Tag Archives: dividend champion

High Yield Dividend Champion Portfolio – December Update

The High Yield Dividend Champion stock portfolio has been updated for December. The portfolio is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments.

The High Yield Dividend Champion Portfolio uses a small number of historically relevant ideas to create a simple, yet powerful investment plan. As I previously detailed, “Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.”

The High Yield Dividend Champion Portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to rank high yield/low payout stocks. 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.

To date the portfolio is up over 92% including dividends.  I mentioned in the 2013 year in review that valuation of high yield stocks was a concern. In January’s update I noted that “I have lowered my expectations for future returns of US equities and high yield stocks.” US equities have held up well for most of 2014, while many yield-centric ETFs have trailed overall equity returns:

Dividend

I added a valuation filter to the portfolio starting in 2014 in an attempt to mitigate concerns over valuation.  We still begin with the Dividend Champion list, which is first sorted by yield and the lowest 50% yielding stocks are eliminated. Eliminating the lowest yielding stocks ensures only stocks with a relatively “high” yield make the portfolio.

The remaining stocks are then assigned a rank based on their yield (the higher the yield the higher the rank), payout ratio (the lower the payout ratio the higher the rank), 3 year dividend growth rate, and price-earnings (P/E) ratio.  Extra weight is given to yield and payout ratio rankings.

I have also created a second portfolio using similar metrics as the High Yield Dividend Champion portfolio. The primary difference is it only requires 10 years of dividend increases and it also hedges the portfolio during unfavorable market conditions. Hedging requires margin, but the portfolio can also be implemented without the hedge. The portfolio is available on Portfolio123 and backtested results were posted in the June update.

The top 10 stocks based on the new ranking system make the portfolio. Stocks will be sold at 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 based on my ranking methodology are below and displayed in order of their overall ranking (figures are November month-end).

There is no turnover in positions for December:

Name Symbol Yield
Helmerich & Payne Inc. HP 3.92
Chevron Corp. CVX 3.92
ExxonMobil Corp. XOM 3.05
Old Republic International ORI 4.82
AT&T Inc. T 5.20
Eagle Financial Services EFSI 3.48
Tompkins Financial Corp. TMP 3.43
AFLAC Inc. AFL 2.61
Questar Corp. STR 3.17
First Financial Corp. THFF 2.93
McDonald’s Corp. MCD 3.51
Community Trust Banc. CTBI 3.32
Consolidated Edison ED 3.99
Mercury General Corp. MCY 4.48
Sonoco Products Co. SON 3.05

As previously stated EFSI is not purchased due to its low liquidity.

The current portfolio is below:

Current Positions Position Initial Purchase Date Percentage Gain/Loss Excluding Dividends Current Yield Current Allocation
CVX 12/6/2012 2.60% 3.86% 7.96%
MCD 1/3/2014 -0.24% 3.53% 8.37%
ORI 4/4/2014 -9.06% 4.95% 8.79%
MCY 9/5/2014 10.90% 4.39% 10.37%
TMP 8/6/2014 14.75% 3.29% 11.39%
CTBI 5/5/2014 -0.41% 3.30% 12.92%
XOM 4/5/2013 5.40% 2.94% 9.57%
HP 10/6/2014 -25.54% 4.08% 8.35%
T 3/6/2014 4.95% 5.42% 11.71%
THFF 7/7/2014 5.86% 2.88% 10.31%

 

Below is the portfolio charted against three benchmarks:

Div Champ

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February High Yield Dividend Champion

The High Yield Dividend Champion stock portfolio has been updated for February. The portfolio is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments.

The High Yield Dividend Champion Portfolio uses a small number of historically relevant ideas to create a simple, yet powerful investment plan. As I previously detailed, “Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.”

The High Yield Dividend Champion Portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to rank high yield/low payout stocks. 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.

To date the portfolio is up over 66%.  I mentioned in the 2013 year in review that valuation of high yield stocks was a concern (see World Beta and O’Shaughnessy). In January’s update I noted that “I have lowered my expectations for future returns of US equities and high yield stocks.” January was not kind to US equities. The High Yield Dividend Champion Portfolio had an approximate 4% drawdown since the last update.

I added a valuation filter to the portfolio starting last month.  We still begin with the Dividend Champion list, which is first sorted by yield and the lowest 50% yielding stocks are eliminated. Eliminating the lowest yielding stocks ensures only stocks with a relatively “high” yield make the portfolio.

