years of dividend growth and once you get beyond 25 years of dividend growth, their primary focus is shareholder buybacks and dividend increase. And then the third one on my list is one that I remember beating the table about a few times. NEP, which is if you're familiar with the utility sector, NEE is like the main utility in Florida.
NEP is their alternative energy offshoot. It's like their wind and solar. It has a 12.23% yield and it pays an 88 cent quarterly dividend.
Its dividend is getting ready to go ex-dividend I think this week. It has 10 years of dividend growth, 15.5 PE and its peers have an average of 17.94. It's down 2.6 and it's down 54% for one year. I remember when we discussed this, there was a huge sell-off because it said it's not going to grow its dividends at the rate that they said they were, it's going to grow it a little bit smaller and people panicked because they thought that meant their EPS wasn't going to grow at that, earnings per share wasn't going to grow at the rate and it was literally just their dividend growth projections, which were in the 6% to 10% range instead of the 12% to 15% range.
So we're talking like no reason for panic selling. Whatsoever. So we bought this in October of 2023 when I saw this, we're up 32% and we've had increased our share.
Quantity of shares. Yeah, our share was increased by 7%. If you don't feel comfortable buying individual stocks, there are a couple of utility funds out there.
The one that I like the best is UTF. It's a utility and infrastructure, so I like that they have infrastructure as well. It yields 8.25% and it has a monthly dividend of 16 cents.
It's up 9% year to date, 5% for one year and it has annualized returns of 9.3 since 2004 when it first came out. So if you don't, like I said, if you don't feel comfortable buying one of the three stocks I recommended, then pour your money into UTF. And as a starter portfolio, I would suggest getting into UTF before buying one of the other stocks.
Really? Yeah. Even though you like the individuals better for utilities? Oh, I love the individual stocks better for utilities, but because they're only going to have a certain amount of funds to put forward, the best bang for the buck is going to be getting into the closed-ended funds, UTF. All right, so there you got it.
The bond one, I know I beat the table on bonds repeatedly over and over and over and over and over. And then they popped off and then we said don't buy. Don't buy, but there are a couple of funds that are pretty nice when it comes to bonds.
One of them is PDI. PDI, I really like. Yeah, PDI is my fave.
It has a 14% yield and it gives you 22 cents a month every month in dividends. It is up 4% year-to-date and it has an annualized return of 11 cents, or I'm sorry, 11% since its inception in May of 2012. We bought this in November and it's up 13% and we've increased our shares 6%.
I really like PDI. If you know anything about the management companies, Pimco is one of the best management companies when it comes to funds. And then we have the next two as well.
YYY is the second one I like here. It has a 12% yield with 12 cents a month dividend. It's only up 7.8 since its inception in June of 2012.
We bought this in July of 2023. We're up 11% with a share increase of 9%. It's good, but it's not as good as PDI.
But it's, I think, a little bit cheaper than PDI, if I remember correctly. And the third one is DSU. It has a 10.5% yield and it gives you 10 cents a month dividend.
It has annualized returns of 6.5 since its inception in March of 1998. And again, we bought this one in July of 2023. We're up 18% with a share increase of 7.4. So if you go through this, the one that we are accumulating the most shares in is DSU.
The one that we are up the most in is DSU. But the one that I like the best is PDI. I just like their allocation of bonds better than DSU.
Ooh, ooh, ooh. Tell them about the bond that you woke up the other day and were like, what? What just happened? We had a bond and it was a Laredo bond that wasn't supposed to be called for another five years and they called it back. And they called it back when it was trading at 105.6 or something like that.
So if you remember when we discussed bonds, when they call a bond back, they call it back at par value, which is 100. So we lost that 5.2 or 5.6, whatever it was, profit. But when they call it back, they do give you the interest that they owe you.
And that right there, again, is why you do not buy bonds above the 100. And if you can buy it even further below par, you have that buffer space. So when we discuss prefers and we discuss bonds and we discuss CDs, you never want to buy those above the par value, which will be 100.
I think you said for that one, you bought it at 98, right? Not at 98, but we had it for three years. So we collected a lot of interest on it because it was a 10.1 percent. It still stuck that we lost that 5 percent.
When they bought it back, we were still up 39 percent because we got it at a decent price and we collected all the interest through the years. So it wasn't the end of the world, but it was like, oh, I have to figure out what the hell to do with all this money. We had a lot of money tied up in it.
