The new normal of low interest rates and likely turbulence has me looking for ideas in the area of solid companies with dividends. Jonas Elmerraji from The Street's Stockpickr has me interested in his selection of 7 companies that are raising their dividends.
- Time Warner Cable (TWC) provides cable television, internet, and phone services to a network that reaches nearly 27 million homes.
- Parker-Hannifin (PH) has a diversified product list that includes everything from fluid control systems to air conditioners to flight control systems.
- Marathon Oil (MRO) has upside is in its shale portfolio, which still has room for unproven reserves to beat analysts' expectations.
- HCP (HCP) owns a real estate portfolio that's spread throughout five different segments: senior housing, skilled nursing, medial offices, lab space, and hospitals.
- Eaton (ETN) develops and manufactures power management and control systems used by commercial and military users, ranging from powertrain systems for cars to aerospace fuel systems.
- Hershey (HSY) is well-known for being the largest candy maker in North America,
- AvalonBay Communities (AVB) is the best-in-breed housing REIT
These are not the usual suspects when it comes to dividend stocks, but it is a diversified set of companies -- including a couple of REIT alternatives -- and so they are worth measuring them 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|
- 7 Dividend Stocks Increasing Payouts in 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||4%||34%||10%||80%||7%||55%|
|7 Dividend Stocks Increasing Payouts in 2012||11%||41%||30%||106%||6%||16%|
|Retirement Income ETFs Strategic Asset Allocation Moderate||2%||15%||16%||102%||2%||8%|
The performance of these stocks is reasonable. Note that their Sharpe ratios indicate that there is significant risk with some of the significant return. However, this is certainly a decent looking table and worth consideration.
Three Month Chart One Year Chart Three Year Chart Five Year Chart
As I look over the longer time horizon, I see why the Sharpe ratios are low compared to the returns, as there is a fair amount of volatility.
I should feel better about this portfolio than I do. I could wish that the selection was based on some filter that I can investigate rather than the analysis of an expert in which I have to trust. Some of the names are familiar and the diversification is sound, I am just a little uncertain as to whether I would invest in this selection. Nevertheless, this is a set of stocks to track.
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