Building a Defensive Portfolio with US ETFs and Monthly Dividends

 Building a Defensive Portfolio with US ETFs and Monthly Dividends

Creating a defensive portfolio with US ETFs, including monthly dividend stocks, is an effective strategy to pursue stable returns and consistent cash flow simultaneously. Here are some ways to combine defensive and monthly dividend ETFs for your portfolio:

1. Defensive ETFs

  • Consumer Staples Select Sector SPDR Fund (XLP):
    • Invests in consumer staples companies like food and household goods, which are relatively less sensitive to economic fluctuations.
    • Includes stable companies like P&G, Coca-Cola, and Walmart.
  • Health Care Select Sector SPDR Fund (XLV):
    • Invests in healthcare companies like pharmaceuticals and medical devices, expecting consistent demand.
    • Includes Johnson & Johnson, Pfizer, and UnitedHealth Group.
  • Utilities Select Sector SPDR Fund (XLU):
    • Invests in utility companies like electricity and gas, pursuing stable returns.
    • Includes NextEra Energy, Southern Company, and Duke Energy.

2. Monthly Dividend ETFs

  • Realty Income Corporation (O):
    • Invests in commercial real estate REITs, providing stable monthly dividends.
    • Known for high dividend yields and consistent dividend growth.
  • AGNC Investment Corp. (AGNC):
    • Invests in residential mortgage-backed securities, offering high dividends.
    • May be sensitive to interest rate fluctuations, so caution is advised.
  • Global X SuperDividend ETF (DIV):
    • Invests in high divident stock, and gives monthly dividends.
    • Since it is invested in high dividend stock, price volatility can be high.

3. Example Portfolio Composition

  • Consumer Staples ETF (XLP): 30%
  • Health Care ETF (XLV): 30%
  • Utilities ETF (XLU): 20%
  • Realty Income (O): 10%
  • Global X SuperDividend ETF (DIV): 10%

4. Important Considerations

  • Investment ratios can be adjusted based on individual investment preferences and goals.
  • Past ETF performance does not guarantee future returns, so invest with caution.
  • Monthly dividend ETFs offer high dividends but may have high price volatility, so consider diversification.
  • When checking ETF information, make sure to check each ETF's prospectus.

5. Additional Tips

  • Diversification: Diversify across various defensive and monthly dividend ETFs to reduce risk.
  • Long-Term Investment: A defensive portfolio should be viewed as a long-term investment, not swayed by short-term market fluctuations.
  • Regular Rebalancing: Periodically review and rebalance the portfolio to maintain target ratios.

Disclaimer: This information is for general knowledge and informational purposes only, and does not constitute investment 1 advice. It is essential to conduct thorough research and consult with a qualified financial advisor before making any investment decisions. 2 

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