This is the sixth in a series of articles that describe my efforts to establish a safe and growing stream of income in retirement.
At the end of 2011 I set out to establish a portfolio that would serve to produce an income stream from dividends that would help fund my retirement. I was looking specifically for stocks with a track record of safety. If there were capitol gains then that was a bonus. As a retiree, I was more interested in a steady stream of income, protection from inflation and preservation of capital. In this series I have been presenting the results of the back testing I've done for the period between 2002-2011.
I set up a screen to look for all stocks paying dividends of at least 2% and had finished 2011 with 6% gains, a figure equal to my returns for 2011 my first year of handling my own investments. 200 plus stocks made the cut. Next I evaluated the individual performance of each stock for each of the ten years included in this testing period. I was particularly interested in stocks that out performed the S&P 500 during the severe bear markets of 2002 and 2008.
Emerging from my back testing were stocks that had gains while the S&P was down over 23% in 2002 and over 38% in 2008. I found a large number of stocks that suffered less than half the lost of the S&P and had offset those losses by the gains they made the following year.
The best performing stocks emerging from my back testing are what I now refer to as my Superstars. Of the 60 stocks that made the grade, 48 have the distinction of being among the over 450 Dividend Champions, Challengers and Contenders complied by David Fish. The CCC's as they are often called did not cut their dividends during the bear markets of 2002 and 2008, they raised them. In fact they raised them each of the ten years I reviewed. I believe that every Dividend Growth investor must download this free list regularly and make it one of their considerations when considering a stock for purchase.
What follows is a chart of the sixth and final set of ten stocks from my research. All stocks are presented for your personal review based on your own evaluation of value and your own investing goals.
Stock | Ticker | Yield % | 5-YearDGR % | 10 Year Ave Return | Notes |
Plains All America | PAA | 5.3 | 6.3 | 18.9% | MLP |
W.P.Carey | WPC | 5.2 | 3.3 | 13.2% | Reit |
Oneox Inc. | OKE | 2.9 | 12.1 | 21.5% | Reit NoK-1 |
Darden Restaurants | DRI | 3.2 | 28.4 | 8.5% | |
Next ERA Energy | NEE | 3.7 | 8.0 | 11.9% | |
Piedmont National | PNY | 4.1 | 3.9 | 11.0% | Reit |
Sempra Energy | SRE | 3.8 | 9.0 | 12.4% | |
UNS Energy | UNS | 4.7 | 14.9 | 11.0% | |
Cleco Corp. | CNL | 3.1 | 4.5 | 10.2% | |
Telefonia Brazil | VIV | 4.2 | 4.5 | 17.9% |
The above chart includes current yield, 5 year dividend growth rates and average annual return for the 10 years of review. The average yield for this group of 10 stocks is just over 4.0%. The 5 year DGR for the group was 9.49% a year, clearly keeping up with inflation and then some. On top of that the group outperformed the S&P 500 every year in the period. During the same period, the group reported an average annual gain of 13.65% vs. an average annual gain in capitol for the S&P 500 of 0.9%.
