Dividend stocks are key in the sense that they deliver income even while there is continuing market turbulence.
David Meier of the Motley Fool summarized the current conditions as follows: "It's not a dividend investor's world these days." For the long term investor, dividend stocks have significant benefits in terms of providing income and growth potential. We continue to examine different portfolios to see what we can learn.
Meier outlined 11 outstanding Dividend stocks which are summarized here:
- PM -- Philip Morris for which we use BTI as a proxy as it has longer history
Tech up and comers
We entered these funds into our system and then compared them to a balanced portfolio of dividend producing ETFs.
Fund in the portfolio
|REAL ESTATE||ICF (iShares Cohen & Steers Realty Majors)|
|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)|
- Fool's 11 Incredible Dividend Stocks -- 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)
|Fools 11 Incredible Dividend Stocks||30%||209%||5%||21%|
|Retirement Income ETFs Strategic Asset Allocation Moderate||16%||162%||4%||17%||5%||25%|
|Retirement Income ETFs Tactical Asset Allocation Moderate||12%||127%||10%||79%||11%||80%|
Three Year Chart
click to enlarge
This is a pretty reasonable return with a similar performance to the ETF portfolio. The performance is still below the tactical asset allocation based on the punishment that all stocks took in the great recession.
Careful consideration should be given to this portfolio compared to others that may have higher growth but no returns -- for example:
This portfolio doesn't have enough history so it will be interesting to track it and see how it performs going forward.
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.
Disclosure: Author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.