He was like, what am I supposed to do with this money now? It was horrible. He wasn't expecting it. But that's what can happen five years early.
That's just FYI on the bond thing. Okay. So the third sector that you need to have an income portfolio is energy.
Energy is not going anywhere. As much as they want energy to be the solar and wind now, there's going to be oil. Just how it is oil and coal.
The first one on my list is ARLP. I remember we sent a blast out about this one because something happened where they were selling the shares off and I said, whoa, don't sell, actually buy ARLP. It has a 13.2 percent yield and it's paying you 70 cents a quarter per share in dividends.
It's up 225 percent for three years and it has a 4.4 PE while its peers have an average of 4.5. So it literally is fair value. But if you look at the energy sector, when you have a 13 percent dividend at fair value, that's a no-brainer. Yeah.
We bought this in July. Again, in July of 2023 seems to be when I did most of my good stock picking. We're up 21 percent, but we've increased our shares by 10.4 percent and not even a year, we've got 10 percent.
I'm assuming a lot of that gain came from that dip we talk about buying, right? Pick up the dip. I only put a couple hundred dollars into it because we got such a really good price the first time. Plus, we might have had a cash flow problem.
So that's why when you're looking at things to buy, you never want to, if the PE is popping off and it's higher than its peers, you don't want to buy it no matter how much you want it. You don't buy it because there's always panic selling and there's always things that, factors that you can't foresee that are going to cause problems. And then what happens, like what happened in that case, it went down by like 12 percent within like three days.
And a lot of people were shitting their pants because they're like, oh my God, ARLP is going off. So do I sell? And like if you went on Reddit, there was like a threads about do I sell? Do I sell? Do I sell? If you read like the publications and emails that everyone's like panicking, I like what they do. They're a coal company.
They're the number two coal company in America. They're not going anywhere. So like when I see that their PE dropped at that time, it was like 3.2. So that's to me means buy, it doesn't mean sell.
Now if it's another company like, I don't know, Joe Schmo Coal Company, that's like the hundred best one in the country, then okay, maybe you have a problem. But because they're the second biggest. Well, I was going to say people panic sell all the time and if it's not right price when you want to get in it, just wait a quarter.
There's quarterly reports that come out all the time and people misinterpret metrics left and right and panic sell and then two weeks later, they're like, oh, that wasn't a bad buy. Then they get back in after they lost their freaking profit. That's why when we discussed things previously, I said you want to have a portion of your portfolio in bullet shares and the reason you want that is specifically for when there's panic selling and something that's a good company that's undervalued you can sell your BulletShares like that as opposed to a CD you have to wait a couple days and so you sell your pick them up right away yeah my second energy company is Exxon mobile XOM it only has a 3.14% yield which is 95 cents quarterly per share but it has 41 years of dividend increases consecutive years it's up a lot year to date 20 year to date 116 for three years it's overvalued according to this is one of those weird ones it's overvalued compared to its peers it's 12.98 PE while its peers have an average of 11.02 the reason i got into it we got into it in December of 2003 and we're up 17 but we've only had um 1.6 percent share increase we're never I'm never selling this one i overpaid but i was willing to overpay for a company that i know is going to give me a dividend increased every year i overpaid by a dollar or two like it trades at like 100 so i could have waited till it went down to like 89 or 88 something like that but i bought it at like 98 so that one you have to hold on like you if you're thinking about getting the Exxon mobile i would hold on that's like a 30-year play yeah that one if you get into it you're never getting rid of it type thing the third one's a micro cap one that's like it's probably the best small cap energy stock that i can that i found in my research it's called  KRP  KRP has a 10.5 percent yield and it gives you 43 cents a quarter in a dividends per share it's up six percent per year for a year to date and it's up 57 over three years this one is overpriced as well energy is going to be overpriced for a couple years so like you might want to actually not invest in energy until the PEs come down but the PE for KRP is 18.1 and its peers have an 11.02 PE which means it's way overpriced but we bought this one in September of 2023 we're up seven percent with a seven percent share increase so in energy if you really need to get into energy get into ARLP because it's the one that according to the value metrics is the best right now like it's PE aside like it's fair valued if you don't then you might want to get into it energy I'm closing it fun or you just want to hold in bullet chairs and wait well but all three these are three of the best energy players but like you said with ARLP  it pays 13 some percent dividend so it's kind of to me but if you see the difference ARLP  pays a 13 percent yield and it's trading it's a fair value i recommended that one over KRP which is 10.5 percent yield but it's like it's overpriced overvalued by like 30 so the 10.5 percent yield is not going to mean shit if it drops the 30 back to the regular PE