The author says they are shifting toward a more defensive portfolio due to warning signs, including the CAPE ratio at its second-highest level in history, soaring margin debt, persistent inflation, and the Fed's recent first rate hike in three years. They sold several lower-conviction holdings and invested over $4,600 in Abbott (ABT), Procter & Gamble (PG) and Paychex (PAYX). Citing Ned Davis Research and Hartford Funds data, dividend growers averaged a 10.2% annual total return over the past 50 years versus 4.2% for non-payers, with a lower average beta (0.89 vs. 1.18). The picks rest on durable cash flows and rising dividends: Abbott has raised its dividend for 54 consecutive years and yields 2.4%, P&G has 70 straight years of increases and a yield of nearly 2.8%, and Paychex yields 4.3% after a 10% hike.
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