We continue to examine different portfolios to see what we can learn and use to further our investment portfolios.
Many working people put off their retirement investing -- just one more year until it has becomes a "hair on fire" problem. The problem is that we can easily be overwhelmed and shut down. The way to solve this is to focus on what works in the long term -- that is what long term investing is all about -- and allow that to filter out what may work in the short term but won't stand the test of time.
We recently published a review The Street's 10 Dividend Stocks which came under fire from a number of SeekingAlpha readers. The dividend stocks that were in the plan were:
- Hewlett Packard (HPQ)
- Fifth Third Bancorp (SLW)
- Oracle (ORCL)
- Fifth Third Bancorp (FITB)
- Qualcomm (QCOM)
- Walmart (WMT)
- Staples (SPLS)
- Bank NY Mellon (BK)
- Gold Corp (GG)
- Procter and Gamble (PG)
There were a number of comments about whether these stocks are the ones that truly represent a dividend portfolio and whether it was a fair comparison with the ETF portfolio. Based on our readers' inputs, we present a portfolio with a more representative set of stocks and compare them against the ETF portfolio -- and over a longer period.
|KO (Coca Cola)|
|PEP (PepsiCo Inc)|
|JNJ (Johnson Johnson)|
|MO (Altria Group)|
|MCD (McDonald's Corp.)|
|PG (Procter and Gamble)|
|ABT (Abbott Labs)|
|BTI (British Alcohol and Tobacco)|
|JPM (JPMorgan Chase & Co)|
We compare this with the first dividend portfolio and a portfolio of dividend ETFs. The comparison is:
- Dividend Stocks Increasing Payouts -- Total of $10K invested equally in each stock
- 10 Dividend Stocks From SeekingAlpha Readers -- Total of $10K invested equally in each stock
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
Portfolio Performance Comparison
|P 10 Dividend Stocks From SeekingAlpha Readers||13%||99%||6%||27%||11%||52%|
|P The Street`s 10 Dividend Stocks||19%||99%||6%||17%||4%||9%|
|Retirement Income ETFs Strategic Asset Allocation Moderate||12%||96%||3%||16%||5%||23%|
|Retirement Income ETFs Tactical Asset Allocation Moderate||7%||52%||10%||76%||10%||66%|
Note that in all cases, dividends were reinvested so this should be an apples to apples comparison.
As predicted by Seeking Alpha readers, over the long term their dividend stock choices perform well. Given that the stocks are a lazy portfolio -- i.e. the ultimate buy and hold -- and this is compared to an ETF portfolio that may have transactions every month, it is a very strong performance and worth serious consideration.
Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.