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Dividend Growth Stocks

|Includes: SPDR Dividend ETF (SDY)

The strategy of selecting, at the beginning of every year, the stocks whose growth of dividends was the highest during the prior five years (as described earlier in the year https://seekingalpha.com/instablog/709762-varan/1551391-an-annually-updated-and-a-permanent-portfolio-of-dividend-growth-stocks ) appears to be quite competitive.

The equity curve for the strategy (called DG510 - 10 stocks selected on the basis of dividend growth during the prior five years) is compared in the following plot with that of SDY , the ETF based on the 50 dividend aristocrats. Also shown in the plot is the performance of PERMDG, the permanent portfolio of dividend growth stocks as described in the post referenced above. We note that the PERMDG is included only for the purposes of comparison, as the performance during the period 2006-2013 was included in historical data that was used to select this basket.

Year to date the performance of DG510 has been quite satisfactory as shown in the table below.

 

YTD Return (2013)

CAGR (2006-YTD)

Sharpe Ratio

Sortino Ratio

Maximum Drawdown

DG510

29%

13.5%

0.61

1

44%

SDY

23.4%

7.15%

0.31

0.46

50%

PERMDG

20.7%

9.8%

0.44

0.71

42.5%

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