Introduction
Someone who is not familiar with investing and who decides to begin investing on their own may find this overwhelming. There is a whole new vocabulary to learn, metrics to understand, stocks to evaluate and much more. There are also groups and newsletters around every corner that bombard new investors with programs, advice, suggestions and promises for success.
I personally felt overwhelmed with the learning curve and all the information thrown at me. However, I have come to embrace dividend growth investing as a preferred strategy to obtain my goal of financial independence. I began to follow Seeking Alpha just over two months ago now. This site and many of its authors have provided me great guidance and furthered my understanding of dividend investing. However, as I was attempting to evaluate and build my portfolio I wanted to know which of all the stocks I had selected were also found in other people's portfolios. As I began to read more and more frequently the articles found on SA, I began to notice a pattern of certain stocks that would be mentioned in articles as well as several authors that publicly presented their portfolios. In my profession as an analyst, I began to think about a meta-analysis which is a statistical method that combines the results of other studies that are published on the same subject in order to gain more information regarding that subject. This is the premise for my first article on SA. The purpose of this article is to find common stocks that are found within other dividend growth investors' portfolios that may serve as the starting point in which a new investor can research stocks to be included in a portfolio to gain a better understanding why they have been selected.
Methodology
This article will not nearly employ the same scientific research methods that would be used for a meta-analysis however it will adopt the same concept by presenting and comparing several other articles that I have come across during my brief time as a follower on SA from published portfolios on SA. I also reviewed many of the comments in each of the articles to get a sense that others have many of the stocks to reinforce the reliability of these portfolios. There is also one article that is not a portfolio, however, from reading the article one could get a sense that the stocks included could easily be considered a portfolio. On a personal note, any stocks that violated my ethical beliefs (i.e. cigarette companies) where removed. Table 1 presents the articles being considered.
Table 1
List of authors/articles used for dividend portfolio comparison
Author/Contributor | Article | Source |
Ong Kang Wei | Investing In Dividend Growth Stocks: My Portfolio or 25 | |
David Crosetti | The Portfolio for Do It Yourselfers: What we are Buying | |
Dean Moriarty | Brave New Life Blog | |
Dividends4Life | Dividend Stock and ETF/CEF Holdings | |
Jeff Paul | A High-Dividend-Growth, Low-Payout-Ratio Portfolio | |
My ETF Hedge Fund | How to Build a Core Portfolio of Strong Dividend Stocks | |
Parsimony Investment Research | Building a DIY Dividend Portfolio (Par 1): Picking the Best Dividend Stocks | |
Intelligent Speculator | Ultimate Sustainable Dividend Portfolio - November 2012 Update | |
Dividend Monk | Dividend Monk Blog | |
Bob Wells | Dividend Growth Safety Superstars - 2012 Update | |
Regarded Solutions | "Team Alpha": Adding CSX - An Undervalued Dividend Paying Stock | |
Rob Ward | A Simple Retirement Portfolio Anyone Can Build (Equal Sector Weights): Year-End Update | |
Dividend Growth Machine | A Real Dividend Growth Machine: 2012 Review | |
Invest Yourself | Building an Income Portfolio | |
Roger S. Conrad | What to Expect From America`s Top 20 in 2013 | |
David Van Knapp | Rising Dividends: My Dividend Growth Portfolio 2012-2013 Report | |
Bob Johnson | Your 2012 Dividend Growth Portfolio: Results After 6 Months |
Results
Each of the stocks from these articles was inserted into an Excel Spreadsheet. A Pivot Table was created to determine the frequency of each stock. Table 2 presents the frequency of each stock from the 17 articles listed in Table 1.