value yep so energy is a tough one right now but that's you should have energy in your portfolio so I'm trying to think of like an energy fund i mean they have like a ml they have like AMZA is a decent one for uh an MLP like it's a collection of all the  MLP s but i would just put money into bullet chairs and wait for the energy prices to come down they always do now we're in the fourth sector the fourth sector is REITs  REITs we've discussed these previously there's a lot going on in in the world of  REITs that's not positive because of interest rates like the like the the share prices keep dropping and like there's a like a lot of ones are cutting their dividends i have two listed here IIPR is an absolute banger i don't know if you're able to get into this one at a reasonable price because when i did the research for this was like two weeks ago and since then they've actually said they're going to move marijuana possession down in the in the court system where it's not it's just a misdemeanor anymore it's not a felony so they're on their way to legalizing marijuana uh what IIPR does is it literally rents out warehouses and land to pot farmers so this one's popping off it popped off it went up uh probably 18 percent in the last week wow that's a big climb it yields 7.3 so that probably came down to like 6.5 6.7 range but it does have a dollar 82 per share quarterly dividend at the time that i did this it had a PE of 16.65 while it's other it's uh its peers had an average of 30.9 so very well could still be undervalued compared to its peers but it only has a six-year dividend growth but its annualized growth rate is 17 percent means and when it hikes a dividend it hikes its dividend a lot and it's been doing it like the last six years it's like like a lot of the companies like Exxon Mobil for example hike it like three or four cents whereas iipr is hiking it like 25 30 cents a share so like they hike when they hike it they hike it a lot um we bought this in December of 2023 and we're up at the time i did this again it's up more up more than i think like 11 percent now it was three percent with a four percent share increase but i like that one a lot specifically because i fully anticipate marijuana being just like aspirin in the near future and the reason that the marijuana stocks have been depressed through the years is because they were still technically against the law yeah so that's one to watch because it's only going to go up it's trading at like 112 or something like that now i would recheck the pe the peers see if it's undervalued it's undervalued throw some money at it if not put money in bullet shares and wait if not like the one that I'll actually recommend of the two is ABR. ABR i know is undervalued uh ABR is one that I've talked about a lot um this is the one that plants trees so every uh every time you buy something from them they plant a tree every time you get a loan they plant a tree like they're pretty cool they actually i like the fact that they try to make the environment better uh they're yielding 13.21 percent and they give you 43 cents a quarter per share in dividends its PE is 7.8 while its peers have an average of 15.09 so it's a lot more undervalued like there's no question on this one compared to IIPR which is who knows right now um it has a 13 year um dividend growth streak and it has an annualized growth rate of six percent and they actually will uh sprinkling special or extra dividends um probably once a year they'll actually give you like a 10 cents 25 cents whatever extra in dividends uh we've held this one so many times through the years I've lost track but the last time we actually sold it and bought into it was may of 2023 and we're up 21 with a share increase of 8.5 ABR is one that you will accumulate shares quick as shit because it's like it's like it's trading at 13 or 12 whatever it is so you put a couple thousand dollars into you get a bunch of shares and then because it gives you a pretty decent yield of 13 every quarter plus the possibility of special living like you accumulate like we've went up um i want to say we've probably went up 60 or 70 shares in the time we've held it we've only held it for a year that's a lot that is a freaky crap so when it comes to REITs ABR is the one I'd recommend but if you have extra money say from uh the energy one and you don't know what to do with it you could dump it into IIPR if the value metrics are in the right spot yeah uh the fifth sector is BDCs and like if you own an income investing portfolio the cat is freaking the hell out if you're if you own an income investing portfolio you have to have BDCs it's like a rule i don't make the rules i just follow them because they yield the most and it's very easy to find undervalued BDCs but you'll see how much they yield here in a hot minute yeah and the reason is because of the interest rates right yes like i will like right now i said like three of these sectors are all depressed because interest rates right now I'm gonna like the BDCs I'm gonna like there's more out there that yield like 50 like trinity is 13 percent TRIN is 13 percent OSCL is like 16 percent so you'll find ones out there that have much higher yields than the three that i have here to recommend but at the same time these are the absolute three best of the BDCs the first one is Hercules Capital we've discussed this one ad nauseum love it it has an 8.4 percent yield uh 48 cents per share quarterly it's grown its dividend for only five years but it's raised its dividend 12 times in the past five years so had they been holy crap had they been like the other companies that are worried about their dividend growth streak they would have just raised it you know 12 years instead of doing it 12 times in