The remaining stocks are then assigned a rank based on their yield (the higher the yield the higher the rank), payout ratio (the lower the payout ratio the higher the rank), 3 year dividend growth rate, and price-earnings (P/E) ratio.  Extra weight is given to yield and payout ratio rankings.  The 5/10 year Dividend Acceleration/Deceleration metric will no longer be used (5-year average increase divided by 10-year average increase)

The top 10 stocks based on the new ranking system make the portfolio. Stocks will be sold at 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.

There is turnover in two positions this month. UGI Corp (UGI) is being sold at a capital loss of 1.48% and original purchase date of 8/5/13. Leggett & Platt (LEG) is being sold at a capital loss of 7.47% and original purchase date of 8/5/13.

Proceeds from the sales will be used to purchase Target (TGT) and Cincinnati Financial (CINF). It should be noted that Eagle Financial Services (EFSI) is rated higher than both stocks but due to its low liquidity it was eliminated from consideration.

The top 15 stocks based on my ranking methodology are below and displayed in order of their overall ranking (figures are January month-end):

Name Symbol Yield Payout 3-yr P/E
Chevron Corp. CVX 3.58 32.73 11.15 9.14
Universal Corp. UVV 3.98 39.92 2.08 10.04
Eagle Financial Services EFSI 3.44 37.44 3.27 10.89
Target Corp. TGT 3.04 46.11 23.44 15.18
Helmerich & Payne Inc. HP 2.84 37.59 80.79 13.24
Tompkins Financial Corp. TMP 3.41 48.78 5.03 14.30
ExxonMobil Corp. XOM 2.73 32.94 12.24 12.05
McDonald’s Corp. MCD 3.44 58.38 11.35 16.97
Altria Group Inc. MO 5.45 75.00 8.23 13.76
Cincinnati Financial CINF 3.63 49.44 1.19 13.61
Community Trust Banc. CTBI 3.16 44.44 1.49 14.07
American States Water AWR 2.85 51.59 13.48 18.09
Old Republic International ORI 4.61 63.16 1.43 13.70
Johnson & Johnson JNJ 2.98 54.89 7.07 18.39
Weyco Group Inc. WEYS 2.73 42.35 4.13 15.54

The current portfolio is below:

Position Purchase Price Purchase Date
CVX 106.45 12/6/2012
MCD 96.54 1/3/2014
HP 65.48 7/5/2013
UVV 45.55 4/5/2012
TGT 55.07 2/5/2014
CINF 47.1 2/5/2014
XOM 89.01 4/5/2013
MO 34.24 3/5/2013
AWR 27.25 7/5/2013
TMP 50.3 1/3/2014

If you enjoy these free tools, please consider making a donation on the home page of Scott’s Investments using the Paypal link in the upper-right corner!

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January High Yield Dividend Champion

In December 2010, I created a screen/hypothetical portfolio called the “High Yield Dividend Champion Portfolio.” The screen is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments.

The High Yield Dividend Champion Portfolio uses a small number of historically relevant ideas to create a simple, yet powerful investment plan. As I previously detailed, “Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.”

The High Yield Dividend Champion Portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to rank high yield/low payout stocks. 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.

To date the portfolio is up over 74%.  I mentioned in the 2013 year in review that valuation of high yield stocks was a concern (see World Beta and O’Shaughnessy).  I do not know what 2014 will bring, but I have lowered my expectations for future returns of US equities and high yield stocks.

There are a number of ways to filter high yield stocks to avoid those susceptible to a “crash”.  The High Yield Dividend Champion portfolio starts with the Dividend Champion list, comprised of quality stocks that have sustained dividend growth over the past 25 years. In addition, the payout ratio rank and dividend growth rank filter stocks which may have unsustainable payouts or low dividend growth.

For 2014 I am adding a valuation filter to the screen.  We still begin with the Dividend Champion list, which is first sorted by yield and the lowest 50% yielding stocks are eliminated. Eliminating the lowest yielding stocks ensures only stocks with a relatively “high” yield make the portfolio.

The remaining stocks are then assigned a rank based on their yield (the higher the yield the higher the rank), payout ratio (the lower the payout ratio the higher the rank), 3 year dividend growth rate, and price-earnings (P/E) ratio.  Extra weight is given to yield and payout ratio rankings.  The 5/10 year Dividend Acceleration/Deceleration metric will no longer be used (5-year average increase divided by 10-year average increase)

The top 10 stocks based on the new ranking system make the portfolio. Stocks will be sold at 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.

