9 Boring But Rock-Solid Dividend Stocks

by: MyPlanIQ

We continue to focus in on dividend yielding stocks as a means of providing income as well as growth in these days of the new normal of low interest rates and turbulent markets.

The Motley Fool recently announced 11 Rock Solid dividend stocks, of which I took 9 -- broken down into aristocrats, high yield divas and up and comers. Having a selection of dividend equities in different categories was appealing to me so I thought I would measure their performance and see what that told me.

The Aristocrats

Company Business Dividend Yield 10-Year Average Annual Dividend Growth
ExxonMobil (NYSE:XOM) Global energy champ 2.6% 7.1%
Johnson & Johnson (NYSE:JNJ) Diversified healthcare products powerhouse 3.6% 13%
PepsiCo (NYSE:PEP) Snacks and beverages giant 3.3% 13%
Procter & Gamble (NYSE:PG) Branded consumer goods leader 3.3% 10.9%
Wal-Mart (NYSE:WMT) Low-price retail kingpin 2.8% 16.3%

Source: Capital IQ, a Standard & Poor's company.

2 High-Yield Dividends Divas
  • AT&T (NYSE:T)
  • New York Community Bancorp (NYB)

2 Dividend Up-and-Comers

  • Greenhill & Co. (NYSE:GHL) is an investment bank
  • Owens & Minor (NYSE:OMI) is a distributor of medical equipment and outsource provider of logistics and inventory management

Some of these names are household names, and others much less well known. I like the balance of five major players with four that have different properties -- maybe more return for more risk. I am going to take them and measure then against our benchmark ETF portfolio.

Asset Fund in this portfolio
REAL ESTATE (BATS:ICF) iShares Cohen & Steers Realty Majors
Emerging Market (NYSEARCA:VWO) Vanguard Emerging Markets Stock ETF
US EQUITY (NYSEARCA:DVY) iShares Dow Jones Select Dividend Index
US EQUITY (NYSEARCA:VIG) Vanguard Dividend Appreciation ETF
INTERNATIONAL EQUITY (BATS:IDV) iShares Dow Jones Intl Select Div Idx
High Yield Bond (NYSEARCA:HYG) iShares iBoxx $ High Yield Corporate Bd

Portfolio Performance Comparison

Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
9 Rock-Solid Dividend Stocks -2% -12% 7% 42%
Retirement Income ETFs Strategic Asset Allocation Moderate 1% 6% 15% 96% 2% 8%
Retirement Income ETFs Tactical Asset Allocation Moderate 2% 22% 10% 77% 8% 57%

This is strangely mediocre performance. As I look at the current holdings, they are all around their target -- meaning that none of them have done particularly well or badly.

Fund in this portfolio Percentage
XOM (Exxon Mobil Corp) 10.67%
JNJ (Johnson Johnson) 11.92%
PEP (PepsiCo Inc) 11.45%
PG (Procter and Gamble) 11.61%
WMT (Wal-Mart) 12.47%
T (AT&T Inc) 10.35%
NYB (New York Community) 10.01%
GHL (Greenhill & Co Inc) 9.51%
OMI (Owens & Minor Inc.) 12.01%

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

As I look over the longer time horizon, this selection has done reasonably well compared to the buy and hold portfolio. However, I think I would be looking for something a little more exciting. Some of the other portfolios we have covered have done better than this. For all the hoopla from the Fool, I think I would look elsewhere.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: 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.