In this third installment of the retirement income series, Chuck Carnevale (“Mr. Valuation”) walks through the completion of a hypothetical $2 million dividend portfolio designed for a retiree who requires at least $100,000 per year in income—equivalent to a 5% yield, with annual income growth to offset inflation. The goal is not only to generate sufficient income today, but to build a portfolio capable of increasing that income every year without selling shares.
In Part 1, Chuck constructed the first three-quarters of the portfolio using 15 stocks with an aggregate 5.27% current yield. This video focuses on selecting the final five holdings to bring the portfolio to 20 stocks and nearly fully invested.
To complete the portfolio, Chuck ran several FAST Graphs screens and manually reviewed additional candidates that met his criteria: investment-grade credit, fair valuation, sufficient free-cash-flow strength, and dividend yields that help maintain a 5% portfolio yield. From a shortlist of seven, he added five companies: Keurig Dr Pepper, J.M. Smucker, Constellation Brands, Target, and Verizon. Verizon’s higher 6.7% yield was especially important in keeping the overall portfolio yield above 5%.
With all 20 stocks included, the portfolio is now 99.8% invested, has already appreciated modestly, and carries a current yield exceeding 5%. Chuck emphasizes that such short-term performance (1.5% gain in the first week) is meaningless—what matters is the multi-year combination of dividends, dividend growth, and eventual valuation changes.
He then provides a valuation walk-through of each holding in the full 20-stock portfolio, illustrating where each company was purchased relative to intrinsic value and explaining why valuation remains the most important factor in long-term returns. The portfolio spans multiple sectors, though it leans toward consumer staples due to their stable dividends and attractive valuations.
Chuck concludes by noting that unlike his “set it and forget it” model portfolios, this one will be actively managed. If fundamentals deteriorate—or if a stock becomes significantly overvalued—he may replace it with a better opportunity. The ultimate goal remains clear: deliver a stable, rising income stream for retirees while still providing long-term capital appreciation potential.
FAST Graphs Analyze Out Loud Video covering Keurig Dr Pepper (KDP), JM Smucker (SJM), Constellation Brands (STZ), Target Corp (TGT), Verizon (VZ), AES Corp (AES), Avnet Inc (AVT), Best Buy Co (BBY), British American Tobacco (BTI), Edison International (EIX), Interpublic Group (IPG), Altria (MO), NNN REIT (NNN), Realty Income Corp (O), Oneok Inc (OKE), Omnicom Group (OMC), Prudential Financial (PRU), Sonoco Products (SON), T Rowe Price Group (TROW), VICI Properties (VICI)
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Disclosure: Long SJM, TGT,VZ, AES, BBY, BTI, MO, NNN, O, OMC, PRU, SON, TROW, VICI, VZ
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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