Dividend investing attracts many people due to its passive cash flow, including a Redditor from the UK. The individual is new to dividend investing and recently posted in the Dividends Reddit community, seeking some guidance.

"I'd like your opinion on what I could do better," the Redditor said before showing everyone their portfolio. Most of the Redditor's holdings are UK-based companies since the individual doesn't want to pay withholdings taxes for the U.S. companies.

The portfolio yields 7.53% and brings in £11.33 ($14.93) per month.

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The Portfolio

The Redditor has 17 holdings. Most of the stocks yield above 5%, and some of them yield more than 10%. The well-diversified portfolio minimizes the Redditor's risk. While one commenter said that the portfolio seems decent, another expressed doubt about one of the holdings.

The individual currently holds 81.71 shares of Oxford Lane Capital Corp. (NASDAQ:OXLC). At the time of the post, it had a 19.72% yield. The cautious commenter warned that the yield might be good for a few months and wasn't a long-term play.

The Redditor responded to the comment by saying that the stock's net asset value will likely decrease and that it won't be a long-term fixture in the portfolio. Shares have been down by 3% over the past year, which is a good performance considering the yield.

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Shares were down by more than 10% year-to-date until the company announced a buyback in the middle of March. Then, the stock recovered most of its losses.

An ETF Can Add More Diversification

The Redditor has a bunch of individual dividend stocks and may benefit greatly from a dividend ETF. It may be worth diversifying into ETFs like the Schwab US Dividend Equity ETF (NYSE:SCHD), which offers some diversification outside of the UK. SCHD comes up frequently in the Dividends Reddit community.

ETFs make it much easier to diversify your portfolio, and you can find funds that align with your risk tolerance and long-term financial goals. Investing in ETFs makes it easier to invest in individual stocks, knowing that you already have a basket of holdings in the ETF.

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Don't Chase Yields

While high yields may look enticing now, the stocks that offer those yields may underperform the stock market in the long run. Some high-yield stocks offer more stability during market uncertainty, but it's important to avoid chasing high yields without considering the fundamentals.

The Redditor admitted to having OXLC as a short-term play, but dividend investing is a long-term game. Sticking with OXLC just for the yield isn't the best approach, but the Redditor may see some value in the company that goes beyond its yield.

Investors should aim to achieve the maximum return that aligns with their risk tolerance. Some stocks with lower yields may produce higher long-term returns. A stock isn't a buy just because of a high yield, and you shouldn't avoid a particular dividend stock just because it has a low yield.

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This article UK Investor Asks Reddit to Rate Their Dividend Portfolio That Yields 7.53%: 'I'd Like Your Opinion On What I Could Do Better' originally appeared on Benzinga.com

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