Yesterday's post tried to explore the extent to which buy and hold investing has evolved and maybe how it can be applied today. On a related note one of the defensive, dividend names we have owned since 2004 hit a 52 week high in the last couple of days; this level is also an all time high just slightly eclipsing the old high from mid 2008 (it is a defensive stock and so it kept going up for a while even after the market had started rolling over).
The company in question has been raising its dividend since the Pilgrims landed (slight hyperbole) and since we bought the stock the dividend has slightly more than doubled. YTD and for ten years the stock has lagged, since the market low it has outperformed and since we bought the stock it is about a push versus the S&P 500.
In talking yesterday about stories changing meaningfully for the worse, I do not believe that has happened since we've owned this particular name but of course it has not been a one way trade either. Assuming there is no meaningful change for the worse the stock will no doubt remain committed to increasing the dividend, do very well during certain parts of the stock market cycle and lag during others, and hopefully at least stay close over long periods of time.
In terms of maintaining a diversified portfolio the above description is what I would hope to see apply to a few of the holdings. Up a ton is a description I would also like to see on a few of the holdings. My idea of diversification is to take in holdings with many types of attributes which serves to smooth out the ride some over the course of the entire stock market cycle. Smoothing out the ride may not sound too important now when things are going very well for the stock market but I believe it matters a lot when things are going poorly.
On what is probably a related note the above stock I wrote about is obviously a dividend growth stock. Over the years I have picked on various dividend strategies but I am quite fond of dividends - but it is ok to be fond of other attributes too. Simply put, it is my opinion that going all in on any single attribute makes for lousy diversification, which is ok for people who don't care about diversification (some folks don't). The problem comes when people want to be diversified, think they are diversified and find out the hard way they are not.