2025: A (stock market) review

 

1. General Reflections

It's been 17 days since we all started in this new year and I was watching fireworks at the beach: time for the review of 2025. To do that, I had a look at what I wrote last year and came across this sentence: "Watching the news is an exercise in doom and gloom - and yet what did the stock market do? Just like last year, almost every single major index soared to new heights and climbed double digits."

The same could be said for 2025. Almost every major index rose in double digits in spite of the increasingly tense geopolitical situation: the tension between Iran and USA resulted in a military attack of their nuclear facilities; the tension between Venezuela and USA rose throughout the year and resulted in the ousting of Maduro in this year; peace in Gaza is still far off; the war between Russia and Ukraine is going into its fourth year with the same unyielding cruelty (a war, which I as a European feel particularly strong about & don't forget Donald Trump's awful dressing down of Zelensky in the White House); the relationship between the US and Europe gets increasingly frosty as Trump and Vance have the gall to tell Europeans on how they mismanage their democracy; tariffs were introduced to cause some sort of "global trade war"; etc.

One common denominator of this chaos is the USA, or most specifically, Donald Trump. Teaching the USA regularly as a topic to my students, I came across this stunning quote by former president Reagan, who said the following: "But to be freedom's protector, to be a force for good, we must, above all, be strong. ... America remains mankind's best hope." At the time of this writing, I find it hard to agree with it. I rather hope the picture of America that Warren Buffet drew in his last shareholder letter this year utlimately prevails: "So thank you, Uncle Sam. Someday your nieces and nephews at Berkshire hope to send you even larger payments than we did in 2024. Spend it wisely. Take care of the many who, for no fault of their own, get the short straws in life. They deserve better. And never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part."  

 

2. My performance 

Still, markets climbed to new heights, mostly driven by the big tech companies and the hopes of the AI revolution. Since my portfolio is not really exposed to it and rather focused on income, it should come as no surprise that my performance was significantly worse. My performance for 2025 was 5.99%. This pales of course in comparison to almost every major index, but it is somewhat acceptable. Still, there are consequences I took from this, which I will later outline.

When it comes to dividends, I received 7.659,11€ in total. This is an increase of 26% compared to 2024, which I'm very happy about. This money is already good enough to not work (in theory) for 2 months every year. Financial Freedom is often thought about in absolute terms, and it of course the goal of most investors, but in order to celebrate the small steps, I think it helps to consider freedom also in smaller steps. On a monthly average, I get 638,26€ in dividends, which is enough to pay already some major bills in perpetuity even if I stopped investing right now (e.g. insurance, phone, electricity, etc.). As a dividend investor, you know the math and that this is technically supposed to work at some point in the future. But still, I can't help recalling a quote from Leonard Cohen: "It’s much like the life of a Catholic nun. You’re married to a mystery." As of now, in this "boring (and very long) middle part, one feels like one is truly married to a mystery.

My best month in 2025 was December (836,39€), my worst (as ever) February (390,96€). I crossed the dividend overshoot day in October and also crossed the barrier of 20k in dividends received this year. Not too shabby. My biggest dividend payers were 1) Ares Capital 2) the iShares STOXX Global Select Dividend 100 ETF and 3) Agree Realty.

Biggest winners Let's have a look at the biggest winners & losers (when it comes to performance) of 2025. The biggest winners in my portfolio for 2025 were... 1) Incomeshares Silver Yield ETP + 36% 2) Iberdrola + 36% 3) British American Tobaco +34% 4) Allianz + 30%

I have to admit that I got a little lucky with the Silver ETP+. I bought a rather sizable position literally just before the silver rally started (around October) and at the time of this writing I am a staggering 68% in plus, which is why this fund is now the biggest position in my portfolio. As for the other stocks, I'm very pleased to hold them though I of course would like to have more of them. 

Biggest losers

While it's nice to bask in the sun of successful picks, one shouldn't shy away from the darker parts of the portfolio. The biggest losers in my portfolio for 2025 were ...

1) Alexandria Real Estate - 54% 

2) Arbor Realty Trust - 48% 

3) FS KKR - 40%

4) Goldman Sachs BDC - 33

Full disclosure: I have sold out of all of these positions by now as I restructured my portfolio. These were all high to very high yields, which disappointed. I might have sold at the bottom as these stocks suffered massively last year, but I had wanted to restructure my portfolio for some time, so the new year was as good a moment as any.

