My Approach to Stock Investing for Steady Passive Income
I’m a dividend income investor—personally and professionally. It’s a simple philosophy: what I buy for my clients, I buy for myself. My approach to is built entirely around this principle. Now, I’ll admit I have a rogue position in Facebook that I picked up back in 2012 and maybe a few shares of Twitter from 2015 after hearing a compelling case from Bill Miller. But that’s where my dalliance with growth stocks ends.
In my personal accounts, you’ll only find publicly traded stocks, specifically high-dividend payers. That’s not what most people expect from a 44-year-old. There are no funds, no alternatives, and no bonds—just stocks. I don’t even own a stake in my brother’s incredibly successful ice cream company because I refuse to let money complicate our relationship. Instead, my portfolio is filled with like MLPs for their consistent income and tax benefits. I also love the straightforward model of real estate investment trusts (REITs) that collect rent and pass it along to shareholders. This strategy is about knowing that every quarter, cash is coming my way, and my returns aren't solely at the mercy of other investors' fickle opinions on a company's valuation.
A Lesson from a 92-Year-Old Client
One of the most important lessons I ever learned didn’t come from business school; it came from a wonderful client named Betty. When I was in my early 30s, fresh out of Columbia, I took over her all-stock portfolio. She was 92, and I prudently suggested she add bonds for stability.
She looked at me and essentially said, “I’ve owned stocks since my father bought them for me as a kid. My husband and I bought them, and I’ve bought them for myself since he passed. They have always provided all the income I need. Bonds don’t grow, and neither does their income. Why would I ever own anything else?”
Her logic was undeniable. Because of my own long-term horizon and my focus on income, I’ve been a firm believer in the “Betty school of asset allocation” ever since.
Finding a Passion by Accident
I became a champion of dividends almost by accident. Back in 2001, a client called and said he was getting ready to retire at 55. He needed income but also wanted growth for the long years ahead. The only way to achieve those two goals was to reposition his portfolio into dividend-paying stocks with a target yield of 5% or more, plus the potential for capital appreciation. That experience was the start of my deep dive into dividend income investing, which I now see as one of the best ways to .
What I came to realize is that dividends are the purest form of shareholder return. A company brings in cash, and a good leadership team returns a portion of it directly to investors. It’s simple to understand, though finding the right companies isn’t always easy. My background at Neuberger Berman and studies at Columbia gave me a strong value-investing mindset, which pairs perfectly with this approach. It just makes sense that the best long-term investments are companies trading at a discount, offering both an opportunity and a margin of safety.
More Than Just Boring Stocks
When most people think of income investing, they probably picture retirees collecting checks from "boring" companies like AT&T, IBM, or Verizon. And they aren’t totally wrong. Many of my holdings are mature businesses with long track records of generating cash through all kinds of economic cycles. It’s not exactly thrilling cocktail party conversation.
Yet, this niche is far more dynamic than it seems. Some of my best have been in companies you wouldn’t consider traditional dividend stocks. Take Western Digital, a data storage maker. Its product pricing is highly cyclical, and the stock price follows suit. But by looking at a three-to-five-year horizon, it was clear its cash flows could easily support the dividend it started paying in 2012. We bought shares for around $40 in early 2017 and sold them a year later for $102.
Another favorite was Douglas Dynamics, a snowplow blade manufacturer with fantastic management. We discovered that while its yearly sales were inconsistent, they were remarkably steady over eight-year cycles. The leadership team managed the company and its dividend policy around that cycle. We invested in 2011 during the U.S. debt downgrade and held the shares for seven years, collecting consistent income while the market slowly recognized the company's strength. Learning like this is a lesson that any guide on should include.
Investing for Peace of Mind
My strategy is also deeply personal. I grew up in a financially volatile household and saw firsthand the downside of banking on big, uncertain wins to fund a lifestyle. The current income from provides me with genuine emotional comfort. Knowing that income will continue to flow into my accounts through thick and thin—from the 2008 financial crisis to the COVID-19 pandemic—gives me conviction and confidence. In tough times, cash is king.
This philosophy extends beyond the market. I also invest heavily in myself and my business. When I was getting my firm, Gilman Hill, off the ground as a , I kept the same babysitter I’d had since my daughter was born in 2007. I had to subsidize the cost from my retirement account, but I knew that reliable childcare was the only way I could fully focus on my career. That investment paid off. At Gilman Hill, we invest in top-tier systems, a functional office, and a meticulously selected team. I believe you get what you pay for, and I’m happy to pay generously to work with the best people. It allows my business to thrive and lets me do my job with the confidence of knowing I have an incredible team by my side. For me, eventually became a full-time passion and career.
