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We continue to investigate dividend alternatives to fixed income investments. It's important not to overstate the impact of dividend stocks -- they are different than bonds -- but increasingly a portfolio with a bias towards dividends is an important part of a retirement portfolio where some form of income stream is important.

The Street.com came up with 20 mid-cap dividend stars, which appeals to me on two levels:

  1. We previously examined a three stocks with dividends and growth and found them to be lacking. Looking at Mid-Cap stocks is a way of moving towards increasing the risk and return variable.
  2. Having 20 from which to choose gives greater diversity, which is always a good thing. I know that I am not a stock picker -- I prefer to buy the market over the long haul.

Here is their list:

CompanyDiv Yield
Apollo Investment (NASDAQ:AINV)14.9%
New York Bank (NYB)7.9%
Omega Healthcare (NYSE:OHI)7.8%
Hospitality Properites (NYSE:HPT)7.4%
Old Republich (NYSE:ORI)7.2%
Senior Housing Properties (NYSE:SNH)6.8%
Mack-Cali (NYSE:CLI)6.3%
Astoria Financial (NYSE:AF)6.1%
National Retail Properties (NYSE:NNN)5.7%
Valley National (NYSE:VLY)5.7%
Liberty Property (LRY)5.6%
Mercury General (NYSE:MCY)5.5%
Highwoods Properties (NYSE:HIW)5.1%
Duke Reality (NYSE:DRE)5.0%
RadioShack (NYSE:RSH)5.0%
Meredith (NYSE:MDP)4.9%
Vectren (NYSE:VVC)4.9%
MDC Holdings (NYSE:MDC)4.8%
Reality Income (NYSE:O)4.8%
Corporate Office Properties (NYSE:OFC)4.6%
Equity One (NYSE:EQY)4.6%

Source: The Street.com

The article goes on to highlight five that are especially attractive:

  1. Apollo Investment
  2. RadioShack
  3. Meredith
  4. MDC Holdings
  5. Omega Hospitality Trust


I am going to compare their 20 and their top 5 with our benchmark dividend yielding ETF portfolio.

To see these stocks in action, visit the are High-Yielding Mid-Caps portfolio.

AssetFund in this portfolio
REAL ESTATE(NYSEARCA:ICF) iShares Cohen & Steers Realty Majors
CASHCASH
FIXED INCOME(NYSEARCA:TIP) iShares Barclays TIPS Bond
Emerging Market(NYSEARCA:VWO) Vanguard Emerging Markets Stock ETF
US EQUITY(NYSEARCA:DVY) iShares Dow Jones Select Dividend Index
US EQUITY(NYSEARCA:VIG) Vanguard Dividend Appreciation ETF
INTERNATIONAL EQUITY(NYSEARCA:IDV) iShares Dow Jones Intl Select Div Idx
High Yield Bond(NYSEARCA:HYG) iShares iBoxx $ High Yield Corporate Bd
INTERNATIONAL BONDS(NYSEARCA:EMB) iShares JPMorgan USD Emerg Markets Bond

Portfolio Performance Comparison

Portfolio/Fund Name1Yr AR1Yr Sharpe3Yr AR3Yr Sharpe5Yr AR5Yr Sharpe
Retirement Income ETFs Tactical Asset Allocation Moderate4%34%10%80%7%55%
Retirement Income ETFs Strategic Asset Allocation Moderate2%15%16%102%2%8%
The Streets Top 5 Midcap Dividend Companies-10%-28%16%42%-2%-6%
The Streets 20 Dividend Stars Among the Mid-Cap Crowd-3%-10%16%44%-2%-6%

This selection, whether small or large, does not present a pretty picture. Moving into Mid Cap territory, you are going to see more volatility and that is really what you get. What's interesting to me is that the additional equities doesn't bring any better risk adjusted returns.

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

The short term performance (three months) looks attractive as there is a move towards more risk and these types of equities look appealing. However, over the longer term horizon, they don't look nearly as attractive and I think I will give this approach a miss for long term investing. For those who are willing to be more active traders, there may be a momentum approach for which this might be an part of a solution.

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

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.

Source: 20 Mid Cap Dividend Stars, Sliced And Diced