Balancing Income Generation and Equity Growth with Capital Preservation and Reinvestment Risk

One of the most difficult and common challenges that both average investors and financial advisors are all faced with, is how to achieve above average returns with below average risks.  It’s an age-old dilemma, where the quickest and easiest solutions often come up short of what otherwise seemed to be rather reasonable expectations. Granted, sometimes they work great.  But, other times, not so much (if at all.) 

Perhaps this uncertainty of outcome is why some people view the entire stock market as a big gambling arena, with a net sum zero (or every winner there’s a loser, and vica versa.)  However, in short, we believe results stem from the inherent complexities of some elusive thing called “economics.”  Elusive, because it is ever changing.  Yet, by and large everyone – be they experts, novices, statisticians, technicians, quants and/or nearly any other kind of market pundits – looks for (hopefully repeatable) patterns in what might more simply or easily be spoken of or perceived as a transfer of wealth, rather than a creation of wealth.  Therefore, much more is said or written about the relationship between the securities markets and the U.S. (or global) economy, rather than the theory or principles behind it.

That said, the question that arises for us is, What creation of wealth factors are (and/or aren’t) driving the current economic “recovery”? Generally speaking, the wealth of a nation originates from the natural resources of that nation.  This encompasses such things as the mineral, timber, farming and manufacturing products, as well as the intellectual and innovative property of the nation’s people.  Missing from this list, however, is the creation of printing of more dollars (aka, “fiat currency.”)

Although it appears that some of the news media and certain politicians would like to believe that our wealth can be printed or digitally manufactured through the magic of congressional approval, we continue to see that sort of stimulus more as a mere transfer of wealth.  Nonetheless, the combined effects of the extraordinarily low rates of a dovish Fed (aiming for higher inflation), the high likelihood of additional stimulus, and money managers giddy about the prospects of a gridlocked government have continued to push the equity markets towards new all-time highs.  All of which brings us back to the simple and basic task of trying to achieve “above average returns with below average risks” in what might very appropriately be deemed, perilous times.

Part of Durig’s concerted effort to balance income generation along with capital preservation has produced the S&P 500 Dividend Aristocratic Portfolio, which utilizes free trading and quarterly re-balancing to combine the cash flow of gradually increasing dividends and a nice potential for solid long term equity growth that sidesteps  the reinvestment risk  typically associated with (currently low yielding) bonds.  This more modern and specialized approach for individual portfolios and a streamlined e-document service help make it a simple and more effective way to own the high and growing dividends of the S&P 500 as a strategy to help mitigate the risk of higher inflation and/or a devalued dollar.

How has Durig’s S&P 500 Dividend Aristocrats portfolio performed since inception?  While still early, after its first year and a quarter the portfolio appears to have averaged an annual equity gain of about 4.6% in addition to the portfolio’s annualized dividend cash flow of approximately 4.4%.  Considered together, the portfolio has thus far averaged an annual gain of about 9%.  However, keep in mind that this is a long-term approach with increasing income, given that these blue chip dividend Aristocrats have both a long history of raising their dividends as part of their plan and avoid cutting their dividend in spite of the volatility of markets like we are currently experiencing.

To put the higher (over 4.4%) dividend yield of this strategy into perspective:

The 10 year treasury current yield is about                0.90%
The   5 year treasury Current yield is about                 0.40%
Durig’s Dividend Aristocrats div yield is about       4.4%

Dividend Aristocrats of the S&P 500

Annual Cost: 0.50% or 1/8 of a percent per quarter.
Minimum Investment: $25,000 (suggested)
Minimum Holding Period: None

Along with the success of our S&P 500 Dividend Aristocrats portfolio , we are also offer Durig’s Dogs of the S&P 500 portfolio and Durig’s Dogs of the DOW portfolio, as well as Durig’s Canadian Dividend Aristocrats portfolio and Durig’s European Dividend Aristocrats portfolio.

For those looking to step into the market now, we think our Dividend Aristocrats strategy deserves some serious consideration.   This just might be the perfect investment for those seeking growth, along with good diversity with high and growing income, and who are willing to take some “blue chip” equity risk for future growth.

Other Durig Low Cost Segregated Portfolios

For Advisors:

We offer our successful Dividend Aristocrats investment strategy to other Charles Schwab Registered Investment Advisors through segregated accounts.  Durig’s fee is the very low cost of only 50 basis points, and RIA’s can apply whatever additional fee that they believe is best situated for its clients and or its firm.

Disclaimer:  Past performance is no indication of future success. The high yield strategies presented in this review by Durig may not be suitable for all investors. This is not investment advice from Durig, nor a specific recommendation to buy or sell securities. If you have any questions or concerns about its suitability for your personal investment, you should seek specific investment advice from a registered professional before making an investment decision. Information on this website is provided for informational purposes only and is not offered as advice with respect to any particular security or related financial instrument. This information should not be used as a basis for making an investment decision and must not be treated as a substitute for seeking advice from a licensed professional. The suitability of a given investment for a particular investor depends on a number of factors, each of which should be considered carefully. Such factors include, but are not limited to, the risk associated with the investment, the nature of current market conditions, and the investor’s objectives, personal needs, and specific circumstances.

About Durig:

Most of our client accounts are custodied in their own name at Charles Schwab, a large discount service provider that is SPIC insured, or at Interactive Brokers. We have now started offering our highly successful FX2 service to clients of other Registered Investment Advisors through segregated accounts at Charles Schwab. Please ask us to learn how this might work for you and your current advisor.

Disclosure: Performance is reported net of fee, as of 11-15-2020. 

Risk Disclaimer: Any content on this review should not be relied upon as advice or construed as providing recommendations of any kind. It is your responsibility to confirm and decide which trades investments to make. Invest with only with risk capital; that is, with money that, if lost, will not adversely impact your lifestyle and your ability to meet your financial obligations. Past results are no indication of future performance. In no event should the content of this correspondence be construed as an express or implied promise or guarantee.

Durig Capital is not responsible for any losses incurred as a result of this article Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

[bsa_pro_ad_space id=4]

Dogs of the S&P 500

Durig Capital provides investors with a specialized, transparent fiduciary service at a very low cost, and has now created a Dogs of the S&P Portfolio Strategy, with a slightly different, specialized approach. Learn more at or call (971) 732-5119.

Leave a Reply