five years its annualized growth rate is six percent again that's all that's that's a really high annualized growth rate that means you hold the stock for five years you're getting 30 percent in dividend growth year to date Hercules is up 13 and it's up 45 for one year it's vastly undervalued it has an 8.3 PE while its peers have an average of 20.13 this is probably one of our longest holdings of currently because of the buying and selling i've done through the years we've had this since July of 2022 and we're up 50 and we've had a share increase of 21 i beat the table about this one all the time it's the one that like they invest in the end like before things go public it's like a venture capital company before they before the companies go public they invest in health care and technology they do they're they're kind of similar to what HRZN does the absolute best one though of the BDCs is main street capital mainly because it's raised this dividend for 15 consecutive years it has special dividends usually twice a year as a five percent annualized dividend growth rate this one is just the bomb its PE is 9.37 its peers are 20.13 this is one that if you have an income portfolio you have to have mainstream capital in your portfolio it has a only has a six percent yield like i said you can find other BDCs that have much higher yields but this one is the best it has a 24 cent per share monthly dividend we've held this one so many times again we've held this one a lot the last time we've bought it in bulk was November of 2023 and we're up 15 with a three percent share increase in bulk like Main Street and Hercules and um the last one we've had this last one is one that I've only held once previously it's ARCC it is the biggest BDC so like i like what i was saying like what was i saying when i said like it's the second biggest or when ARLP is like the biggest their second biggest coal company in America ARCC is the biggest BDC in America with um market cap value it has a nine percent yield and it pays you 48 cents per share quarterly it has not cut its dividend in 15 years and has raised it eight times in 15 years so it's not really worth it's not really focused on a dividend growth streak like a lot of other companies like it's i guess it's like a badge of honor all we've raised our dividend for 10 years straight or we've raised our dividend for 12 years straight ARCC is more concerned with keeping the balance sheet under wraps and then when they have when they have extra money they'll give you a dividend increase but their primary goal is not cutting the dividend which is nice in the BDC yep um if it wasn't for main this would be the one that I'd recommend to everyone but mainstream capitalists is better this one has a 7.79 PE the average of the peers is 20.13 that's way undervalued well they're all going to be because of uh the interest rates crap we have going on we've held this one since august of 2023 and we're up 12 with a six percent share increase but if you're starting to see a theme here like our shares have increased a lot through all these different holdings we have and that's what i like especially the interest rate ones that's why i say these are like the starter portfolio like i know there's other ones like other people out there other experts say the starter portfolio should be this well I'm actually using data that we have so i know the price of these i know when they're undervalued and i know what you're what the possible rewards are to reap if you buy them at the right valuation because I've held every one of these except for UTF i never held that uh that fund for that's because you prefer individual utilities yeah consumer staples uh consumer staples again like toilet paper and whatever like the best like the best consumer staple of company out there is triple M MMM but there's some sketchy stuff going on right now things just changed this week with MMM um prior to this week 64 years is how long they've had a dividend growth streak of 64 years they're actually cutting their dividend for the first time in like 65 years they're giving up their dividend king status which is insane if you think about it and i said they have to have a specific plan to do that if you know what happened with them they they spun off what spun off means is they actually created a different uh different different ticker different company for their health care product their health care was 19 of their revenue they spun that off into its own company it's called SOLV um if you got the email you know we sold all of our shares and that because it wasn't offering a dividend i have no desire holding something regardless of if it's good or not if it's not paying me to own it so we sold that off so they they spun off their health care portion so they got rid of 20 of their revenue at the same time they have litigation going on from like um the earplugs with the troops and something with PFSA chemicals in the water so they have billions of dollars in litigation but the fines are spaced out over the year over the course of 10 years for the the earplug one and 20 years for the water one so the fines won't be that big of an impact on their their overall financials but they're actually cutting their dividend their dividend prior to the cut is 6.6 and it's $1.51 a quarter a quarterly dividend per share i don't know what it's going to be when they do it it's all no more and i think a month when that's going to come out yeah so the share price of that one dropped pretty significantly actually the share price went up oh it went up everybody was getting out of MMM because they thought the dividend was sustainable so once the management said that hey we're going to cut the dividend the share price shut up by 12 is that