 

3. New structure

My portfolio for some time had become rather messy, unwieldy and rather chaotic. I had at its peak more than 120 positions and was still starting new positions for even 50 or €100, which in the grand scheme makes absolutely no sense: there were €50 positions in 3x Leveraged Nasdaq ETF, a €100 position in an India ETF, an €80 position in a crypto ETP, etc. All this was pure FOMO and the desire to be part of everything. But in reality, it created just mental noise, which I wanted to get out of. So this year I decided to restructure my portfolio into 4 different parts. Why 4? Because there are different styles of investing which I am drawn to that I want to cover with this system.

a) My anti-FOMO vehicle & market return generator

I do invest monthly in a simple, boring, accumulating All-World ETF for a couple of reasons. 

Firstly, it is my anti-FOMO vehicle. Whenever I hear a new stock being cast around the investing world, I typically had the urge to invest in it. But my money, alas, is limited, which meant that it often resulted in these laughable €50 investments, which are ultimately meaningless clutter. So my new mental exercise now is that whenever I see an interesting stock pop up, I know that I am (however small and indirectly) already invested in it because of this vehicle.

The second reason why I invest in this vanilla ETF is that I am rather low on tech (as you will later see) due to their low yields. By investing in it, I participate partly in AI run and the big tech companies.

And the last reason why I invest in it is to simply get my share of the market return. There are years when I have outperformed major indexes, and there are years (like this year) when I underperformed. To get the market return, I stick to a simple and boring monthly investment in this ETF.

 

b) The allure of the individual company & dividend growth

There are companies that I really do find very interesting and which I would like to be a part of with a more substantial sum. I also like the fact that you do have companies with a very long track record of increasing dividends, which over time give you a very nice yield on cost and an increased income. Unfortunately, European dividend ETFs can't replicate that. I bought Munich RE, for example, at a rather fortunate price before it surged, which now means that I almost have a 10% yield on cost and I expect the dividend hikes to be coming. So, I have as the second pillar of my portfolio a basket of stocks, which should give me low-to-moderate dividend hikes most years. The exceptions to this are the two mining stocks BHP and Rio Tinto, which due to their cyclical nature can't (or won't?) provide that. The list of the stocks is as follows: 

Healthcare: (3) 

• Johnson & Johnson
• AbbVie 
• Merck 

Consumer Staples: (6) 

• Philip Morris 
• Unilever  
• British American Tobacco
• Coca-Cola 
• Altria 
• PepsiCo 

Consumer Discretionary: (2) 

• McDonalds 
• Starbucks 

Financials: (6) 

• Munich RE 
• Allianz 
• Hannover RE 
• JPMorgan 
• ASR 
• Legal & General 

Energy: (5) 

• ExxonMobil 
• Total Energies 
• Shell 
• Enbridge 
• Kinder Morgan 

Telecommunication: (2) 

• Deutsche Telekom 
• Verizon 

Utilities: (3) 

• Iberdrola 
• Southern Company 
• Brookfield Infrastructure 

Industrials: (4) 

• Siemens 
• Lockhead Martin 
• Itochu 
• Automatic Data Processing 

Information Technology: (1) 

• Texas Instruments 

Materials: (2) 

• BHP 
• Rio Tinto 

As you can see, it is rather old economy, low on technology and with a tendency towards value. I tried to get a geographically diversified mix of stocks. As of now, it consists of 34 stocks and I have put a limit of 35. For a while, I was racking my brains what the last stock should be, but I have just decided to go with the flow and whenever I feel like adding that last stock, then that will be it. Should a dividend be cut by those stocks, I would like to have the discipline to potentially replace it. Let's see if I can stick to that plan.

 

c) KISS: The simplicity of ETF-Investing 

If there were ETFs like SCHD in Europe, I might just be a simple index investor. I enjoy the simplicity of it, the peace of mind, the lack of noise, etc. So, the third pillar is a mix of 10 ETFs, which give me (beside their simplicity) 

a) a wide mix of dividend stocks from around the world (including emerging markets)

b) covered call income, which I am too lazy/incompetent to do myself manually

c) access to precious metals with an income element and

d) income from bonds to cover another asset class

The list is as follows:

Dividend-ETFs:  

• iShares Global Select 100 Dividend  
• VanEck MorningStar Develeoped Markets Dividend Leaders 
• WisdomTree Emerging Markets Equity Income 

Covered Call / Future ETFs:  

• Euro Stoxx 50 Covered Call  
• JPMorgan Nasdaq Equity Premium Income 
• iShares World Equity High Income 

Gold + Silver:  

• IncomeShares Gold Yield ETP+ 
• IncomeShares Silver Yield ETP+ 

Bonds:  

• Vanguard Emerging Markets Government Bonds 
• iShares Fallen Angels High Yield 

 

d) Chasing Yield 

When you look at the losers from last year, you undeniably see that there is a yield chaser in me. Why is that? Call it pure impatience as I outlined in a previous post in February:

"These stocks (and sectors) are perhaps more likely to suffer dividend cuts than, say, a portfolio of blue-chip stocks like PepsiCo, Walmart, P&G, etc. Then why do I invest in those sectors? Well, I invest in them because I'm interested in income and I want to speed up the process by also having a higher income part in my portfolio. Though I do own some of those blue-chip stocks (either directly or indirectly via ETFs), I am eager to speed up the process by dipping into more high yield stocks and am willing to take on that additional risk. This time, it bit me in the ass."

