We continue to examine stock portfolio recommendations from luminary publications to see whether we can mix ETFs and equities to create a portfolio with good risk/return properties that is easy to live with for the long term investor.
The Fool's Matt Koppenheffer approach is not to simply grab the biggest yields available. He wants to look back 30 years from now at the long-term returns. In addition to worthwhile yields, he wants quality companies that we can expect to be around 30 years from now.
With that in mind, here are five stocks that fit the bill. All five have dividend yields well in excess of the S&P's, trade at reasonable valuations. All of these businesses have what it takes to continue to succeed for decades to come.
His selections are:
Company | Dividend Yield |
|---|---|
| Johnson & Johnson (JNJ) | 3.4% |
| McDonald's (MCD) | 3% |
| Kimberly-Clark (KMB) | 4.1% |
| Sysco (SYY) | 3.3% |
| Mattel (MAT) | 3.5% |
We compare this with two of our highest performing portfolios
- 9 Stocks That Gain Every Earnings Day
- 10 Dividend Stocks From SeekingAlpha Readers
- A balanced portfolio of Dividend producing ETFs.
| Asset | Fund in this portfolio |
|---|---|
| REAL ESTATE | ICF (iShares Cohen & Steers Realty Majors) |
| CASH | CASH |
| FIXED INCOME | TIP (iShares Barclays TIPS Bond) |
| Emerging Market | VWO (Vanguard Emerging Markets Stock ETF) |
| US EQUITY | DVY (iShares Dow Jones Select Dividend Index) |
| US EQUITY | VIG (Vanguard Dividend Appreciation ETF) |
| INTERNATIONAL EQUITY | IDV (iShares Dow Jones Intl Select Div Idx) |
| High Yield Bond | HYG (iShares iBoxx $ High Yield Corporate Bd) |
| INTERNATIONAL BONDS | EMB (iShares JPMorgan USD Emerg Markets Bond) |
- Fools 5 Dividend Payers to Save your Portfolios-- Total of $10K invested equally in each stock
- Most Popular Stock Portfolio-- 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
| Portfolio/Fund Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Most Popular Stock Portfolio | 42% | 274% | 18% | 75% | 16% | 73% |
| Fools 5 Dividend Payers to Save your Portfolio | 23% | 197% | 11% | 54% | 13% | 65% |
| Retirement Income ETFs Strategic Asset Allocation Moderate | 21% | 208% | 3% | 14% | 6% | 25% |
| 10 Dividend Stocks From SeekingAlpha Readers | 21% | 160% | 7% | 30% | 10% | 51% |
| Retirement Income ETFs Tactical Asset Allocation Moderate | 15% | 152% | 9% | 71% | 11% | 72% |
The more detailed analysis and graphs show the volatility of the stock portfolio which has performed well as far as the back testing allows as some of the stocks have only a four year life.
Three Month Chart
(Click to enlarge)
Five Year Chart
(Click to enlarge)
All of these portfolios have solid stocks and they all perform well. the most popular stock still has the highest performance and we will shortly review the list of most popular based on the new portfolios we have examined.
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.