Readers asked that this go round I review each of the 10 stock portfolios previously presented. Since you asked for them, here they are:
Stock | Ticker | Yield % | 5-YearDGR % | 10 Year Ave Return | Notes |
Wisconsin Energy | WEC | 3.2 | 17.4 | 15.1% | |
Vectren Corp. | VVC | 4.8 | 2.4 | 7.4% | |
National Health Investors | NHI | 5.4 | 5.3 | 20.2% | Reit |
Unilever | UL | 4.0 | 7.7 | 10.0% | |
PPG Industrials | PPG | 2.4 | 3.4 | 8.3% | |
Tangier Shopping Centers | SKT | 2.7 | 13.4 | 25.0% | Reit |
Republic Service Group | RSG | 3.3 | 14.4 | 9.5% | |
J.M. Smuckers | SJM | 2.5 | 10.6 | 10.9% | |
Chubb | CB | 2.3 | 9.8 | 9.8% | |
TELUS Corp. | TU | 4.2 | 14.7 | 18.7% |
Stock | Ticker | Yield % | 5-YearDGR % | 10 Year Ave Return | Notes |
Consolidated Edison | ED | 4.1 | 0.9 | 10% | |
Enbridge | ENB | 2.9 | 14.1 | 23.2% | MLP |
Realty Income | O | 4.6 | 2.7 | 15.9% | Reit |
Colgate Palmolive | CL | 2.5 | 12.7 | 7.0% | |
RPM International | RPM | 3.4 | 5.2 | 9.6% | |
Omega Healthcare Investors | OHI | 8.3 | 10.1 | 19.1% | Reit |
Reynolds American | RAI | 5.8 | 9.4 | 18.7% | |
McCormick | MKC | 2.2 | 9.2 | 11.6% | |
Compandia de Bebidas das Americas | ABV | 3.8 | 12.8 | 31.2% | |
Nike | NKE | 1.4 | 13.8 | 14.7% |
Stock | Ticker | Yield % | 5-YearDGR % | 10 Year Ave Return | Notes |
Johnson and Johnson | JNJ | 3.5 | 10.3 | 3.6 | |
Chevon | CVX | 3.2 | 9.0 | 12.8 | |
NStar | NST | 3.8 | 7.0 | 12.4 | |
Health Care Reit | HCN | 5.5 | 2.2 | 15.9 | |
Intel | INTC | 3.1 | 14.4 | -.7 | |
Kinder Morgan Partners | KMP | 5.7 | 7.2 | 15.9 | |
Coke | KO | 2.8 | 8.7 | 6.8 | |
McDonalds | MCD | 2.9 | 20.4 | 17.1 | |
AT&T | T | 5.8 | 5.3 | 2.5 | |
Kimberly Clark | KMB | 3.9 | 7.8 | 5.7 |
Stock | Ticker | Yield % | 5-YearDGR % | 10 Year Ave Return | Notes |
Sunoco Logistics Partners | SXL | 4.5 | 9.8 | 26.4% | |
Clorox | CLX | 3.5 | 14.8 | 8.1% | |
Rayonier | RYN | 3.6 | 4.0 | 15.6% | |
Novartis | NVS | 4.7 | 7.8 | 7.1% | |
Royal Dutch Shell | RDS.B | 5.1 | 6.7 | 9.6% | |
V.F. Corp | VFC | 2.1 | 6.2 | 15.7% | |
BCE Inc. | BCE | 5.4% | 12.8 | 11.6% | |
Southern Company | SO | 4.3 | 4.0 | 9.9% | |
Honeywell | HON | 2.6 | 8.7 | 7.5% | |
Altra | MO | 5.2 | 15.0 | 17.1 |
Stock | Ticker | Yield % | 5-YearDGR % | 10 Year Ave Return | Notes |
General Mills | GIS | 3.06 | 11.1 | 7.2 | |
Pepsi Co | PEP | 3.14 | 12.2 | 5.4 | |
Procter & Gamble | PG | 3.33 | 11.2 | 7.9 | |
National Retail Properties | NNN | 5.7 | 3.0 | 15.1 | |
Altria | MO | 5.77 | 15.0 | 17.1 | |
Magellan Midstream Partners | MMP | 4.86 | 6.4 | 20.2 | |
Genuine Parts Co | GPC | 2.82 | 6.3 | 9.0 | |
Verizon | VZ | 5.31 | 3.9 | 3.6 | |
SCANA Corp | SCG | 4.33 | 3.2 | 9.8 | |
Caterpillar | CAT | 1.69 | 10.4 | 16.0 |
My final portfolio remains a work in progress. In my next article, I will present more on finding the best values to round out my portfolio.
Disclosure: I am long VZ, MO, GPC, MMP, NNN, PEP, CVX, HCN, INTC, KMP,KO, MCD, T, KMP, UL, NHI, SXL, RDS.B, MO, BCE, SO, OHI, RAI, PAA and WPC.
Disclaimer: I am not a professional investment advisor or financial analyst. You need to do your own research and due diligence before you decide to trade any securities or other products.