There is turnover in two positions this month.  WGL Holdings Inc. (WGL) is being sold at a capital gain of 2.49% and original purchase date of 12/6/12. Northwest Natural Gas (NWN) is being sold at a capital loss of 4.66% and original purchase date of 4/5/13.

Proceeds from the sales will be used to purchase McDonalds (MCD) and Tompkins Financial (TMP).

The top 15 stocks based on my ranking methodology are below and displayed in order of their overall ranking (figures are December month-end):

Name Symbol Yield Payout 3-yr P/E
Chevron Corp. CVX 3.20 32.73322 11.15152 10.22
Helmerich & Payne Inc. HP 2.97 37.53754 80.78965 12.62
Eagle Financial Services EFSI 3.38 37.43842 3.273327 11.08
Universal Corp. UVV 3.74 39.92172 2.08393 10.68
McDonald’s Corp. MCD 3.34 58.48375 11.34791 17.51
Tompkins Financial Corp. TMP 3.11 48.78049 5.032115 15.67
Altria Group Inc. MO 5.00 75 8.225114 15.00
ExxonMobil Corp. XOM 2.49 32.94118 12.23508 13.23
Target Corp. TGT 2.72 46.1126 23.44095 16.96
Cincinnati Financial CINF 3.21 47.19101 1.194918 14.71
American States Water AWR 2.82 51.59236 13.48455 18.30
UGI Corp. UGI 2.73 47.08333 7.079563 17.28
Community Trust Banc. CTBI 2.83 42.52492 1.492757 15.00
Old Republic International ORI 4.17 63.15789 1.428764 15.15
Piedmont Natural Gas PNY 3.74 66.66667 3.481022 17.83
Leggett & Platt Inc. (tied with PNY) LEG 3.88 68.57143 3.672965 17.68

The current portfolio is below:

Position Shares Purchase Price Purchase Date
CVX 120 106.45 12/6/2012
MCD 167 96.54 1/3/2014
HP 280 65.48 7/5/2013
UVV 294 45.55 4/5/2012
UGI 431 42.49 8/5/2013
LEG 577 31.72 8/5/2013
XOM 196 89.01 4/5/2013
MO 395 34.24 3/5/2013
AWR 674 27.25 7/5/2013
TMP 321 50.3 1/3/2014

 

If you enjoy these free tools, please consider making a donation on the home page of Scott’s Investments using the Paypal link in the upper-right corner!

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December High Yield Dividend Champion Portfolio

In December 2010, I created a screen/hypothetical portfolio called the “High Yield Dividend Champion Portfolio.” The screen is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments.

Like many of the screens, strategies, and portfolios I track and prefer, the High Yield Dividend Champion Portfolio uses a small number of historically relevant ideas to create a simple, yet powerful investment plan. As I previously detailed, “Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.”

The High Yield Dividend Champion Portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to rank high yield/low payout stocks. 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.

In January changes were made to the ranking system. We still begin with the Dividend Champion list, which is first sorted by yield and the lowest 50% yielding stocks are eliminated. Eliminating the lowest yielding stocks ensures only stocks with a relatively “high” yield make the portfolio.

The remaining stocks are then assigned a rank based on their yield (the higher the yield the higher the rank), payout ratio (the lower the payout ratio the higher the rank), 3 year dividend growth rate, and 5/10 year Dividend Acceleration/Deceleration (5-year average increase divided by 10-year average increase).  Extra weight is given to yield and payout ratio rankings.

The top 10 stocks based on the new ranking system make the portfolio. Stocks will be sold at 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.

This month, as with the previous three months, there is no portfolio turnover. All current positions will be held until next month.

The top 15 stocks based on my ranking methodology are below and displayed in order of their overall ranking (figures are October month-end):

Name Symbol
Chevron Corp. CVX
Helmerich & Payne Inc. HP
Altria Group Inc. MO
UGI Corp. UGI
WGL Holdings Inc. WGL
Target Corp. TGT
ExxonMobil Corp. XOM
American States Water AWR
Universal Corp. UVV
Tompkins Financial Corp. TMP
Leggett & Platt Inc. LEG
Eagle Financial Services EFSI
McDonald’s Corp. MCD
Northwest Natural Gas NWN
MGE Energy Inc. MGEE

The current portfolio is below:

Position Purchase Date
CVX 12/6/2012
WGL 12/6/2012
HP 7/5/2013
UVV 4/5/2012
UGI 8/5/2013
LEG 8/5/2013
XOM 4/5/2013
MO 3/5/2013
AWR 7/5/2013
NWN 4/5/2013

The portfolio performance is below along with three benchmarks (log scale)

December Dividend Champion

If you enjoy these free tools, please consider making a donation on the home page of Scott’s Investments using the Paypal link in the upper-right corner!

