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I asked ChatGPT to pick me a portfolio of five UK dividend shares. And just to make things interesting, I’m going to compare that with a portfolio of five income stocks selected by me.
Starting today, I’ll track both, see what happens, and report back with the results in due course. I’m not putting my own money behind what ChatGPT says, but I’ll be keeping score.
The portfolios
Right then, let’s get to it. The rules are pretty straightforward – dividends are reinvested back into the shares of the companies they came from and the highest total return wins.
With that in hand, let’s get to the portfolios. Since ChatGPT gave me suggested weightings for each position, here are both portfolios with percentage allocations for each choice:
| ChatGPT | Stephen Wright |
|---|---|
| British American Tobacco (22%) | Admiral (22%) |
| M&G (22%) | Games Workshop (22%) |
| Shell (20%) | Croda International (20%) |
| Unilever (18%) | Diageo (18%) |
| OSB Group (18%) | AEW REIT (18%) |
In both cases, we’ve mostly stuck to the FTSE 100 for ideas, but each team has an outsider. ChatGPT’s gone for OSB Group (LSE:OSB) and I’ve selected AEW REIT (LSE:AEWU).
Having seen the teams, I’m feeling pretty good. But I didn’t expect to see OSB Group making the list, so let’s have a closer look at the wildcard on Team ChatGPT.
OSB Group
OSB’s a specialist mortgage and savings business. It works a lot like a bank – taking in deposits, making loans, and earning a profit on the difference between the interest rates.
It specialises in loans for Buy-to-Let investors, developers, and commercial properties. Its focus in this area can give it an edge over more general competitors in terms of assessing risks.
Its lending margins have been pretty strong, but they’ve been starting to come down recently. This is due to higher interest rates increasing funding costs, which is a risk worth noting.
At the moment though, there’s a dividend yield of around 6% on offer. But while I’m interested in taking a closer look, I don’t think I like it as much as anything I’ve chosen.
AEW REIT
The wildcard in my portfolio is AEW REIT – a real estate investment trust (REIT) that doesn’t play by the usual rules. And it could just be the ace up my portfolio’s sleeve.
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Conventional wisdom says REITs are supposed to focus on properties with long-term leases in high-demand industries. That’s the usual way to try and achieve consistent rental income.
AEW focuses on unpopular sectors where demand’s weaker, but supply’s also low. And it looks for leases that are closer to expiry as potential opportunities for rent increases.
It’s a high-risk strategy with a much higher chance of vacant buildings. But the company’s executed incredibly well on its strategy and I think income investors should take a look.
Smart money
This particular competition is just for fun. I’m not willing to put my own money behind a portfolio generated by ChatGPT, especially when it contains a name I don’t know very well.
I am however, interested to see how the two portfolios get on. I’ll set up a simulation using my broker’s online platform – watch this space for future updates.
