This One’s for My Fellow Millennials

Okay, this is for more than just millennials. It’s for anyone who feels stuck and can’t get started with their investing strategy. If you poke around on the internet, it sounds like my generation might be in the most trouble.

A colleague (also a millennial) recently sent me a Newsweek article titled “Millennials Are Sharing Their ‘Plan’ for Retirement—and It’s Eye Opening.” The word “Plan” was in quotes as the article referred to an unhinged Reddit thread. Posters had joked they would work until noon the day of their funeral, or planned on dying before retirement.

The National Institute of Retirement Security found that 66% of working millennials have nothing saved for retirement. This is way higher than Gallup’s finding that 40% of Americans are in the same boat.

When asked about investing, it’s easy for me to suggest reading some articles by analysts they relate to and make the trade. I like to gather a lot of data from different sources and then make my own decision. Those stats remind me how hard it is for people to simply start.

I built my premium newsletter Yield Shark around that frame of thinking. The stocks are divided according to two main goals: generate more income today, or build wealth for the future. My readers love it. But I realize that many people don’t think in those terms.

The Quick-Start Portfolio

A portfolio should be tailored to your investing goals and risk tolerance. If you want a balanced portfolio of dividend payers that you don’t have to watch every day, I’ve got you covered. You can get started with just $22.

This pie chart shows how I’d allocate my investments across multiple sectors and themes:

You should start building your portfolio in the upper right slice: Consumer Staples/Boring Preferreds and work clockwise as you build out your holdings.

Consumer staples are generally the “needs” in a household budget. Good examples are food, cleaning supplies, and personal hygiene products. Companies that sell these products will have customers when the economy is thriving or struggling.

Certain preferred stocks are part of this first slice. Preferreds almost act like a hybrid between a common share and a bond. They have fixed dividend payments and a par value. This means your income is more stable and the share price tends to move less.

Still, not all preferred shares are created equal. This slice includes preferred shares of big, boring businesses that will be around for years.

My favorite stocks in this pie slice are Clorox (CLX) and Public Storage Preferred Shares Series F 5.25% (PSA-F). The market hates the shares of both companies, and that’s great. A lower share price means we can grab an above-average yield—4.8% and 5.9%, respectively. I am bullish on both and believe you will collect generous dividends for years or even decades to come.

The best part is that one share of PSA-F is just $21. Honestly, that’s less than what you’d spend on lunch and a latte. That’s all you need to get started. Reinvest the dividends and compounding will amplify how hard your money works for you.

Build Confidence and Keep Moving

Once you have a handful of shares in the first slice, move onto the next – Oil. Here we have lots of options. A quick review of the Dividend Digest archives and you will know my favorite energy play is pipeline companies. They transport oil through the entire refining process no matter what the price per barrel is. And most also transport natural gas and natural gas liquids. 

Enterprise Products Partners (EPD) has been my go-to pipeline company for over a decade. It should not, however, be held in a tax-advantaged account such as a 401(k) or IRA. A pipeline ETF such as Global X MLP & Energy Infrastructure ETF (MLPX) is a better option.

Pipelines aren’t the only way to invest in oil.

You can buy a producer such as ExxonMobil (XOM), Chevron (CVX), or ConocoPhillips (COP). Or, look for companies involved in the oil rig construction industry. I have options for those as well in the Yield Shark portfolio.

Next, start adding utilities exposure. Your local utility might pay a decent dividend. And the AI boom offers opportunities for utilities in the right location. You want a company that pays at least a 3.5% yield, and higher yields are pretty easy to find.

I’ve revealed a lot of my favorite tickers in Dividend Digest over the past three years. This includes companies that fit into every slice of the pie. The best way to see all my current recommendations is to join Yield Shark when you’re ready. Until then, work on those first few slices of the pie chart to get your portfolio rolling.

For more income, now and in the future,

Kelly Green