Why My 3 Worst Picks Beat The S&P 500 In Retirement
Why My 3 Worst Picks Beat The S&P 500 In Retirement
Investors who track “total returns” on the internet often argue that this metric alone determines an investment’s merit. Those charts typically assume that every dividend is reinvested and that the investor never withdraws cash—a scenario that works for active traders but not for retirees who must draw income from their portfolios.
Total Return Assumptions
Rida Morwa, an Investing Group Leader, points out that the 100 percent reinvestment and zero‑withdrawal premise gives a false sense of security to those living off savings. Retirees, by definition, need to pull money out regularly, and that need changes the performance picture dramatically.
The D‑list Stress Test
Morwa conducted a “D‑List” Stress Test on three individual holdings that have each lagged the broader market. All three stocks have endured multiple dividend cuts or outright suspensions, and two of the three suffered a share‑price decline of roughly 50 percent. Despite those setbacks, when the analysis incorporates regular withdrawals, the underperforming trio actually outshone a benchmark portfolio that was forced to liquidate positions during market lows. The result underscores the value of anchoring retirement plans with reliable cash flow rather than relying on capital appreciation alone.
Cash Flow over Capital Gains
The author warns against the “sell the furniture to pay the rent” mindset, urging retirees to build a cash‑flow base that prevents the need to dump shares when prices are depressed. By focusing on dividend income—even from stocks that have been labeled “bad” picks—investors can avoid the painful timing risk that comes with forced sales at market bottoms.
Analyst Position Disclosure
In the accompanying analyst disclosure, Morwa confirms a beneficial long position in the shares of Annaly Capital Management (NLY), EPR Properties (EPR), Mid‑Pacific Trust (MPT) and Realty Income (O) through direct ownership, options or other derivatives. He states that he authored the piece himself, receives no compensation beyond the platform’s standard fees, and holds no other business relationship with any of the companies discussed. The article also notes that Beyond Saving, Philip Mause and Hidden Opportunities are supporting contributors for the High Dividend Opportunities service, and that any recommendation is subject to ongoing monitoring and may be revised with exclusive buy or sell alerts for members.
Seeking Alpha Disclaimer
The piece carries the standard Seeking Alpha disclaimer: past performance does not guarantee future results, no specific investment advice is being offered, and the views expressed may not reflect those of Seeking Alpha as a whole. The platform clarifies that it is not a licensed securities dealer, broker, investment adviser or investment bank, and that its analysts are third‑party contributors who may not hold professional certifications.
By reframing the analysis around withdrawal‑adjusted returns and cash‑flow stability, Morwa demonstrates that even the three “worst” picks can deliver superior outcomes for retirees compared with a naïve total‑return approach that ignores the realities of income‑focused investing.
Source: seekingalpha.com · 2026-08-30