Core and Satellite Strategy: Dividends

April 21, 2024

The core and satellite strategy was popularised by research conducted by The Vanguard Group.


The idea with this strategy is to have a portfolio that performs well with lower risk and lower eventual fees. The core positions are usually comprised of ETFs while the satellite positions are actively managed positions e.g. individual stocks, crypto or any other asset class.

In terms of dividend investing, this implies that the core positions are usually dividend-focused ETFs while the satellite positions are individual dividend paying companies. Three other factors are usually considered when setting up such a portfolio, these include:

1. Dividend Yield 
2. Dividend Growth
3. Time Horizon

Roughly speaking, if you have a shorter time horizon then you should probably focus more on the dividend yield than the growth of the dividend since income is more important.


An income-focused approach might include ETFs with a higher dividend yield like "Vanguard High Dividend Yield ETF" or covered call ETFs like "JPMorgan Equity Premium Income ETF" and, potentially, fan-favourite stocks like "Realty Income".

An growth-focused approach might include ETFs like "Schwab US Dividend Equity ETF" or "iShares Core Dividend Growth ETF" and, potentially, fan-favourite stocks like "Apple" or "Visa".

To get ideas about how to setup such a portfolio, I suggest you watch the following video:



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