November High Yield Dividend Champion Portfolio

In December 2010, I created a screen/hypothetical portfolio called the “High Yield Dividend Champion Portfolio.” The screen is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments.

Like many of the screens, strategies, and portfolios I track and prefer, the High Yield Dividend Champion Portfolio uses a small number of historically relevant ideas to create a simple, yet powerful investment plan. As I previously detailed, “Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.”

The High Yield Dividend Champion Portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to rank high yield/low payout stocks. 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.

In January changes were made to the ranking system. We still begin with the Dividend Champion list, which is first sorted by yield and the lowest 50% yielding stocks are eliminated. Eliminating the lowest yielding stocks ensures only stocks with a relatively “high” yield make the portfolio.

The remaining stocks are then assigned a rank based on their yield (the higher the yield the higher the rank), payout ratio (the lower the payout ratio the higher the rank), 3 year dividend growth rate, and 5/10 year Dividend Acceleration/Deceleration (5-year average increase divided by 10-year average increase).  Extra weight is given to yield and payout ratio rankings.

The top 10 stocks based on the new ranking system make the portfolio. Stocks will be sold at 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.

This month, as with the previous two months, there is no portfolio turnover. All current positions will be held until next month.

The top 15 stocks based on my ranking methodology are below and displayed in order of their overall ranking (figures are October month-end):

Name Symbol Yield Payout A/D* 3-yr
Chevron Corp. CVX 3.33 32.41 0.96 9.68
Helmerich & Payne Inc. HP 2.58 30.44 1.52 11.87
ExxonMobil Corp. XOM 2.81 31.74 1.08 9.51
Altria Group Inc. MO 5.16 87.67 1.25 8.71
American States Water AWR 2.84 53.29 1.53 7.93
Target Corp. TGT 2.65 41.45 1.10 24.74
UGI Corp. UGI 2.73 47.48 1.15 10.53
Universal Corp. UVV 3.77 33.96 0.58 2.13
WGL Holdings Inc. WGL 3.73 62.22 1.35 2.89
Leggett & Platt Inc. LEG 4.03 69.77 1.15 3.81
Questar Corp. STR 3.04 60.50 1.03 9.61
Northwest Natural Gas NWN 4.24 86.38 1.24 3.81
Genuine Parts Co. GPC 2.73 48.21 1.17 6.76
Eagle Financial Services EFSI 3.58 37.44 0.31 2.39
McDonald’s Corp. MCD 3.36 59.34 0.49 11.87

The current portfolio is below:

Position Purchase Date
CVX 12/6/2012
WGL 12/6/2012
HP 7/5/2013
UVV 4/5/2012
UGI 8/5/2013
LEG 8/5/2013
XOM 4/5/2013
MO 3/5/2013
AWR 7/5/2013
NWN 4/5/2013

The portfolio performance is below along with three benchmarks:

november high yield

If you enjoy these free tools, please consider making a donation on the home page of Scott’s Investments using the Paypal link in the upper-right corner!

More on this topic (What's this?)
Is time spent learning dividend investing worth it?
7 Higher Yield Dividend Growth Stocks
Preventing Blind Spots in Dividend Investing
Read more on Dividend Investing at Wikinvest

October High Yield Dividend Champion Portfolio

In December 2010, I created a screen/hypothetical portfolio called the “High Yield Dividend Champion Portfolio.” The screen is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments.

Like many of the screens, strategies, and portfolios I track and prefer, the High Yield Dividend Champion Portfolio uses a small number of historically relevant ideas to create a simple, yet powerful investment plan. As I previously detailed, “Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.”

The High Yield Dividend Champion Portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to rank high yield/low payout stocks. 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.

In January I announced some changes to the ranking system. We still begin with the Dividend Champion list, which is first sorted by yield and the lowest 50% yielding stocks are eliminated. Eliminating the lowest yielding stocks ensures only stocks with a relatively “high” yield make the portfolio.

