Long-Term Dividend Portfolio That Has Outperformed By A Big Margin - Part 2

by: Arie Goren

In a previous post, I tried to create dividend stock portfolios that can outperform the market by a big margin. I created screening methods that show such promise, but the demand was to rebalance the portfolio every four weeks and replace the stocks that no longer comply with the screening requirement with other stocks that comply with the requirement. Since most investors do not have the opportunity to rebalance the portfolio every four weeks, I created a new screening method that requires rebalancing the portfolio just once a year. Furthermore, in order to decrease the maximum expected drawdown to a lower level than that of the benchmarks I had to be satisfied with a bit lower return, but still much better than the benchmarks.

In the first part of this article, I described the screen and the companies that are included in the portfolio now. Since the screening method requires rebalancing the portfolio just once a year, it is appealing to show how the portfolio was composed a year ago. Portfolio123 enables us to get this information. In this article, I will show the list of companies selected by the screening method on July 27, 2012, to be held until July 27, 2013.

The table below presents the eight stocks selected by the screen on July 27, 2012, and their price appreciation on July 27, 2013.

Cascade Corp (NYSE:CASC-OLD)

Cascade Corp was bought by Toyota Industries on March 03, 2013, for $65 a share. Since the screening method requires rebalancing the portfolio just once a year, that price has been considered to remain in cash until next rebalancing.

Corning Inc (NYSE:GLW)

GLW is the only stock from the 2012's screen which is also selected to the new screen.

Corning Incorporated produces and sells specialty glasses, ceramics, and related materials worldwide.

Corning has a very low debt (total debt to equity is only 0.14), and it has a very low trailing P/E of 11.80 and a very low forward P/E of 10.84. The PEG ratio is quite low at 0.98, and the average annual earnings growth estimates for the next five years is quite high at 12%. The forward annual dividend yield is at 2.61%, and the payout ratio is only 27%. The annual rate of dividend growth over the past five years was very high at 25.79%.

The GLW stock price is 1.82% above its 20-day simple moving average, 2.42% above its 50-day simple moving average and 15.49% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

On July 30, Corning reported its second-quarter results, which beat EPS expectations by $0.01 and beat on revenues.

Second-quarter performance highlights

  • Core sales were $2.0 billion, an increase of 11% over the same period of 2012. Net sales (GAAP) for the quarter were $2.0 billion.
  • Core earnings per share were $0.32, representing a 23% improvement over the second quarter of 2012 and the third consecutive quarter of year-over-year double-digit growth. GAAP earnings per share were $0.43, compared with $0.31 a year ago, a 39% increase.
  • In the Display Technologies segment, second-quarter LCD glass price declines were moderate and less than the previous quarter.
  • Sales and net income in Corning`s Telecommunications segment improved significantly on both a year-over-year and sequential basis.

Remarking on the second quarter, Wendell P. Weeks, chairman, chief executive officer, and president, said:

In Corning`s strong second quarter, we achieved our third consecutive period of year-over-year EPS improvement. For the past 18 months, we have effectively managed our cost structure, brought stability to our LCD glass business, returned to earnings growth, and advanced our new-product portfolio. We are pleased with the progress we are making and believe our strategy is working.

All these factors - the very low multiples, the rich dividend, the fact the company consistently has raised dividend payments, and the fact that the stock is in an uptrend -- make GLW stock quite attractive.

Chart: finviz.com


ACE Limited, through its subsidiaries, provides a range of insurance and reinsurance products to insured worldwide.

Chart: finviz.com

Magna International Inc. (NYSE:MGA)

Magna International Inc. designs, develops, manufactures, and engineers automotive systems and components to original equipment manufacturers primarily in North America, Europe, and internationally.

Chart: finviz.com

Men's Wearhouse Inc. (MW)

The Men's Wearhouse, Inc., together with its subsidiaries, operates as a specialty apparel retailer in the United States and Canada.

Chart: finviz.com


Aflac Incorporated, through its subsidiary, American Family Life Assurance Company of Columbus, provides supplemental health and life insurance products.

Chart: finviz.com

General Dynamics Corp (NYSE:GD)

General Dynamics Corporation, an aerospace and defense company, provides business aviation; combat vehicles, weapons systems, and munitions; military and commercial shipbuilding; and communications and information technology products and services worldwide.

Chart: finviz.com

Stancorp Financial Group Inc. (NYSE:SFG)

StanCorp Financial Group, Inc., together with its subsidiaries, provides financial products and services in the United States.

Chart: finviz.com


All the eight stocks selected by the screen on July 27, 2012, have shown a very nice price appreciation on July 27, 2013, which proves the strength of this screening method. The average one-year price appreciation of the portfolio was at 51% while the ACE stock gave the smallest gain at 28.72%, and the MGA stock showed the biggest appreciation at 95.79%.

Disclosure: I am long AFL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.