Diversifying Your Portfolio and Dividend Yields

To start building your portfolio you should keep in mind that you must diversify. Tempting as it may be to put all your money into that one stock that is paying big dividends, you have to be smart and spread your money around to protect your investment

It's a good idea to put your money into different industries i.e. manufacturing, retail, technology, financial, minerals and entertainment.  This will keep you from being hurt too much when various sectors of the market are experiencing trouble.

I created a list of stocks that I am watching I chose to invest in several of these stocks because of how they look in my technical analysis. Many of them are oversold and are in a good position to rebound.

• Retail – TGT, WMT, DG
• Housing/REITs– ARR, CYS
• Technology – MSFT, ORCL, CSCO
• Manufacturing/Automotive – TSLA, F
• Financial – JPM, WFC, BAC, PNC, UBS, RLI
• Entertainment – SNE, TWX, LGF, DIS
• Communications – VZ, T
• Minerals – GLD

I especially like buying retail stocks right before the holidays they may take a downturn after their earnings report in the new year but at least you have an option to sell before then.

I mostly buy stocks with a high dividend yield however I will buy stocks that don't pay a dividend only if it’s a break out company, Tesla fits that criteria.

I recently read a couple of articles about diving deeper into analyzing stocks for dividend yields.  They talked about inadequate assessment in many of the current stock analyzers.  In order to get the true dividend yield you have to look at when a company distributes their dividend. Go back and look over the whole year to see if extra dividend payments were distributed.  If a company only declares a quarterly dividend then only the distributions over the quarter will be factored into the dividend yield calculation.  This however excludes additional one-time distributions which will sometimes dramatically increase the dividend yield calculation.

In short it pays to do your research.