The remaining stocks are then assigned a rank based on their yield (the higher the yield the higher the rank), payout ratio (the lower the payout ratio the higher the rank), 3 year dividend growth rate, and 5/10 year Dividend Acceleration/Deceleration (5-year average increase divided by 10-year average increase).  Extra weight is given to yield and payout ratio rankings.

The top 10 stocks based on the new ranking system make the portfolio. Stocks will be sold at 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.

This month, as like last month, there is no portfolio turnover. All current positions will be held until next month.

The top 15 stocks based on my ranking methodology are below and displayed in order of their overall ranking (figures are September month-end):

Name Symbol Yield Payout A/D* 3-yr
Chevron   Corp. CVX 3.29 32.41 0.96 9.68
Helmerich   & Payne Inc. HP 2.90 30.44 1.52 11.87
Altria   Group Inc. MO 5.59 87.67 1.25 8.71
ExxonMobil   Corp. XOM 2.93 31.74 1.08 9.51
WGL   Holdings Inc. WGL 3.93 62.22 1.35 2.89
Target   Corp. TGT 2.69 41.45 1.10 24.74
Universal   Corp. UVV 3.93 33.96 0.58 2.13
American   States Water AWR 2.94 53.29 1.53 7.93
UGI Corp. UGI 2.89 47.48 1.15 10.53
Questar   Corp. STR 3.20 60.50 1.03 9.61
Leggett   & Platt Inc. LEG 3.98 69.77 1.15 3.81
Northwest   Natural Gas NWN 4.34 85.45 1.24 3.81
Clorox   Company CLX 3.48 65.74 0.91 8.91
Tompkins   Financial Corp. TMP 3.29 58.91 0.84 5.70
HCP Inc. HCP 5.13 108.25 1.14 2.82

The current portfolio is below:

Position Purchase Date
CVX 12/6/2012
WGL 12/6/2012
HP 7/5/2013
UVV 4/5/2012
UGI 8/5/2013
LEG 8/5/2013
XOM 4/5/2013
MO 3/5/2013
AWR 7/5/2013
NWN 4/5/2013

The portfolio performance is below along with three benchmarks:

High Yield Dividend Champion Oct

If you enjoy these free tools, please consider making a donation on the home page of Scott’s Investments using the Paypal link in the upper-right corner!

More on this topic (What's this?)
Is time spent learning dividend investing worth it?
7 Higher Yield Dividend Growth Stocks
Preventing Blind Spots in Dividend Investing
Read more on Dividend Investing at Wikinvest

August Dividend Champion Portfolio Update

In December 2010, I created a screen/hypothetical portfolio called the “High Yield Dividend Champion Portfolio.” The screen is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments.

Like many of the screens, strategies, and portfolios I track and prefer, the High Yield Dividend Champion Portfolio uses a small number of historically relevant ideas to create a simple, yet powerful investment plan. As I previously detailed, “Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.”

The High Yield Dividend Champion Portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to rank high yield/low payout stocks. 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.

In January I announced some changes to the ranking system. The changes were not due to poor performance – the strategy has returned over 75% since late 2010.

We still begin with the Dividend Champion list. The list is first sorted by yield and the lowest 50% yielding stocks are eliminated. Eliminating the lowest yielding stocks ensures only stocks with a “high” yield make the portfolio.

The remaining stocks are then assigned a rank based on their yield (the higher the yield the higher the rank), payout ratio (the lower the payout ratio the higher the rank), 3 year dividend growth rate, and 5/10 year Dividend Acceleration/Deceleration (5-year average increase divided by 10-year average increase).  Extra weight is given to yield and payout ratio rankings.

The top 10 stocks based on the new ranking system make the portfolio. Stocks will be sold at 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.

This month there is turnover in two positions – California Water Service (CWT) was a holding since 4/5/13 and appreciated 11.14%. Air Products & Chem (APD) was a holding since 2/5/13 and appreciated 23.25%.

The two new positions are UGI Corp (UGI) and Leggett & Platt Inc. (LEG).  As of the end of July UGI yielded 2.7% with a 51% payout ratio and LEG yielded 3.7% with a payout ratio of 67%.

