Tuesday Reads

Below is my mid-week investment reading list. Needless to say I am a bit behind on my reading!

Demystifying Managed Futures Funds – Seeking Alpha

You’re obsessed with outcomes. Here’s why attention to process pays off. Barry Ritholtz, Washington Post

Pragmatic Capitalism:

Why are Treasury Bonds the Ultimate Safe Haven?
The Importance of Global Asset Allocation – Japan Edition

A Wealth of Common Sense:

Asset Allocation 2.0 (and 3.0, 4.0, etc.)
When Diversification Works

A Gift From God – The Irrelevant Investor

Swedroe: Make Your Retirement Money Last – ETF.com

Even God Would Get Fired as an Active Investor – Alpha Architect

Why Is Momentum Neglected? Dual Momentum

Tactical Alpha Part III: Asset Allocation vs. Security Selection – GestaltU

“Sell Hubris, Buy Humiliation” – The Reformed Broker

James Montier on Fed-Induced Bubbles, Market Valuations, Smart Beta and Liquid Alts – Advisor Perspectives

Fama on Momentum – AQR

Research Affiliates:

Timing Poorly: A Guide to Generating Poor Returns While Investing in Successful Strategies
Peak Profits
The Confounding Bias for Investment Complexity

GMO:

GMO Quarterly Letter
Market Macro Myths: Debts, Deficits, and Delusions

Dividend Champion Portfolio – February Update

The High Yield Dividend Champion Portfolio is a publicly tracked stock portfolio on Scott’s Investments.  Its goal is to capture quality high yield stocks with a history of raising dividends.

The screening process for this portfolio starts with the “Dividend Champions” as compiled by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years.

For 2016 I made one change to the screen methodology in order to further simplify the process. Stocks from the Dividend Champion list were previously ranked on yield, payout ratio, P/E, and 3 year dividend growth rate.

In 2016 stocks are ranked on yield, P/E and 3 year dividend growth rate.  Payout ratio will no longer be a factor.  The modification has a relatively low impact to screen results.

Stocks will still be sold on the re-balance date (generally around the 5th of the month) when they drop out of the top 15 (to limit turnover) and are replaced with the next highest rated stock.

The top 15 stocks using the new method  are below and displayed in order of their overall ranking (figures are January month-end):

Name Symbol Yield
Helmerich & Payne Inc. HP 5.41
Emerson Electric EMR 4.13
Questar Corp. STR 4.12
Chevron Corp. CVX 4.95
Eaton Vance Corp. EV 3.7
ExxonMobil Corp. XOM 3.75
Archer Daniels Midland ADM 3.17
MDU Resources MDU 4.44
Old Republic International ORI 4.09
HCP Inc. HCP 6.4
Universal Corp. UVV 3.87
Universal Health Realty Trust UHT 5.08
Altria Group Inc. MO 3.7
Target Corp. TGT 3.09
Eagle Financial Services EFSI 3.44

 

There is turnover this month in one position. Walmart (WMT) has been a holding since October 2015 and will be sold for a gain of 1.99%.  The proceeds will be used to purchase Eaton Vance (EV).  A small portion of the of the WMT sale will also be used to rebalance the portfolio’s position in HP by purchasing an additional 20 shares.

The current portfolio is below:

Position Average Purchase Price Initial Purchase Date Percentage Gain/Loss Excluding Dividends
CVX 103.1835 12/6/2012 -19.69%
EMR 49.64 8/4/2015 -5.50%
ORI 16.22 4/4/2014 8.51%
EV 28.38 2/5/2016 0.00%
ADM 35.41 12/7/2015 -3.78%
MO 58.14 1/7/2016 2.86%
XOM 89.01 4/5/2013 -10.03%
HP 87.4457 10/6/2014 -42.50%
STR 22.8 3/6/2015 9.34%
TGT 73.39 12/7/2015 -5.22%

Resources for DIY Investors