why you got out i got i got i sold half my position yeah i actually thought you got out because it went down that's really funny i would have took half out too yeah i sold half like we had uh close to ten thousand dollars in triple m i sold i sold half of my position and when you if you get the email you'll see what i did with the proceeds of that i split it up in to equal increments and three new investments but the PE of MMM is 12.2 the average of its peers is 16.37 so like all this data is like past data so like but anyway it's not even the one i recommended the two of the of the consumer stables the one i recommend is mo it's the cigarette one so if you have a problem with cigarettes either get over yourself or go find a sustainable thingy gig. MO has a nine percent yield so it actually has a better yield than triple m it has uh not so it's 98 cents per share quarterly they've raised their dividend for 54 consecutive years and they have a 4.5 percent annualized dividend growth so that's pretty high for a company that's as as developed as mo i figure if smokers are going to smoke you might as well make money off of them um mo is up 7.5 percent four year today but for one year three year and five years down and it's down significantly in three year and five year like damn 15 or something like that what i found through the years with mo is entry price is everything when it comes to this one and what I've actually done with this one is anytime the the price per share falls below 40 I'll pick up more more shares it has a 8.53 PE and it's um it peers have a 14.1 PE when it falls below 40 that PE is actually below eight eight eight PE so it's like a 7.6 7.7 so that's why i say when it falls below 40 i pick up additional shares uh we held multiple times through the years like we even have a bond in mo it's the one I've been trying to get out of but i can't really justify getting out of it uh it actually pays like half less it pays it's a 4.5 bond so it's paying half less than the actual stock but we got it at such a good price we got it like 62 dollars or some shit like that holy crap below 100 that's insane yeah so we're up and we've had this since January of 2024 is the most recent time we got bought a bulk of mo and we're up eight percent with a 2.4 percent share increase mo is the better one like there's other ones out there there's a Philip Morris and there's BTI. BTI is the third one i list on the consumer staples the only reason i list it is because it gives you a 10 percent yield so it actually has one percent more than mo um 74 cents per share quarterly but it has a variable dividend i mean sometimes it's 74 cents sometimes it's 58 cents sometimes it's a dollar so that's one of those that like if you want consistency in your income portfolio which retirees do and if you're using your income to supply your like your life on the road which is like what we're going to be doing that's why we're not in BTI her mom's in BTI because it's a retirement account and she's not retired yet once she retires I'll probably transfer from BTI over to mo for her mother because it's not consistent you want it like whenever you're on a income you want like that's consistent income so mo is better than that it's cheaper it's a lot cheaper like uh Altria trades at like $40 a share whereas BTI. BTI is at like 28 so it's 12 12 cheaper so you can get more shares per dollar i would imagine that compounds faster too it does but like the difference but the difference between like the returns is something that i pay attention to mo is down seven percent one year year and 19 five year whereas BTI is down 20 one year 23 three year and 23 five year so it's down more than Altria like a lot more and again this is when the entry point is going to be crucial when you're investing in BTI and with her mom's account anytime BTI falls under $29 a share is when i pick up additional shares it has a 6.44 PE so it's it's a vastly cheaper than most of the uh mo yeah it's vastly cheaper than mo mo is 8.53 what's the average up here 14.12 dang that's less than half we've held BTI since November and we're up only two percent with a two percent share increase so you can see the difference like we've actually held uh Altria less and we're up more with more share increase so like i think I'll treat is the better one that's why i say when i my recommendation for the consumer goods sector is mo and then if you have money left over do triple m but then triple m kind of imploded and it price went up it's one of those weird things like where it's all bad do you think it's going to crash later though i was going to ask about that i think it will crash whenever they come out with a dividend i think people are super stoked because like oh they're cutting the dividends they're like the dividend's going to be um better sustainable sustainability with the dividend but once they see what they're going to cut it to like I'm probably my prediction is and I'm not like a forecaster but i think it'll probably be they're going to take it from what was it it was um a dollar 51 quarterly i think it's going to be under under 75 cents i think they're going to cut it like more than a half they're going to cut it a lot and i think people are going to panic I'm like oh my god they're like I'm not going to get any money for holding this because that's what i was thinking i was thinking the excitement of the smart business decision is going to over inflate and then once they actually realize what that signifies for the people holding it long term it's it's not going to be good so I'm you selling half of it we kind of win either way you look at it because if it goes up again we still have our shares but if it goes down we can pick up shares at a discounted