Table 2
Stock frequency within the 17 portfolios
Ticker | Company | Sector | Industry | n (%) |
| INTC | Intel | Technology | Electronics | 9 (52.9) |
| JNJ | Johnson and Johnson | Healthcare | Drugs | 9 (52.9) |
| CVX | Chevron | Basic Materials | Energy | 7 (41.2) |
| PG | Proctor and Gamble | Consumer Goods | Consumer Non-Durables | 7 (41.2) |
| T | AT&T | Technology | Telecommunications | 7 (41.2) |
| KO | Coca-Cola | Consumer Goods | Food & Beverages | 6 (35.3) |
| MCD | McDonald's | Services | Leisure | 6 (35.3) |
| WMT | Wal-Mart | Services | Retail | 6 (35.3) |
| XOM | ExxonMobil | Basic Materials | Energy | 6 (35.3) |
| KMB | Kimberly-Clark | Consumer Goods | Consumer Durables | 5 (29.4) |
| AFL | Aflac | Financial | Insurance | 4 (23.5) |
| COP | ConocoPhillips | Basic Materials | Energy | 4 (23.5) |
| HAS | Hasbro | Consumer Goods | Consumer Durables | 4 (23.5) |
| IBM | IBM | Technology | Computer Hardware | 4 (23.5) |
| ITW | Illinois Tool Works | Industrial Goods | Manufacturing | 4 (23.5) |
| LMT | Lockheed Martin | Industrial Goods | Aerospace/Defense | 4 (23.5) |
| MSFT | Microsoft | Technology | Computer Software & Services | 4 (23.5) |
| PEP | Pepsi Co. | Consumer Goods | Food & Beverages | 4 (23.5) |
| ABT | Abbott Labs | Healthcare | Drugs | 3 (17.6) |
| ARLP | Alliance Resource Partners LP | Basic Materials | Metals & Mining | 3 (17.6) |
| BBL | BHP Billion PLC | Basic Materials | Energy | 3 (17.6) |
| BDX | Becton Dickinson & Co | Healthcare | Healthcare Services | 3 (17.6) |
| CL | Colgate-Palmolive | Consumer Goods | Consumer Non-Durables | 3 (17.6) |
| CSX | CSX Corp | Services | Transportation | 3 (17.6) |
| GE | General Electric | Industrial Goods | Manufacturing | 3 (17.6) |
| HRS | Harris Corp Del | Technology | Telecommunications | 3 (17.6) |
| KMP | Kinder Morgan Energy Partners | Basic Materials | Energy | 3 (17.6) |
| NVS | Novartis | Healthcare | Drugs | 3 (17.6) |
There are 28 stocks presented in Table 2 where many of them are very well-known companies. In this particular case, we find that Intel and Johnson & Johnson are the most common stocks included in these portfolios (found in 9 portfolios each), or in other words, they are found in over half (52.9%) of the portfolios listed. Furthermore, these 28 stocks are relatively well diversified based on sector (see Table 3).
Table 3
Frequency of sectors of the 28 common stocks
Sector | n (%) |
Consumer Goods | 6 |
Basic Materials | 6 |
Technology | 5 |
Healthcare | 4 |
Services | 3 |
Industrial Goods | 3 |
Financial | 1 |
Conclusion
A total of 17 articles were combined together to identify common dividend stocks among them. Each author has established a specific criterion for screening and selecting a particular stock to be included in their portfolio. Despite these criteria, there are stocks that are commonly found among the various portfolios. This may suggest that, in particular, Intel and Johnson & Johnson which were the most commonly found stocks are companies with a solid base for dividend growth investors. Given the diversity that these stocks provide, it may further serve to expose the new dividend growth investor to various sectors and companies that are a part of those sectors and assist in getting a broad range exposure. However, the results of this article found only one financial stock that was commonly held in several portfolios (Aflac: AFL). Given the financial crisis of 2008-2009 and the impact that the crisis had on the banking sector in particular, it may not be that surprising that few financial stocks are commonly found in these portfolios since many US banks in particular cut or eliminated their dividend.
On a personal note, this exercise has helped me focus on a few stocks for me to research and better understand why others have selected them to be part of their portfolio. It also helped me as a new investor to understand what to look for, what are good and bad signs and how to evaluate a stock.
The articles listed in Table 1 may also help serve new dividend growth investors to develop ideas for their own plans and to help them establish their own selection criteria. These articles also provide good guidance on buying and selling, screening criteria and much more that will prove useful for the new investor as they overcome the learning curve.
Each investor should develop their own plan and strategy when building their portfolio. None of the information contained in this article should be construed as recommendations for taking positions in any of the companies listed. Each investor is encouraged to perform their own research to determine whether any stock is appropriate in meeting their goals and plan.
Additional disclosure: I am also long on COS.UN, REI.UN and AX.UN which are Canadian Stocks listed on the TSX.
