{
  "id": 7019571,
  "title": "Portfolio Diversification Is the Simplest Way to Lower Risk. Here's How I Build Mine.",
  "url": "https://urgent.news/2026/09/12/portfolio-diversification-is-the-simplest-way-to-lower-risk-heres-how-7019571",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-12T23:35:00.000Z",
  "source": {
    "name": "Yahoo Finance",
    "slug": "yahoo-finance",
    "url": "https://finance.yahoo.com/markets/stocks/articles/portfolio-diversification-simplest-way-lower-233500459.html"
  },
  "original_language": "en",
  "account": "I prioritize buying companies with a history of increasing dividends and high yields that are above average. Finding clusters of such stocks in certain sectors is important for me. I aim to own around 34 investments in total. While the Fool suggests owning 50 stocks, that number is quite large and time-consuming. Owning 50 stocks from just one sector does not truly diversify a portfolio. A well-diversified portfolio should consist of a reasonable number of investments across various sectors and asset classes.\n\nI begin by evaluating my investment goals and capabilities. My goal is to achieve a balance between income and capital appreciation, and I am confident in my ability to select dividend stocks. However, I also understand that I cannot manage too many stocks simultaneously. Therefore, I work with various pooled investments to diversify my portfolio effectively. For example, I own two Baron mutual funds to gain exposure to growth stocks and smaller companies. I also own several closed-end funds, each focused on specific areas like healthcare stocks with an income overlay, convertible securities, and a broadly diversified dividend portfolio. Additionally, I own three exchange-traded funds that pick dividend stocks using different screening approaches.\n\nThis diversified foundation of pooled investments allows me to invest in individual stocks with more confidence, knowing I have a strong base to work from. I prefer to buy companies with a strong history of increasing dividends and high yields that are historically high. After careful research, I only purchase stocks that I believe are worth owning. My current portfolio includes a mix of real estate investment trusts, consumer staples companies, energy stocks, and utilities. These are areas where income opportunities are often found, so I try to allocate my investments accordingly while maintaining a broad sector spread.\n\nWhen I buy a stock, I allocate a specific dollar amount to establish a position size. Once I reach that full position size, I do not add more to it. While this approach may limit potential upside, it also helps limit potential downside risk. I aim to buy stocks with historically high yields, even if the underlying business might not be performing well at the moment. For example, PepsiCo, despite being a successful company with a long track record of dividend increases, is currently underperforming in my view. I believe the company will bounce back, so I see it as an opportunity to buy with a high yield. Warren Buffett's strategy of buying undervalued stocks with strong dividends aligns with my approach, so I am comfortable with this strategy. I also keep cash on hand as a safe-haven investment, as it provides flexibility in both good and bad markets, though it may not keep pace with inflation over time.",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 3,
    "also_reported_by": [
      {
        "outlet": "Motley Fool",
        "title": "Portfolio Diversification Is the Simplest Way to Lower Risk. Here's How I Build Mine.",
        "url": "https://urgent.news/2026/09/12/portfolio-diversification-is-the-simplest-way-to-lower-risk-heres-how",
        "published": "2026-09-12T23:15:00.000Z"
      },
      {
        "outlet": "Nasdaq Markets",
        "title": "Portfolio Diversification Is the Simplest Way to Lower Risk. Here's How I Build Mine.",
        "url": "https://urgent.news/2026/09/12/portfolio-diversification-is-the-simplest-way-to-lower-risk-heres-how-7025426",
        "published": "2026-09-12T23:35:00.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}