It has been some time since I audited and updated this account. This post is going to chronicle both reviewing my holdings and then how I am going to deploy capital for the near future.
As a reminder (to my future self, since no one reads this site), this account is easily my favorite asset despite being one of my smallest – although I am hoping to change that in the very near term. It combines both my naked puts and those equities and ETFs that I hope to turn into an active income stream one day in the future.
Auditing My Non-Brokerage Account
First, I want to make sure my current equity holdings did not cut their dividend. Next I want to make sure they are in line with some simple metrics namly, normal P/E and payout ratio. Next, I want to compare the equity to ETF ratio – this will help the above goal of creating a deployment schedule for the next year or so (until I do this again).
Dividend History Check
After checking my holdings, they all had multi-decade history of growing their dividends except CARR and OTIS. I remember thinking a year ago that they would grow their dividends, since they were both offshoots of UTX, which had a long history before the conglomerate was chopped up. They have continued to do so, increasing the dividend for the past 5 years. No removals based on dividend history.
Metric Review
Next up was taking a quick look at some metrics – P/Es, Dividend Yield and Payout Ratio. This process used to take a really, really long time, but with today’s AI tools it took about 5 mins total!
Only one that is really worrying me is ADM with a payout ratio of 91%! It has a 41 year history of dividend growth so it is my guess that the board would slow down spending before they cut the dividend. Either way it is something to keep an eye on!
ETF to Equity Ratio
Years ago I really just wanted to acquire equities and then I had a very real thought – I don’t do this full time, why do I think I am going to find that hidden gem? My ego says it is still possible which is why equities are still very much on the table, but I integrated the following ETFs and the following allocations:
- SCHD – 35%
- VIG – 35%
- VIGI – 10%
- SMDV – 20%
For really the first time in a really long time, I want to see how those holdings have grown both – compared to equities and within themselves.
My ETF to Stock Holdings is at less than .5:1 which is not at all where I want it to be, an my current holdigns within themselves are:
- SCHD – 35.1%
- VIG – 35.8%
- VIGI – 18.8%
- SMDV – 10.2%
Wild how close it worked out!
These 2 pieces of information will come in handy when I allocate free capital.
Moving Forward
There are really two categories of inflow of new capital, and I am going to treat them differently:
Regular weekly deposits
Nothing special here, just regular weekly deposits getting dropped into the account. This is going to be allocated directly, and only to ETFs. I am going to throw a new one into the mix – a boring bet on America. I know it doesn’t have the same dividend feel, but I am still only 44, and at least a decade and a half, before needing the income from this account, so I’ll bet on America!
The new allocation I am striving for will be:
- SCHD – 30%
- VIG – 30%
- VIGI – 15%
- SMDV – 10%
- ITOT – 15%
I am not going to sell any holdings so I’ll just monitor and purchase ITOT weekly until we get to the allocation I am looking for (it’ll take some time).
Naked Put Proceeds
I have a daily income goal, and I created a spreadsheet to allocate those proceeds. It isn’t a crazy daily goal since I am literally working during trading hours! But since I am taking crazy risks with the naked puts, I like to allocate the proceeds in a conservative manner. In the past that meant the individual equities I was holding, ETF purchases, pure cash or debt repayment – or more often than not, a combination thereof.
The ETFs are now covered by my weekly contributions, which leaves my other options of stocks, cash and debt. I am going to allocate the proceeds as follows:
- Stocks 50% – Only to be deployed upon reaching $1,000.00. This may change in the future, but that feels a good “lot.” I’ll work through my screening process when I get to my first lot purchase.
- Debt 25% – Right now the account has a little bit of margin debt, so I am just going to accumulate it there. After that small amount is paid off I will reallocate to a tier 2 debt (probably solar loan so I can clear up that monthly bill.
- Cash 25% – This is going to be a cash sweep right now (until the margin debt is paid off) but afterward, I will do some research on yield on a money market vs Schwab cash sweep, but I have a feeling this is going to take some time before this research needs to be done.
Very excited for 2026!
I am going to let the rest of the week play out and start all of this next week with fresh numbers!