Best 2014 Dividend Stock Pick Returns Beating Both Benchmarks

by: The Dividend Guy

I started this “tradition” on my blog back in 2012. The goal is to pick 20 US and 10 CDN dividend stocks that I think will outperform their peers. This is the reason why I use VIG and XDV as my benchmarks. I keep track of my results for accountability purposes. I find that too many analysts and blogs just drop the ball on their picks when they aren’t so great. By posting monthly results, I have no choice but to face my performance and explain it. You can look at my previous picks and returns:

Best Dividend Stock Picks 2012 (-1.47% vs. VIG (US dividend ETF), + 8.32% vs. XDV (CDN dividend ETF)

Best Dividend Stock Picks 2013 (+11.07% vs. VIG, + 0.77% vs. XDV)

2014 Best US Dividend Stocks: +3.77% vs. VIG: +1.00%

After five months, I’m not only adding 2.77% to my benchmark, but I’m also beating the whole US market (S&P500) by 2.82%. While we are still in a bullish market, my dividend growth stocks continue to beat even my expectations. I even picked five double digit return stocks (ALV +11.08%, HP +29.21%, LMT +10.41%, LO +17.25% and WEC +17.26%). HP's most recent quarterly results were still up, but disappointed Wall Street. This created a buy opportunity, in my opinion. The stock dropped 6% on the day HP published its results.

More on the positive notes, we see McDonald’s (NYSE:MCD) and Apple (NASDAQ:AAPL) finally coming out of limbo. For the past 18 months or so, MCD is finally showing some uptrend (+4.48% vs. VIG at 1.00%). Apple published strong results while everybody expected a drop in sales. The stock went up by 8% instantly. I’m still holding my position in this stock at the moment as I believe there is more good news to come for AAPL.

Like a good father, I tend to be patient with poor results. I’ve given Mattel (NASDAQ:MAT) a chance to come back with a strong quarter after a disappointing holiday season. MAT keeps fooling around with another drop in sales and Barbie, for the first time in her life, is starting to hear the call for retirement.

2014 Best CDN Dividend Stocks: +2.86% vs. XDV: +2.66%

best cdn stocks

Making a selection of stocks each year and posting monthly results is a big risk for any blogger. Each year, I put my credibility on the line to show that my investment strategy works (or not). When I beat my US benchmark by 11% like in 2013, or how I am currently beating it by almost 3% this year, I know this is not just luck.

This year, I can’t really say I’m riding the Canadian market as strong as I am in the US. I remember having a hard time finding very interesting dividend stocks at the beginning of the year in Canada, and it’s back to haunt me right now. While I am “ahead” of my benchmark by 0.20%, I can say it’s almost just luck. Out of 10 picks, only three of them beat the benchmark at this time.

I’m very proud of my find from last year; Black Diamond Group (OTCPK:BDIMF), which is +71.44% since I picked it for the first time in January 2013. The find of this year is Gluskin & Sheff (OTC:GLUSF), which is +28.17% this year and +122.26% since January 2013.

I think my two banks Bank of Nova Scotia (NYSE:BNS) and Royal Bank of Canada (NYSE:RY) will come back strong, as the Canadian economy is not improving this year. Their investment/stock market division should bring them to the positive side of the equation.

It’s tougher for my consumer picks: Dorel Industries (OTCPK:DIIBF), Lassonde (OTC:LSDAF) and The North West Company (NWC). I anticipated a stronger year for consumers and it seems that’s not working out well right now. But the year is still young, so who knows what will happen during the next quarter!

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.