A Dividend Growth Portfolio For Total Return Investors

May 14, 2017 5:45 PM ETDIS, EXR, HD, MPC, NKE, SBUX, UNH, V, WBA, ACN, AMGN, BA, AMT, FLIR, FNF, HAS, PFG, SYK, TXN, PG, KO74 Comments
Jeff Paul profile picture
Jeff Paul


  • Research has shown that dividend growth stocks have historically outperformed the S&P 500 with less volatility, making them an excellent long-term vehicle for total return investors.
  • Applying filters to financial metrics can narrow the dividend growth stock universe to higher-quality companies with high dividend growth rates, two factors shown to contribute to strong total return.
  • Portfolio selections are also influenced by macro-economic trends including population, technology, and interest rates.
  • I share my Dividend Growth Total Return model portfolio, which has gained 11.5% versus 7.2% for the S&P 500 TR through April 30, 2017.


It's been about four years since my last Seeking Alpha article. From July 2011 to June 2013, I wrote many articles focused on dividend growth stocks, highlighting research that demonstrated the outperformance of dividend growth stocks compared to the S&P 500 and subgroups of the dividend growth universe that drove this performance. This work led to the creation of four model portfolios that I maintained and tracked, such as the High-Dividend-Growth/Low-Payout-Ratio portfolio. In 2013, I had the opportunity to join an RIA and manage a dividend growth portfolio for its clients, which is why I stopped writing for SA. Overall, that portfolio had a slight growth stock bias (e.g. underweighted utilities and higher-yield) yet performed very well, especially considering the declines in interest rates that favored value stocks and the energy price collapse. Over 3 years, the portfolio had annualized returns of 9.46% vs. 8.87% for the S&P 500, and it nearly matched the S&P 500 over 5 years (2 years were based on my SA income model portfolio), 14.40% vs 14.65%, with 0.85 beta.

Having left finance and returned to healthcare analytics, I look forward to engaging more with the Seeking Alpha community and sharing my experience. From my observations, I've noticed that there are many DG portfolios being tracked online now, but not many focus on total return investors or provide some higher-level narrative and research to explain the portfolio decisions. I hope to address both areas. Looking at my holdings and the portfolio I managed, I own a mix of higher-yield core and lower-yield higher-growth stocks. I thought it would be interesting and informative to create a portfolio representing the latter half for those interested more in total return. The following sections will outline the Dividend Growth Total Return (DGTR) portfolio's rationale, construction, and year-to-date results and statistics. The portfolio inception date was January 1, 2017.

This article was written by

Jeff Paul profile picture
Jeff Paul has been investing since his teen years, though his professional career has primarily been in software engineering, education, and healthcare. His math classes participated in online stock market challenges, providing an opportunity to share his enthusiasm for investing with his students and the chance for them to learn the fundamentals and try to identify the next big stock (they found Google). Jeff completed an MBA at Portland State University with a focus on finance. He served as a Senior Investment Analyst and Portfolio Manager at a wealth management firm, where he developed and managed a Dividend Growth portfolio that outperformed the S&P 500 over a 5-yr period. Jeff currently works in data analytics at a large healthcare system.

Disclosure: I am/we are long NKE, DIS, HD, HAS, WBA, MPC, FNF, PFG, SYK, UNH, AMGN, FLIR, BA V, ACN, TXN, DOW, AMT, COR, AND EXR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (74)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.