We continue to examine ideas for the long-term and retirement investor -- especially with anything that has a dividend focus. Matt Koppenheffer of the Motley Fool outlines 12 dividend stocks on his 2012 watchlist.
- Flowers Foods (FLO) -- Owner of Nature's Own, Whitewheat, Country Hearth, Sunbeam, Roman Meal, Aunt Hattie's bakery brands
- Aflac (AFL) -- Insurance from the Duck
- Clorox (CLX) -- Home consumer staple
- Owens & Minor (OMI) -- A distribution and logistics provider for a wide swath of medical gear for hospitals and other health-care providers
- Avon Products (AVP) -- The venerable cosmetics company
- Exelon (EXC) -- A nuclear generation giant
- Hasbro (HAS) -- An owner of great brands in the toy industry
- Molex (MOLX) -- Electronic connectors
- National Presto (NPK) -- produces housewares/small appliances, defense products, and absorbent products
- Lockheed Martin (LMT) -- defense contractor
- Darden Restaurants (DRI) -- operates restaurants under Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, and Seasons 52 brand names
- Strayer Education (STRA) -- for profit education
This is a diversified selection of stocks that are outside the mainstream of Dow giants. Are they worth considering against some of the dividend aristocrats? We will be comparing them with our dividend ETF benchmark and see how they perform.
|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|
- 12 Dividend Stocks for 2012 -- 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|
|Retirement Income ETFs Tactical Asset Allocation Moderate||1%||9%||9%||72%||8%||55%|
|Retirement Income ETFs Strategic Asset Allocation Moderate||1%||6%||16%||98%||2%||7%|
|12 Dividend Stocks for 2012||-4%||-17%||9%||44%|
The performance as far as it goes is not attractive. We have seen that analysis that derives large companies that have a long history of dividends and can clearly afford them are a better bet. This may be a selection that those who are looking for bargains may prefer but I don't think this is of interest for those who don't want to constantly be involved with their stock portfolio.
Three-Month Chart One-Year Chart Three-Year Chart Five-Year Chart
As I review the graphical data, the problem that I see is too much volatility. There are some good gains and then some very steep drops. Since this is aggregated over 12 equities, this is less than desirable behavior. At this stage, I think that there are better alternatives than this selection.
Additional 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.