A Retirement Ready Dividend Portfolio for Young Investors In Part B of this series, Chuck Carnevale, co-founder of FAST Graphs and “Mr. Valuation,” continues building a dividend growth portfolio designed for younger investors who still have decades before retirement. While Chuck acknowledges that younger investors could focus more aggressively on pure growth stocks, he emphasizes that a well-constructed dividend growth portfolio can still deliver meaningful capital appreciation while simultaneously building a reliable income stream over time. The long-term objective is to create a dividend portfolio that grows its income every year, allowing investors to eventually live off dividends alone without ever needing to sell shares.
This portfolio is built from a value investor’s perspective and is actively managed, not a “set it and forget it” strategy. Fundamentals and valuation matter, and holdings may change if conditions deteriorate or valuations become excessive. After initially constructing a 15-stock portfolio in Part A, Chuck adds five additional companies in this video, bringing the total to 20 holdings. As of the update, the portfolio carries a current yield of approximately 2.46% and is modestly positive since inception, though Chuck cautions against drawing conclusions from such a short time frame.
The portfolio is tilted toward long-term growth, with roughly 65% allocated to large-cap companies, close to 10% in small-caps, and the remainder in mid-caps. Chuck highlights that many holdings have relatively smaller market capitalizations, increasing their growth potential over time. Sector allocation is intentional, with financials comprising over 40% of the portfolio due to attractive valuations and strong earnings potential across diverse financial sub-industries.
Chuck walks through the five new additions in detail. These include Federal Agricultural Mortgage Corporation (AGM), Autoliv, CVS Health, Magna International, and Sonoco Products. Each company was selected based on a combination of valuation, earnings growth potential, dividend safety, and long-term fundamentals. While some holdings are cyclical or face near-term headwinds, Chuck emphasizes that valuation creates opportunity. In many cases, a significant portion of the expected return comes from potential multiple expansion, combined with dividends and earnings growth.
A key theme throughout the video is the importance of earnings yield as a valuation metric. Chuck explains that earnings yield represents the inverse of the P/E ratio and reflects the return an investor would receive if all earnings were paid out. He contrasts attractively valued companies in the portfolio with high-quality but overvalued stocks like Visa, noting that even exceptional businesses can be poor investments when purchased at excessive valuations.
Chuck concludes by reinforcing that valuation is critical, especially in an overvalued market environment. Buying strong companies at reasonable prices helps lower risk while improving long-term return potential. The portfolio will be reviewed periodically but not micromanaged, staying true to the philosophy that excessive trading erodes results. This series will continue with future updates as the portfolio evolves over time.
FAST Graphs Analyze Out Loud Video covering Federal Agricultural Mortgage (AGM), Autoliv (ALV), CVS Health (CVS), Magna International (MGA), Sonoco Products (SON), Visa (V)
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Disclosure: Long V, ALV, CVS, MGA, SON
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.
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