Entering text into the input field will update the search result below

The Next Ones Beat The Index By Almost 3% In 2017

Mar. 01, 2018 3:49 AM ETADP, APD, CAT, CB, COST, ECL, EMR, EOG, FDX, GD, ITW, MOS, NEE, NOC, LIN, SYK, TGT, TJX, TRN, VIG, YUM19 Comments
Dale Roberts profile picture
Dale Roberts


  • In early 2015, I skimmed 15 of the largest cap Dividend Achievers.
  • Had I gone further down the list and skimmed the next 20 largest cap, I would have considerably greater returns.
  • In 2017, those "Lesser Caps" beat the Dividend Achievers Total Index.
  • We are seeing the size premium on display, but will it continue?

In late 2017, I penned this article The Next Dividend Achievers Absolutely Trounce The Market. These are the 20 companies that have a lesser cap than the top 15 largest cap Dividend Achievers (VIG) that I purchased in early 2015. The next ones are Costco (COST), TJX Companies (TJX), General Dynamics (GD), Target (TGT), Monsanto (MOS), EOG Resources (EOG), FedEx (FDX), NextEra Energy (NEE), Caterpillar (CAT), ADP Data Processing (ADP), Trinity Industries (TRN), Air Products and Chemicals (APD), Northrop Grumman (NOC), Stryker (SYK), Illinois Tool Works (ITW), Ecolab (ECL), Emerson Electric (EMR), Praxair (PX), Yum! Brands (YUM), Chubb Limited (CB).

Here are the full-year returns for "The Next Ones." The portfolio is equal-weighted and rebalanced on an annual basis. The returns history is courtesy of portfoliovisualizer.com. And as always past performance does not guarantee future returns.

And here are the returns for 2017 for the individual assets.

We see that (unlike my Dividend Achievers) there is nary a loser in the bunch. The only drastic underperformer is TJX Companies. Of course, that's another company that is supposed to get wiped out due to the Amazon (AMZN) effect, just like Walmart (WMT) that I own, ha. That might suggest of course that the Dividend Achievers construct of selecting larger cap companies with at least a 10-year history of increasing dividends (each year) combined with the Index financial health screens can find consistent financial success. In the article The Returns of all S&P 500 Members for 2017: Is Winning Found By Not Losing? I showed that 119 companies in the S&P 500 delivered a negative return in 2017, a failure rate of 23.8%. Of the top 35 Dividend Achievers, the failure rate is 2 of 35 or 5.7%. That's a remarkable amount of stability, but of course the index and market outperform are due to

This article was written by

Dale Roberts profile picture
Dale Roberts is the Chief Disruptor at the Cut The Crap Investing blog. Cut The Crap will introduce Canadians to the many sensible low fee investment options in Canada. Canadians currently pay some of highest investment fees in the world. Dale will help Canadians on the path to creating their own low fee portfolios or direct them to the lower fee managed portfolio solutions. Dale was a former Investment Funds Advisor and Trainer at Tangerine Investments, and is a still recovering former award-winning advertising writer and creative director. Dale has been writing on Seeking Alpha from 2013, covering asset allocation, dividend investing and retirement. As always past performance is not guaranteed to repeat. You should always conduct your own research or speak to a financial advisor. If you don't know what you're doing, don't do it. Dale's articles are not investment advice.

Analyst’s Disclosure: I am/we are long AAPL, NKE, BCE, TU, ENB, TRP, CVS, WBA, MSFT, MMM, CL, JNJ, QCOM, MDT, BRK.B, ABT, PEP, TXN, WMT, UTX, LOW, RY, BNS. 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.

Dale Roberts is an Investment Funds Advisor at Tangerine Investment Funds Limited a subsidiary of Tangerine Bank, wholly owned by Scotia Bank; he is not licensed to provide professional advice on stocks. The opinions expressed herein are Dale Roberts' personal opinions relating to his experience as an investor and are not those of Tangerine Bank or its subsidiaries and/or affiliates. This article is for information purposes only and does not constitute investment advice or an offer or the solicitation of an offer to buy or sell any securities. Past performance is not a guarantee and may not be repeated. Investment strategies are not suitable for everyone and you should always conduct your own research or speak to a financial advisor.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (19)

The real question for us young investors is, who are the “next” next ones?

One can only hope to make the right decisions in investing.
Dale Roberts profile picture
Hi Quest and that would mean following proven strategies or factors and perhaps they repeat.

Thanks for your article, Dale. I follow you.
Dale Roberts profile picture
Thanks for the read and follow.

Dale, thanks for the article.
You are way too silent. Write more often. Interesting analysis while thought-provoking.
Like the simplicity.
Dale Roberts profile picture
Thanks labman, much appreciated. I will write more when I leave full time work in May. I will hopefully write 2-3 articles a week for SA. But most of my energy will go to my personal site/blog to be launched in May. There's much work to be done in Canada on low fee investing. Canadians ain't "getting it" yet. I hope to open the door for many more Canadians to take control of their investments in simple low-fee fashion.

Ill be looking forward to your blog! Loved your article, an entertaining and informative read! Everyone and his granny know about Dividend Achievers, but despite that fact still a very interesting comparison! Thanks!
Dale Roberts profile picture
Thanks truth. The many Dividend Indices all have such unique characteristics and use, and we can also shade or shape each index by way of skimming. For example, the Achievers can (historically) be shaded for even greater stability and for growth. One can skim for yield as well, that article follow up arriving soon. I tracked the highest yield Achievers from 5 years ago.

Kurtis Hemmerling profile picture
Thanks for the mention Dale.

I always appreciate your well thought-out articles and tireless efforts to provide a solid mix of practical portfolio application and education.

Keep it coming...

Dale Roberts profile picture
Thanks Kurtis, your research and articles are always a great help for those looking for simple ways to shape their portfolio.

You have some more complicated ideas as well, but too much thinking for this meat n potatoes investor.

galicianova profile picture
well, had you merely bought the ETF, you would have done better than you did, unless it was the equal weighting which did the trick!
Dale Roberts profile picture
Hi gallicianova, at last report the mix was beating the total index, just slightly. But again, I purchased the largest 15 for their potential performance through a market correction.

If I wanted to 'beat' the index without concern for volatility I certainly would have added more companies down the list.

Dale: I’m curious as to why you don’t own ITW, the highest performing compounder of all The Next Ones? I’ve been a holder for 3 decades now and like every thing about the company - nice portfolio of quality assets in necessary but not sexy industries, strong operating and capital allocation process, honest management. The market has rewarded those attributes
Dale Roberts profile picture
Hi Sound investor, cause ITW was likely 10 or 15 more down the list. Nothing more, nothing less.

Dale Roberts profile picture
And after a quick look ITW, was down over 50% into 2009. My grouping would have been more in the 30%ish area.

I bought these for greater potential stability in a major market correction.

amegalo profile picture
Dale. You're always a good read..
Dale Roberts profile picture
Thanks amegalo.

InvestorsEdge profile picture
Hi Dale,

Interesting article - you mention some financial health screens but I can't find anything that identifies what they are. Are they proprietary?

Dale Roberts profile picture
Hi IE, yes they are proprietary. Likely simple common sense filters. MSCI High Yield also applies quality smart beta filters.

Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
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.