Scott Rothbort's 10 Low Volatility Stocks In A Rising Volatility Environment

Includes: CB, JNJ, MCK, MO, NLY, PEP, PG, SO, T, WMT
by: MyPlanIQ

We are seeing big swings in the market as has become usual in the era of computer triggered trading and the uncertainties that we now face. We continue to look for portfolio ideas from industry luminaries and measure them against a portfolio of dividend producing ETFs with broad diversification.

Today, we look at the selection made by Scott Rothbort / Lake View Asset Management, LLC. He has found ten stocks with low volatility over the past year and we measure them against our benchmark.

Symbol / Co Last Price Change Analysis
Procter & Gamble
$62.79 -0.23
1 YR Realized Volatility 11.34
Dividend Yield 3.47
PE Ratio 15.4
PepsiCo Inc
$63.41 -0.07
1 YR Realized Volatility 12.98
Dividend Yield 3.19
PE Ratio 16.5
Johnson & Johnson
$65.29 0.32
1 YR Realized Volatility 12.61
Dividend Yield 3.64
PE Ratio 15.0
Wal-Mart Stores Inc
$53.10 -0.11
1 YR Realized Volatility 12.64
Dividend Yield 2.87
PE Ratio 11.1
Southern Co
$41.14 0.52
1 YR Realized Volatility 10.07
Dividend Yield 4.74
PE Ratio 17.49
Chubb Corp
$60.08 0.05
1 YR Realized Volatility 14.14
Dividend Yield 2.62
PE Ratio 8.59
Altria Group Inc.
$26.44 0.00
1 YR Realized Volatility 15.37
Dividend Yield 6.03
PE Ratio 15.4
AT&T Inc
$29.25 0.27
1 YR Realized Volatility 16.13
Dividend Yield 6.09
PE Ratio 8.2
Annaly Capital Ma.nagement
$17.88 -0.39
1 YR Realized Volatility 19.47
Dividend Yield 14.54
PE Ratio 6.3
McKesson Inc.
$75.54 -0.07
1 YR Realized Volatility 16.24
Dividend Yield 2.45
PE Ratio 15.9
Click to enlarge

These are top drawer companies and many of them have been mentioned before when looking for long term, dividend producing equities. It provides access to worldwide markets and to real estate. So, we know that this is a good list. On the other hand, there is no international or commodities exposure.

The purpose of this article is to swallow the premise but then measure the returns against a benchmark set of dividend ETFs which are more steady. The comparison set are:

Asset Fund in this 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,
Click to enlarge

Portfolio Performance Comparison
Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
Retirement Income ETFs Tactical Asset Allocation Moderate 8% 68% 11% 81% 10% 68%
10 Low Volatility Stocks In A Rising Volatility Environment 17% 145% 10% 44% 10% 45%
Retirement Income ETFs Strategic Asset Allocation Moderate 9% 52% 5% 18% 4% 13%
Click to enlarge

This selection of equities has interesting properties -- the returns over the long period are reasonable but note the Sharpe index which tells you that you have more risk than the ETF portfolio but better than the buy and hold (NYSEARCA:SAA) with the ETF portfolio so it's worthy of consideration.

Three Month Chart One Year Chart Three Year Chart Five Year Chart

Full details

As I review the short term behavior with the three month chart, it hasn't done too badly -- again between the Tactical and Strategic strategies for the ETF portfolios. If this were augmented with some commodity equities (gold perhaps), I think this could be a good basis for a stable set of equities

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: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.