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. We are open to ideas from other experts and Stockpickr recently listed their 19 'Dividend Opportunity' Stocks for 2012
Their list of 19:
- (MMM) 3M
- (ABT) Abbott Laboratories
- (AFL) Aflac Inc
- (BDX) Becton Dickinson
- (BMS) Bemis Co Inc
- (CVX) Chevron Corp
- (EMR) Emerson Electric Co.
- (GD) General Dynamics
- (HCBK) Hudson City Banco
- (MDT) Medtronic Inc.
- (EE) NextEra Energy Inc
- (NSC) Norfolk Southern
- (PPG) PPG Industries Inc.
- (PPL) PPL Corp
- (SCG) SCANA Corp
- (TJX) TJX Companies
- (UTX) United Technologi
- (WMT) Wal-Mart Stores Inc
- (WAG) Walgreen Company
I like a longer list, as that gives stability. This is a diversified set across different market segments and a mix of well-known and less well-known names. I was unable to find the selection criteria, but it is still worth measuring against our dividend bearing ETF list.
|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|
- Stockpickrs 19 Dividend Opportunity 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|
|Retirement Income ETFs Tactical Asset Allocation Moderate||3%||34%||10%||80%||7%||55%|
|Retirement Income ETFs Strategic Asset Allocation Moderate||2%||15%||15%||102%||2%||8%|
|Stockpickrs 19 Dividend Opportunity Stocks||-1%||-7%||11%||53%||3%||8%|
The performance of this stock selection has been okay without ever being great. At no point does it significantly outperform the ETF portfolios, and the risk adjusted returns say to me that the ETF portfolio is a better bet.
The spread of ownership (which stocks have performed better over time) is reasonable -- there aren't any real dogs.
|Fund in this portfolio||Percentage|
|UTX (United Technologies)||9.02%|
|PPL (PPL Corp)||8.00%|
|GD (Gen l Dynamics)||7.68%|
|HCBK (Hudson City Bancorp)||6.84%|
|PPG (PPG Inds)||6.07%|
|CVX (Chevron Corp)||6.00%|
|SCG (SCANA Corp)||5.88%|
|EE (Paso Electric)||5.58%|
|NSC (Norfolk Southern Corp.)||5.55%|
|EMR (Emerson Electric)||4.72%|
|BMS (Bemis Co)||4.39%|
|MMM (3M Company)||4.26%|
|ABT (Abbott Labs)||4.06%|
|AFL (AFLAC Inc)||3.85%|
|BDX (Becton Dickinson)||3.67%|
|WAG (Walgreen Co.)||3.50%|
|MDT (Medtronic Inc)||3.43%|
|TJX (The TJX Companies, Inc.)||3.21%|
Three Month Chart One Year Chart Three Year Chart Five Year Chart
As I look over the longer time horizon, this selection has performed fairly, but there is a lot of volatility. It could be that this would be suitable for those who want to be more active and perhaps cut out some of the dips, but for those who want to only review investments infrequently, I think there are better alternatives.
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.