“I don’t have time to invest in individual stocks.”
This is a common saying I hear. A part of it is certainly true- most people simply don’t have time to spend many hours per week researching companies and tuning their portfolios.
But there’s a middle ground. Investors can, in addition to their passive funds, own a concentrated, diversified portfolio of individual stocks that:
1) They understand
2) Are low maintenance
3) Constitute good long-term holdings
And here are three examples of this sort of portfolio. I don’t necessarily recommend every company, and specific selections would be based on what companies an individual is bullish on, but they get the point across.
|The Coca Cola Company||KO||2.85%|
|Canadian National Railway||CNI||1.73%|
Average Portfolio Yield: 2.18%
|Automatic Data Processing||ADP||2.76%|
Average Portfolio Yield: 3.50%
|Phillip Morris International||PM||3.89%|
|Realty Income Corp||O||5.21%|
|Johnson and Johnson||JNJ||3.46%|
|Kinder Morgan Energy Partners||KMP||6.38%|
Average Portfolio Yield: 4.63%
Benefits of Ownership
The benefits of owning individual stocks are many.
-You keep yourself aware of business events and the economy.
-You ensure that you become and remain financially literate.
-You have a solid part of your portfolio in companies that you understand.
-You derive passive income from investments across many sectors.
-You get to vote in matters of those businesses.
Disclosure: I am long KO, ABT, XOM, CVX, and JNJ.