Dividend Portfolio Playoffs - Aristocrats Start Appearing

by: MyPlanIQ

Dividend stock selections continue to be of interest in the light of continuing low interest rates limiting the returns from bonds. We have seen that not all high dividend stocks are good value however, and we are trawling through the many selections (over 60) we have reviewed to drill down to the best of the best and note the most commonly used. We have reviewed twenty five selections so far and have a leader board of four. In this group we see more of the dividend aristocrats that have been providing increasing dividends for decades. This is mixed in with some lesser known names that might offer brighter growth prospects for those that are willing to take on extra risk.

Dividend Aristocrats for 2012 (NYSE:MMM) (NYSE:MCD) (NYSE:SYY)
5 Dividend Stocks For International Exposure (NYSE:PM) (NYSE:DEO) (NYSE:YUM) (NASDAQ:VOD) (NASDAQ:INTC)
David Meier's 11 Incredible Dividend Stocks as a Portfolio (NYSE:WMT) (NYSE:PEP) (NYSEMKT:BTI) (NYSE:ABT) (NYSE:AFL) (NYSE:BMS) (NASDAQ:KLAC) (NYSE:BIP) (NYSE:ALV)
Seven Small Stocks Pack a Big Dividend Punch (NYSE:VGR) (UIL) (NASDAQ:PSEC) (NYSE:MPW) (NASDAQ:PCH) (NASDAQ:SLRC) (NYSE:NHI)

In this set of selections, Intel is referenced three times, Johnson and Johnson and Philip Morris twice. We also have a full list of the company names against the tickers at the end of the article.

We are keeping a tally of the most popular selections and the leader board is:

Ticker Mention
Intel 6
Johnson and Johnson 6
PepsiCo 4
Proctor and Gamble 4
Sysco 4
Wal-Mart 4

There are several companies mentioned twice but we will continue to prune the leader board to keep the list from being too long

Portfolio Performance Comparison

Portfolio/Fund Name YTD
1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
Dividend Aristocrats for 2012 0% 19% 112% 26% 162% 12% 57%
Dow Jones Dividend Leaders 3% 10% 56% 27% 152% 4% 14%
Dividends for the International Investor 9% 26% 138% 38% 204%
Fools 11 Incredible Dividend Stocks 7% 12% 61% 31% 166%
Small Stocks Packing Big Dividend Punch 4% 3% 13%

Given that the dividend aristocrat selection comprises three stocks, the Sharpe ratios as well as the performance are strong. Admittedly they are treading water so far this year, but their long term performance and security is outstanding. It could be that if there is more desire for risk, they might move slowly in terms of growth, but you have the benefit of steady income. Similarly the Dow Jones dividend leaders have decent returns and reasonable risk properties. It is interesting that the smaller selection of the aristocrats beats out the more diversified selection in risk adjusted returns. The dividends for the international investor -- i.e. US companies with worldwide appeal is also interesting as it has strong results in both categories.

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

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I now add this set of selections into the leader board and determine what stays and what goes.

Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
Dividend Aristocrats for 2012 19% 112% 26% 162% 12% 57%
Fools 5 Dividend Payers to Save your Portfolio 26% 172% 21% 137% 11% 55%
7 Dividend Stocks Increasing Payouts in February 2012 15% 45% 33% 108% 18% 49%
Dow Jones Dividend Leaders 10% 56% 27% 152% 4% 14%
Dividends for the International Investor 26% 138% 38% 204%
Fools 11 Incredible Dividend Stocks 12% 61% 31% 166%
3 Bargain Dividends Investors Should Buy Today 27% 150% 24% 135%
4 Special Dividend Plays 16% 59% 26% 98%

Two selections make it in and we end up with a relatively strong set of performers both in terms of total and risk adjusted returns. The competition continues to stiffen and it will become increasingly more difficult to break into the leader board.

Ticker Company
ABT Abott Labs
ALV Autoliv
BIP Brookfield
BMS Bemis
BTI British American Tobacco
DD Dupont
DEO Diageo
GE General Electric
INTC Intel
JNJ Johnson & Johnson
KTF DSW Municiple
MCD MacDonalds
MPW Medical Properties
MRK Merck
NHI National Health Investors
PCH Potlatch
PEP Pepsi
PFE Pfizer
PM Philip Morris
PSEC Prospect Capital
SLRC Solar Capital
SYY Sysco
TRV Travelers Insurance
UIL UIL Holdings
VGR Vector Group
VOD Vodaphone
VZ Verizon
WMT Wal-Mart
YUM Yum! Brands

Disclosure: I am long INTC, MCD, MMM.

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.