Portfolio construction for income investors involves more than just picking high-yielding stocks. It requires a disciplined approach to diversification, risk management, and cash flow planning.
The DivAgent Pyramid
A sustainable income portfolio is often built like a pyramid: 1. The Base (Tiers 1 & 2): Cash equivalents and stable dividend growers (50-60% of portfolio). 2. The Core (Tier 3): REITs and BDCs for reliable high yield (20-30% of portfolio). 3. The Booster (Tiers 4 & 5): Options-based income and synthetic ETFs for extra yield (5-15% max).
Rebalancing Routine
Effective construction includes periodic rebalancing to ensure your risk tiers haven't shifted due to price changes. Selling high-performing but high-risk assets to buy steady growers helps maintain your long-term target risk profile.
DivAgent Educational Standards
This definition is part of the DivAgent Income Academy curriculum. Our glossary is designed to bridge the gap between institutional jargon and retail investor understanding. Each term is reviewed by our Research Team for accuracy, specifically in the context of:
- Tax implications (Ordinary vs. Qualified)
- Impact on Total Return calculations
- Relevance to Option-Income strategies
- Risk assessment in a retirement portfolio
*While we strive for precision, financial terminology can evolve. Always verify definitions with official regulatory sources (SEC, IRS) when making tax or legal decisions.