price well that was one of the things i was going to address with the income portfolio is like you we were just discussing what i did with triple m like the news came out from the earnings report and like that's why i say you have to monitor your account you can't just like set it and forget it like i'll tell you if it's set and forget it like PDI's has said it forget it uh JEPQ's has said it forget it because they have their ETFs and they're closing their funds that have access to so many companies so it doesn't matter if one of the company does something that's sketchy or like they do something that's bad news if you're owning individual stocks you actually have to monitor them like as soon as i saw that the dividend cut came i was like okay let me see what's going to happen and when i saw that everyone was euphoric about it i was like well that's not good so then i sold half the shares i might actually sell all the shares if it keeps going up in price because i know what they're going to do like they said that they want their dividend to be under 50 percent of their revenue and if you run the numbers that's we're talking 40 or 50 cents a share oh yeah that's going to be a big death blow later wow all right yeah I'm curious to see what the reason i like triple m is because when we if you remember when we were discussing economic moats they have the best economic moat so it's one of those that i might sell everything now and then wait for it to implode and then buy it back later um if you look at the experts they're saying like the their predicted price is like 70 a share and it's currently like a hundred dollars a share like only one person thinks it's going to trade for more than it does now in a year the rest of them are like 60 70 78 82 so they all know it's going to fall by like 20 so the people buying into it now are insane that's why i was like well i'll sell you shares here you go I'll sell you my shares have some yeah so you have to monitor like when you like i said i I'll reiterate if you own individual stocks you have to pay attention to the in earnings reports yep earnings reports in the news so in summary the starter portfolio should look like this JEPQ, UTF, PDI, ARLP, ABR, MAIN, and MO what i do is i begin a position in each of these say whatever you can afford like on my my example was two to five thousand dollars in each one of them so that would be one two three four five six seven zero it is a percent of the portfolio there's seven of them there's seven of them so i do for this so i would just do it into like I'd put a thousand into JEPQ and the next time i could put a thousand I'd put a thousand into UTF and then i put a thousand into PDI and i keep doing that until i established a pretty good chunk chunk of change in each one of those before i started branching out to the other ones that i listed so if you disperse your money equally your portfolio is going to yield what 10.37 10.37 and if you do the stocks i recommended so you're getting 10 plus one two three three of those are dividend growers so four of them are different the three of them are different growers ARLP is not it's a variable one but it's pretty good and then you're going to have three consistent funds that pay you x amount per month in JEPQ, UTF, and PDI so you have a lot of stability and you'll have a lot of consistency with your income portfolio with those seven different investments and then you can like i said branch out once you get that up to a certain point you can branch out into if you want different sectors say you want i don't know fast food or you want whatever like you can then branch out into different sectors but your starter portfolio should be ideally like at least 40 to 50 percent of your overall portfolio when it's all said and done because Hercules Capital and ARCC are really good companies so you like that would be the first one i like i would put my money in the main and i get all the ones up to a decent amount then I'd go a Hercules Capital and ARCC areas capital and then i would go from mo to to triple m and then to BTI then I'd go for arbor to IIPR like i if you go on the website it's all written out I'll put the link to the blog post in the show notes that way you can actually walk through these and look at it when you're not multitasking yeah so that's my startup portfolio it's awesome we hold every one of them except UTF so I'm pretty knowledgeable but everyone every one of the investments i brought up today I'm pretty knowledgeable about UTF I've been recommended multiple times from if you remember when i did the sources of the contrarian outlook he brings that up all the time UTF UTF UTF and then UTG like it's all the time but again it's like PDI so if you do like the fun thing where you don't have to keep up with the news and everything go ahead and throw it in that versus the individual utilities and they'd like for example the energy i know they have energy funds that cover all of they'll have an MLP that'll cover all the different energy ones they'll have a an energy fund that covers all the different gas companies or all the different midstream companies and i know for REITs they have like a REIT of a fund that has all the REITs in it and i know for BDCs they have another one that's like all BDCs like it has all it'll have shares and main it'll have shares in Hercules Capital and shares in ARCC but i for some of them i like funds for some of my like the individual investments and I'm I'd rather have main than a fund that holds like six percent in main you could have if you have any questions or comments reach out I'll help you out like email me so my question is how long does this thing stay valid for like what's the longevity from post-state forever forever i