Originally published on Nov. 29, 2014
Live by the dividend; die by the dividend. While the 2014 Dividend Machine Portfolio delivers more income for income investors, the recent slide of oil prices took a toll on energy stocks Chevron (NYSE:CVX) and Conoco Phillips (NYSE:COP). See the comparisons in the table below of year to date performance of two low cost ETFs that concentrate on dividends, VIG and SDY.
I personally would not sell. If you have cash to invest, you might consider adding to CVX and/or COP. COP has a PE of only 9. Both have healthy dividend yields. CVX's dividend yield 3.72% with a five year dividend growth rate of 11.47%. COP's dividend yield is 4.12% with a 5 year dividend growth rate of 9.2%. Both have good balance sheets. Chevron's D/E ratio is .13 according to MSN Money and COP's is .35.
You see the biggest question is will these dividends continue and will their annual increases continue. If the past five years is any indicator of future performance, CVX and COP are bargains.
Using Dividend Machine criteria to pick stocks for the income producing portion of your portfolio is still a good strategy. This is demonstrated by looking at the 2013 Dividend Machine Portfolio. Stocks have been on a tear lately and it is not surprising that buying in 2013 provides more gain than buying in 2014. Take a look at the 2013 Dividend Machine portfolio comparison with VIG and SDY in 2013.