Strategy shift from techgrowth to monopoly dividends Flawed thinking or sensible plan for the withdrawal phase

Hello everyone,

I'm currently thinking a lot about my long-term strategy and would like to hear your opinion on whether I'm making a mistake or whether the plan is sound.

1. my current situation

I am currently invested very "classically" to tech-heavy.

- ETFs:

- Scalable MSCI AC World $SCWX (+0.11%) 6.300 € (currently 200 € savings rate)

- Xtrackers MSCI World IT $XDWT (-0.03%) 8.000 € (currently 400 € savings rate)

- Individual shares:

- Allianz $ALV (-0.17%) : 2.900 €

- Nvidia $NVDA (-0.39%) : 3.900 €

- TSMC $2330 : 1.700 €

I realize that the IT ETF plus Nvidia/TSMC gives me an extreme tech lump risk.

2. my consideration / the "why"

I am considering changing my strategy from "accumulation/growth" to "distribution/dividend growth".

My main thought concerns the later withdrawal phase (in about 25 years):

If I save purely accumulating, I will have to sell units when I get older to get money. If there is then a bear market, I will eat up my assets much more quickly (sequence of return risk).

With a dividend strategy - according to my theory - I don't touch the substance, but live off the cash flow. I also think it is psychologically easier to stay invested in crises if dividends are still regularly paid into the account....and of course dividends are reinvested during the savings phase.

3. the new strategy: "wide moat" / monopolies

I want to invest specifically in companies that have a de facto monopoly or oligopoly. The idea is that where there is (and can be) no competition, pricing power is high and dividends are (more) secure.

I am thinking of sectors that are "inescapable":

- Railroads: Canadian National Railway ($CNR (+1.34%)). No one is building new railroad tracks across North America. It is physically and legally almost impossible to build a competing railroad across Canada and the United States.

- Waste: Waste Management ($WM (+1.26%) ) - Getting landfills approved is nearly impossible.

- Infrastructure/Gases: Air Liquide - not only US? Air Liquide often build gas plants (oxygen, nitrogen, hydrogen) directly on the premises of their customers (steelworks, chemical parks). A change of supplier is extremely expensive for the customer and logistically a nightmare ($AI (-0.74%) ) or American Tower ($AMT (+1.17%) ) They own the physical framework of the communication towers. When 5G or 6G is rolled out, AT&T or Verizon will need space on these towers. The leases are long-term and inflation-linked.

- Financial infrastructure: Visa/Mastercard ($V (+0.35%) / $MA) (-0.44%). Very low dividend but a monopoly/duopoly?

4. the plan

My savings rate should initially be 600 € later also 700€, ...800€).

I am considering stopping the old savings plans (AC World & IT) and dividing the new money as follows:

- Core: A quality dividend ETF (e.g. Fidelity Global Quality Income ($FGEQ (+0.28%) ) for the base.

- Satellite: 2-3 of the above "monopoly stocks" direct savings.

My questions to you:

1. Errors in thinking when taking the sample?

Is the assumption that I will be better off with a dividend portfolio in a crash than by selling ETF shares valid? Or is it "left pocket, right pocket"?

2. Dealing with legacy assets:

What do I do with the big tech block (IT ETF + Nvidia)? Leave it as a "growth booster" or reallocate to immediately reduce the cluster risk (pay attention to taxes)?

3. Stock selection:

Do stocks like Canadian National Railway or Waste Management fit my logic? Are there other "monopolists" that I am overlooking?

4. Is the savings rate sufficient?

Does it make sense to divide €600 into ETF + individual shares, or will I get bogged down by the fees/units?

Are there any general suggestions for improvement?

PS: The tax-free amount is €2000 as I am married.

I look forward to your input and critical opinions!

Thank you.

Tobi60@Tobi60

And you really believe that you will hold on to these 3 shares and the ETF for 25 years? 🤣 yes never

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buumms@buumms

@Tobi60 well I can really do something with that comment 👍 thank you very much

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Krush82@Krush82

If I wanted to invest for 25 years, I wouldn't want to miss out on returns right from the start. It's good that you're basically thinking about what a withdrawal phase could look like for you, but I would implement it in the last 5-10 years

@Krush82 But is that "smart" from a tax point of view? Are you aiming to continue saving with accumulation? My problem with the idea is simply what if we have a bear market with -40% when I want / need to access the money? 🙈

@buumms I don't care about "tax" smart - because I work with target returns of >30% / year and not with 10% / year the market return - if at some point the bear market should come and I just have -40% "paper losses" then that's just the way it is, but before that I have generated factor X significant 3-4 digit returns

Chris_legt_an@Chris_legt_an

So I have the feeling there's more than just a mistake in my thinking.
1. you can also hold growth stocks and switch to dividend stocks in 25 years' time
2. there are "such and such dividends", companies that really pay out a lot of dividends often have to cut their dividends in tough economic times, the most recent example here in Germany being $BAS or $BAYN. There are often companies where it says "increasing for ... years", but they usually still pay "only" 0.5-1.4% dividends, and the increases are not noticeable but only to continue the streak. And even these companies are not immune to canceling dividends from time to time.
3. your explicitly mentioned stocks are all solid stocks, but a lot can happen in 25 years. And regarding your example $AI, which I have in my own portfolio, I can immediately think of 2 other global players that actually work in the same segment, even though I have also opted for $AI for the implementation, I would not regard this as a moat.

Chris@IronEagle

I don't think the idea of shifting into distributing ETFs or dividend stocks is wrong in principle, even if you still have a very long time until the payout phase and are therefore certainly in no hurry. At some point, however, it certainly makes sense to make the switch, as otherwise you could actually be forced to sell at poor prices during the payout phase, while the distributions should also be made during these phases. Due to the advance lump sum, the compound interest effect with accumulating ETFs is no longer quite as great as it used to be, but it is still there. However, I wouldn't put everything into dividend stocks just yet, as you have certainly achieved good results with growth stocks. I would let that continue and not fragment the portfolio too much. And nobody knows whether the stocks you have suggested will dominate their respective markets in the long term and develop positively.

Christoph@ChrisBizz

👍🏻

Strategy shift from tech-growth to "monopoly" dividends: Flawed thinking or sensible plan for the withdrawal phase?