We continue to focus in on dividend yielding stocks as a means of providing income as well as growth in these days of the new normal of low interest rates and turbulent markets.
The Motley Fool recently announced 11 Rock Solid dividend stocks, of which I took 9 -- broken down into aristocrats, high yield divas and up and comers. Having a selection of dividend equities in different categories was appealing to me so I thought I would measure their performance and see what that told me.
|Company||Business||Dividend Yield||10-Year Average Annual Dividend Growth|
|ExxonMobil (XOM)||Global energy champ||2.6%||7.1%|
|Johnson & Johnson (JNJ)||Diversified healthcare products powerhouse||3.6%||13%|
|PepsiCo (PEP)||Snacks and beverages giant||3.3%||13%|
|Procter & Gamble (PG)||Branded consumer goods leader||3.3%||10.9%|
|Wal-Mart (WMT)||Low-price retail kingpin||2.8%||16.3%|
Source: Capital IQ, a Standard & Poor's company.
2 High-Yield Dividends Divas
- AT&T (T)
- New York Community Bancorp (NYB)
2 Dividend Up-and-Comers
- Greenhill & Co. (GHL) is an investment bank
- Owens & Minor (OMI) is a distributor of medical equipment and outsource provider of logistics and inventory management
Some of these names are household names, and others much less well known. I like the balance of five major players with four that have different properties -- maybe more return for more risk. I am going to take them and measure then against our benchmark ETF portfolio.
|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|
- 9 Rock-Solid 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)
Portfolio Performance Comparison
|Portfolio/Fund Name||1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe|
|9 Rock-Solid Dividend Stocks||-2%||-12%||7%||42%|
|Retirement Income ETFs Strategic Asset Allocation Moderate||1%||6%||15%||96%||2%||8%|
|Retirement Income ETFs Tactical Asset Allocation Moderate||2%||22%||10%||77%||8%||57%|
This is strangely mediocre performance. As I look at the current holdings, they are all around their target -- meaning that none of them have done particularly well or badly.
|Fund in this portfolio||Percentage|
|XOM (Exxon Mobil Corp)||10.67%|
|JNJ (Johnson Johnson)||11.92%|
|PEP (PepsiCo Inc)||11.45%|
|PG (Procter and Gamble)||11.61%|
|T (AT&T Inc)||10.35%|
|NYB (New York Community)||10.01%|
|GHL (Greenhill & Co Inc)||9.51%|
|OMI (Owens & Minor Inc.)||12.01%|
Three Month Chart One Year Chart Three Year Chart Five Year Chart
As I look over the longer time horizon, this selection has done reasonably well compared to the buy and hold portfolio. However, I think I would be looking for something a little more exciting. Some of the other portfolios we have covered have done better than this. For all the hoopla from the Fool, I think I would look elsewhere.
Disclaimer: 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.