The top 15 stocks based on my ranking methodology are below and displayed in order of their overall ranking (figures are July month-end):

Name Symbol Yield Payout A/D* 3-yr
Helmerich & Payne Inc. HP 3.16 35.46 1.517 11.9
Chevron Corp. CVX 3.18 30.23 0.956 9.7
WGL Holdings Inc. WGL 3.65 55.45 1.347 2.9
Altria Group Inc. MO 5.02 80.37 1.251 8.7
ExxonMobil Corp. XOM 2.69 25.69 1.081 9.5
UGI Corp. UGI 2.69 51.36 1.147 10.5
Leggett & Platt Inc. LEG 3.69 67.44 1.153 3.8
Tompkins Financial Corp. TMP 3.37 58.91 0.843 5.7
Target Corp. TGT 2.41 40.38 1.102 24.7
Northwest Natural Gas NWN 4.14 86.26 1.245 3.8
Clorox Company CLX 3.30 66.51 0.910 8.9
Genuine Parts Co. GPC 2.62 48.31 1.170 6.8
Questar Corp. STR 3.02 60.50 1.035 9.6
Universal Corp. UVV 3.26 42.92 0.585 2.1
American States Water AWR 2.52 54.36 1.528 7.9

The current portfolio is below:

Position Purchase Price Purchase Date Percentage Gain/Loss Excluding Dividends
CVX 106.45 12/6/2012 16.48%
WGL 38.61 12/6/2012 19.61%
HP 65.48 7/5/2013 1.25%
UVV 45.55 4/5/2012 39.10%
UGI 42.49 8/5/2013 0.00%
LEG 31.72 8/5/2013 0.00%
XOM 89.01 4/5/2013 2.90%
MO 34.24 3/5/2013 4.00%
AWR 54.5 7/5/2013 19.65%
NWN 44.24 4/5/2013 -0.66%

 

The portfolio performance is below along with three benchmarks:

august dividend champ

 

If you enjoy these free tools, please consider making a donation on the home page of Scott’s Investments using the Paypal link in the upper-right corner!

More on this topic (What's this?)
Is time spent learning dividend investing worth it?
7 Higher Yield Dividend Growth Stocks
Preventing Blind Spots in Dividend Investing
Read more on Dividend Investing at Wikinvest

July Dividend Champion Portfolio

In December 2010, I created a screen/hypothetical portfolio called the “High Yield Dividend Champion Portfolio.” The screen is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments.

Like many of the screens, strategies, and portfolios I track and prefer, the High Yield Dividend Champion Portfolio uses a small number of historically relevant ideas to create a simple, yet powerful investment plan. As I previously detailed, “Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.”

The High Yield Dividend Champion Portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to rank high yield/low payout stocks. 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.

In January I announced some changes to the ranking system. The changes were not due to poor performance – the strategy has returned over 62% since late 2010.

We still begin with the Dividend Champion list. The list is first sorted by yield and the lowest 50% yielding stocks are eliminated. Eliminating the lowest yielding stocks ensures only stocks with a “high” yield make the portfolio.

The remaining stocks are then assigned a rank based on their yield (the higher the yield the higher the rank), payout ratio (the lower the payout ratio the higher the rank), 3 year dividend growth rate, and 5/10 year Dividend Acceleration/Deceleration (5-year average increase divided by 10-year average increase).  Extra weight is given to yield and payout ratio rankings.

The top 10 stocks based on the new ranking system make the portfolio. Stocks will be sold at 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.

This month there is turnover in two positions. Genuine Parts Company (GPC) was a holding since 1/7/13 and was sold for a gain over 27% (excluding dividends).  Tompkins Financial (TMP) was a holding since 5/3/13 and was sold for a gain over 13%.

The two new positions are Helmerich & Payne Inc. (HP) and American States Water (AWR).  As of the end of June HP yielded 3.2% with a 35.5% payout ratio and AWR yielded 3.02% with a payout ratio of 54.4%.

(Charts courtesy of Portfolio123)

hp

 

awr

The top 19 stocks based on my ranking methodology are below and displayed in order of their overall ranking (figures are June month-end):

Name Symbol Yield
Helmerich & Payne Inc. HP 3.20
Chevron Corp. CVX 3.38
WGL Holdings Inc. WGL 3.89
Altria Group Inc. MO 5.03
American States Water AWR 3.02
UGI Corp. UGI 2.89
ExxonMobil Corp. XOM 2.79
Leggett & Platt Inc. LEG 3.73
Air Products & Chem. APD 3.10
Northwest Natural Gas NWN 4.28
California Water Service CWT 3.28
Clorox Company CLX 3.42
Universal Corp. UVV 3.46
Piedmont Natural Gas PNY 3.68
Procter & Gamble Co. PG 3.13
Sonoco Products Co. SON 3.59
Tompkins Financial Corp. TMP 3.36
Questar Corp. STR 3.02
Emerson Electric EMR 3.01