recommend these stocks forever i do okay that's the only thing only thing that i would differ with this is this is the evergreen portfolio the only thing that's different is i would turn the drip on and off depending on okay like I'm telling you like these are like the cream of the fucking crop that's why i like okay so this is the only one that's in question would be triple m and like all we'll know more about that whenever they announce their dividend cut like in a month or two so i would say if this is evergreen portfolio these are all stocks to put on the watch list and then you just have to pay attention to the PE versus peers and obviously any like crazy news and one of the financials you have to make sure they're not accruing a lot of debt yeah but I'm just saying like if this is the evergreen portfolio oh yeah like we hold all these and like we held we hold all the ones i brought up and we'll probably hold all the ones we brought up for years and years and years and years and if we change that you will find out on the recent episode of the podcast yep if i like if i go all i'd be like oh i had to sell Hercules I'll like for sure mention it but i highly doubt it all right guys so get started with uh what was the one you said ARLP no ARLP no i would start with JEPQ or uh MBXG or HRZN that's where I'd start with the tech one because tech's tech's going to be the thing of the future so i would like literally start at the top like how i have them listed is how i start start i start with JEPQ then i would start with the UTF I'll actually add a sentence in there for that so get your take home today is to throw some money in the first one if you got more money than that then equally disperse like on the sidebar I'm so proud her mom finally opened up a worthy account oh my god i know we're in the process right now because she has one of those stupid federal credit unions who doesn't have clad so she can't instantaneously open and transfer banks we have to do those stupid micro deposits so as soon as that happens she's throwing 10 grand in there and she's gonna watch like the two dollar a day so obviously you want to have your emergency fund in place before you guess where that money came from guys tax return yeah that's way better than whatever the heck other people spend it on she did listen in that regard i know i'm so proud of her you have no idea listen or she bring it up i brought it up to her a couple weeks ago and she actually asked me about it when i was over there last night i was like wow like that's a that to me that is the biggest opportunity for investment there is it's a tax return that you don't actually have like account money accounted for so like well actually how it happened was my dad said to put it in a CD and when she looked at the interest rates of the CD she's like i think Carm said something about this other thing being a higher thing so she asked me about it again and i was like yeah CDs are stupid they're not stupid you can do like short-term ones like do eight-month CDs yeah trash interest I'm just saying but like but like liquidity wise the word is better and it pays you seven percent there's a couple other ones that are paid more so again set up your emergency fund with worthy and um like i guess if you do so five they actually have a 4.6 check or find your other high-yield savings account or do bullet shares whatever you want to do like you have before you do your startup before you must have an emergency fund because you don't want to touch like if you notice in all those only when i sold office triple m and that was extenuating circumstances other than that i just let it shares compound yeah you'll never ever hear us saying we had to share sales because we need money for some emergency that cropped up we will never say that and if we ever do call us out on it I'll stop podcasting at that point I'm like I'm done i violated my core principle i retire about all right so for next week next week's gonna suck uh this year's just been a shit show next next week's gonna be data on like because my parents both died like in the last month and they were young so I'm gonna go into detail about how like there's a certain portion of the population that doesn't live as long as people think they're if you recall we did a longevity one where like a certain portion of the population lives well beyond like his grandmother and grandfather and we're like well beyond what the average is so you have to prepare for that but then there's a certain portion of the population that doesn't make it to the retirement age and you have to prepare for that so we're going to go into detail about that it's going to be i mean no i wasn't close to my parents but it's still it's still it's like it's more what is that mortality slap me in the face yeah so he wasn't close to him because of his bad childhood and the abuse he went through but he at least reflected on the fact that he still has the genetic component and they both died at 68 69 67 68 so they were young that's only two three years in retirement at the normal 65 like that's so we're gonna go into detail about the other end of the retirement thing like what happens why so how you prepare for if you don't make it to 60 or 78 or 72 wherever the hell the number is i forget it's gonna be interesting i think it's pretty cool it's a topic that I've never heard anyone address like I've never i heard i hear I've actually heard the longevity aspect but I've never actually heard anyone address like what prepare for dying before you before you retire before you expect so basically live live now all right so we'll see you guys in next week's episode sorry this is so long hopefully that starter portfolio helps you get rolling have a great week. yeah