The 4th pillar, then, is my high-yield portion of the portfolio. In this part, I invest in REITs, BDCs, and UK investment trusts. These investment vehicles give me access to high yields and different asset classes (e.g. private debt, private equity, real estate, infrastructure, etc.). This pillar consists of 20 positions and is structured as follows:

REITS (9): 

• Realty Income 
• Agree Realty 
• WP Carey 
• Omega Healthcare 
• Vici Properties 
• Simons Property Group 
• NNN 
• Iron Mountain 
• Sabra Healthcare 

BDCs (6):  

• Main Street 
• Ares Capital 
• Blackstone Secured Lending 
• Golub Capital  
• Blue Owl Capital 
• Sixth Street Specialty Lending 

 Investment Trusts (5):  

• City of London Investment Trust 
• Foresight Solar Fund 
• International Public Partnership 
• GCP Capital 
• Greencoat UK Wind 

When it comes to REITs and BDCs, I have generally preferred to stay close to the biggest and most consistent names and not to get too exotic. Dividend cuts may occur in this segment and are (up to a certain level) accepted, but the rules are a bit more fluid here. 

The perceptive reader might have noticed that my portfolio, which at its messy peak consisted of north of 120 positions, has now become somewhat "lean" and consists of an almost devilish 65 positions with one position still left open. This I find to be more manageable and all my ETFs are basically on autopilot, meaning they consume no mental energy. Some of these positions are still rather small, so there is now need (memo to myself!) to start new positions when there are still positions to grow. I haven't calculated its actual yield (which is also hard due to the irregularity of ETFs and covered call income, but I would expect it be just around 5 to 6%).

As of now, I find it sufficiently diversified across sectors, currencies, asset classes and geography. I know that there is no crypto, but I have yet to find an European income-generating vehicle that covers this asset class. This is my base for 2026 and beyond and I hope very little changes are necessary.

 

4. Personal highlights 

Personally, this year was marked first of all by my move from Germany to Ecuador. While I had been a few times before to get to know and visit the family of better half, going there to live there for a certain amount of time (at least 2 years) is something different altogether. I think that I have for the most part successfully adapted to life here, which was of course a lot easier since I already spoke Spanish before. But it is a powerful reminder of how hard it is to leave one's home country behind and adapt in a different country, even more so if you don't know the language or anyone there.

Apart from that, this year was unfortunately also somewhat marked by some health concerns (for lack of a better word). I had my first surgery ever this year because of the difficulty of finding a date for that surgery, there were less trips abroad than normally. Besides, there were some rather nagging and annoying injuries which somewhat hampered my physical activities, which I was very frustrated by. As I get older, I will have to start taking a little more care of myself to prevent these.

Still, there were lots of highlights last year. I had almost completely forgotten that I had a short, but surprisingly pleasant trip to Albania in April, which was just lovely. 

Clear waters in Ksamil, Albania

I also had lots of good runs this year (despite the injuries) and I'm looking forward to the next trail runs I'll be doing here in Ecuador.

My prized possession after the run (31KM)

 

My shoes after the trail run

 

My medal after 21KM

 

I also went to the jungle for the first time and it was absolutely stunning. The way the jungle comes alife at dusk and the sounds you hear while you fall asleep are freaking mesmerizing. I can't wait to go back there. Swimming in that lagoon below while seeing the sun go down was literally one of the best moments of this year (even though I was terrified of the caymans & snakes which I also saw later that night in the water).

 

I also had to say goodbye to my beloved Hamburg and, more importantly, to family, friends, colleagues and students. I am not very good at goodbyes and get somewhat teary-eyed every time, which made this doubly difficult. That's why I am also very much looking forward to seeing them again this summer when I come back to visit them in my summer break.

Enjoying early spring in Hamburg

It was a busy year and I have no doubt that, regardless of my desire to slow down, this again will be a busy one. If that is the case, then I would at least like to have (just like this year) lovely memories to look back on. I remember a slogan from a few years ago when Jenson Button retired from F1, which I think is very fitting for life in general: "We arrive with dreams and leave with memories."

This is what I always strive for - next year included.

And there is already one thing that I'm sure of. Some time ago, I wrote the following: "Next time I'm there, the Galápagos Islands will be waiting for me - no more postponing." And yes, I already know that I'll be there in May. For this and many other things that I don't even know of now I can't wait! All the best for 2026 to everyone!