The current portfolio is below:

Position Purchase Price Purchase Date Percentage Gain/Loss Excluding Dividends
CVX 106.45 12/6/2012 13.21%
WGL 38.61 12/6/2012 10.64%
HP 65.48 7/5/2013 0.00%
UVV 45.55 4/5/2012 27.00%
CWT 19.74 4/5/2013 -0.46%
APD 87.49 2/5/2013 5.02%
XOM 89.01 4/5/2013 2.88%
MO 34.24 3/5/2013 3.65%
AWR 54.5 7/5/2013 0.00%
NWN 44.24 4/5/2013 -4.50%

If you enjoy these free tools, please consider making a donation on the home page of Scott’s Investments using the Paypal link in the upper-right corner!

The portfolio performance is below:

dividend champion

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High Yield Dividend Champion Portfolio for May

In December 2010, I created a screen/hypothetical portfolio called the “High Yield Dividend Champion Portfolio.” The screen is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments (see the right hand column for a link to the spreadsheet).

Like many of the screens, strategies, and portfolios I track and prefer, this strategy takes a small number of historically relevant ideas, to create a simple, yet powerful action plan for the individual investor. As I have previously detailed,

 

Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.

 

This portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to gauge the “best” high yield/low payout stocks. The list 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

The Dividend Champions are the starting point and we begin by ranking the top third highest yielding champions. With the remaining high yielding stocks, we will eliminate 50% with the highest payout ratio. The remaining stocks are assigned a rank based on the ratio of their dividend yield to payout ratio (the same as a trailing earnings/price ratio, or the inverse of the trailing P/E ratio). This month we eliminated the requirement stocks have projected forward earnings – the requirement has rarely come to use since the portfolio’s inception and it relies on analyst’s projections.

Now you can follow me on Stocktwits and Twitter!

The top 10 stocks based on this ratio make the portfolio. Stocks will be sold at the re-balance date (generally around the 5th of the month) when they drop out of the top 12 (to limit turnover) and are replaced with the next highest rated stock.

For May we sold MGE Energy (MGEE) and PepsiCo (PEP). MGE was sold at a loss of 2.41% (excluding dividends) and PEP was essentially flat since its purchase last month. The proceeds of these two transactions were used to purchase Chevron (CVX) and UGI Corp (UGI) at Friday’s closing price.

Last month’s Dividend Champion Portfolio update stated “The technical analyst in me has seen momentum in US equities slow the past few weeks. This particular portfolio has returned over 27% since inception but now may be a time to temper expectations.”

This still appears to be the case, so additional hedging or diversification techniques could reduce risk at this juncture. The High Yield Dividend Champion Portfolio was designed to be fully invested at all times regardless of market conditions. However, as part of a larger portfolio there may be additional steps an investor can take to reduce risk and diversify strategies. For example, using Born To Sell we can explore potential covered call opportunities on stocks in the portfolio. The CVX June $105 calls had a last bid of $1.74 and the June $110 calls had a last bid of $.38.

The equity curve of the portfolio is plotted below and since inception it is up over 27%. All discussions of returns are strictly hypothetical and exclude commissions and taxes.

The top 18 rated stocks for the purposes of this portfolio’s criteria are listed below:
Company Symbol Yield Payout Ratio Yield/Payout
Chevron Corp. CVX 3.38 26.79 0.126
Community Trust Banc. CTBI 3.88 46.10 0.084
Tompkins Financial Corp. TMP 3.80 46.60 0.082
Mercury General Corp. MCY 5.40 70.11 0.077
Eagle Financial Services EFSI 3.42 48.98 0.070
Sysco Corp. SYY 3.74 55.38 0.067
Universal Corp. UVV 4.28 64.90 0.066
UGI Corp. UGI 3.70 59.02 0.063
Nucor Corp. NUE 3.72 60.83 0.061
Questar Corp. STR 3.29 54.62 0.060
Sonoco Products Co. SON 3.62 60.30 0.060
Consolidated Edison ED 4.07 67.98 0.060
Clorox Company CLX 3.42 59.26 0.058
MGE Energy Inc. MGEE 3.35 57.97 0.058
Johnson & Johnson JNJ 3.75 67.03 0.056
Kimberly-Clark Corp. KMB 3.77 68.68 0.055
Procter & Gamble Co. PG 3.53 66.12 0.053
California Water Service CWT 3.48 70.00 0.050
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High Yield Dividend Champion Portfolio for April

In December 2010, I created a screen/hypothetical portfolio called the “High Yield Dividend Champion Portfolio.” The screen is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments (see the right hand column for a link to the spreadsheet).

Like many of the screens, strategies, and portfolios I track and prefer, this strategy takes a small number of historically relevant ideas, to create a simple, yet powerful action plan for the individual investor. As I have previously detailed,

 

Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.

 

This portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to gauge the “best” high yield/low payout stocks. The list 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.

Now you can follow me on Stocktwits and Twitter!

The Dividend Champions are the starting point and we begin by ranking the top third highest yielding champions. With the remaining high yielding stocks, we will eliminate 50% with the highest payout ratio. The remaining stocks are assigned a rank based on the ratio of their dividend yield to payout ratio (the same as a trailing earnings/price ratio, or the inverse of the trailing P/E ratio).  Stocks must also have a positive forward projected P/E, to eliminate stocks with no projected earnings for the next year.

The top 10 stocks based on this ratio make the portfolio. Stocks will be sold at the re-balance date (generally around the 5th of the month) when they drop out of the top 12 (to limit turnover) and are replaced with the next highest rated stock.

 

For April we are selling RPM International (RPM) and Pitney Bowes (PBI). RPM was sold at a gain over 41% (excluding dividends) since its purchase in September, 2011. PBI was sold for a loss of 9.55% (excluding dividends) since its purchase in December 2011. The proceeds of these two transactions were used to purchase Universal (UVV) and PepsiCo (PEP) at today’s closing price.

 

The overall equity market, which has had a stellar 2012 so far, has cooled this week. The technical analyst in me has seen momentum in US equities slow the past few weeks. This particular portfolio has returned over 27% since inception but now may be a time to temper expectations.

 

The High Yield Dividend Champion Portfolio was designed to be fully invested at all times regardless of market conditions. However, as part of a larger portfolio there may be additional steps an investor can take to reduce risk and diversify strategies.  For example, the Ivy Portfolio uses a 10 month moving average to dictate an invested or cash position (signals are updated daily at Scott’s Investments). Michael Dever’s Jackass Investing: Don’t do it. Profit from it also provides several different methods for diversifying strategies and not just asset classes.

 

Covered call writing is another potential tool to generate additional income. By selling a call against an underlying equity position, the seller earns income upfront but gives up a certain amount of potential capital appreciation. Using Born To Sell we can explore potential covered call opportunities on stocks in the High Yield Dividend Champion Portfolio. For example, PEP May $67.50 calls had a last bid of $.55 and the May $60 calls for ED had a last bid of $.20.

 

The simple system I developed for the High Yield Dividend Champion portfolio is not without its drawbacks.  When a stock is near the bottom of the rankings for yield or payout,  minor fluctuations in yield or payout could put the stock in or out of the current portfolio each month. In other words, turnover could potentially be a drag on returns.  One potential solution would be to rebalance the portfolio less frequently, or to give stocks more room to fall in rankings before being removed from the portfolio.

 

The portfolio’s equity curve is below, plotted against the SPY (distributions included in both):
All discussions of returns are strictly hypothetical and exclude commissions and taxes.

 

The top 18 rated stocks for the purposes of this portfolio’s criteria are listed below:

 

Company Symbol Yield Payout Yield/Payout (E/P)
Tompkins Financial Corp. TMP 3.59 45.14 0.080
Mercury General Corp. MCY 5.58 70.11 0.080
Community Trust Banc. CTBI 3.87 49.01 0.079
Sysco Corp. SYY 3.62 55.38 0.065
Universal Corp. UVV 4.21 64.90 0.065
Sonoco Products Co. SON 3.49 54.46 0.064
Eagle Financial Services EFSI 3.47 54.96 0.063
Consolidated Edison ED 4.14 67.98 0.061
PepsiCo Inc. PEP 3.24 53.35 0.061
Questar Corp. STR 3.37 56.03 0.060
MGE Energy Inc. MGEE 3.45 57.97 0.059
Clorox Company CLX 3.49 59.26 0.059
RPM International Inc. RPM 3.28 56.95 0.058
Nucor Corp. NUE 3.40 59.59 0.057
Johnson & Johnson JNJ 3.46 65.52 0.053
California Water Service CWT 3.46 70.00 0.049
Abbott Laboratories ABT 3.33 68.00 0.049
Conn. Water Service CTWS 3.36 73.64 0.046
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