How Strong are my 2012 Predictions 18 months later?

 

 

I always thought dividend growth investing was about selecting extremely solid companies that will increase their dividend over time. Companies that increase their sales, earnings and dividend payments year after year while keeping a relatively low payout ratio will eventually gain value within an investor portfolio. I’m also a big believer that time will be on the investor’s side as the compounding effect will work its magic. That all happens for everyone… who has set a sound investing strategy and sticks to it!

 

Back in 2012, I wrote my first eBook about stock picking. This eBook was free and available for download to my mailing list subscriber. If you haven’t done this already, I strongly suggest you subscribe to my exclusive and free investing newsletter:

 

 

 

The goal with this book was to select 20 US dividend stocks and 10 Canadian dividend stocks that would beat dividend ETFs that I use as a benchmark. On December 31^st, 2012, I made my last update on the Top 2012 Dividend Stocks. I was slightly behind my benchmark with my US stock picks (1.47% behind) but was way ahead with my Canadian selections (8.32% better than my benchmark). Since it was the first time I played the prediction game, I was quite happy with the result. After all, both virtual portfolios were making money!

 

How I Made My Selections For The Long Haul

 

I did select these 30 stocks to outperform the market in 2012, but my goal was bigger than this. The way I chose these companies and not others is based on my investing strategy. I selected key metrics to filter the market and then pulled out these companies for very specific reasons. Since these companies had made the cut for my rigorous selection back in 2012, they should, technically, hold the fort and keep performing over 2013. After all, my investing strategy is setup to find great companies that would continue to perform over time. 18 months after my first prediction, it is time to see where these stocks are today, don’t you think? Was I just lucky with my stocks or do they keep performing over time?

 

This is why I’ve decided to update my charts and see how both portfolios performed from January 1^st, 2012 to July 22^nd, 2013. Stock prices have been taken during the first hour of the market opening on July 22^nd. This was when I had the time to write this blog post ;-). Total return (including capital gains and dividend payout) is not annualized.

 

Here again, these are not stock recommendation and you MUST do your own research before investing. I can’t be held responsible for any profits or losses within your investment account.

 

Best US Dividend Stocks 2012

Company Name	Ticker	Price	Shares	Amount	Dividend Per Share	Dividend Received	July 22th 2013	Stock %	Current Value
Avon Products	AVP	$16,99	58,86	$1 000,00	$0,24	$14,13	$23,28	37,02%	$1 370,22
AT&T	T	$30,24	33,07	$1 000,00	$1,80	$59,52	$35,67	17,96%	$1 179,56
Black Rock	BLK	$178,07	5,62	$1 000,00	$6,72	$37,74	$280,06	57,28%	$1 572,75
Chevron	CVX	$106,41	9,40	$1 000,00	$4,00	$37,59	$127,04	19,39%	$1 193,87
Conoco Phillips	COP	$53,84	18,57	$1 000,00	$2,72	$50,52	$65,85	22,31%	$1 223,07
Flowers Food	FLO	$18,98	52,69	$1 000,00	$0,44	$23,18	$23,53	23,97%	$1 239,73
Garmin	GRMN	$39,00	25,64	$1 000,00	$1,80	$46,15	$36,87	-5,46%	$945,38
General Mills	GIS	$40,01	24,99	$1 000,00	$1,52	$37,99	$51,64	29,07%	$1 290,68
Hasbro	HAS	$31,01	32,25	$1 000,00	$1,20	$38,70	$47,33	52,63%	$1 526,28
Harris Corp	HRS	$36,04	27,75	$1 000,00	$1,48	$41,07	$52,58	45,89%	$1 458,93
Intel	INTC	$24,22	41,29	$1 000,00	$0,88	$36,33	$22,93	-5,33%	$946,74
Johnson & Johnson	JNJ	$65,00	15,38	$1 000,00	$2,64	$40,62	$92,05	41,62%	$1 416,15
Lockheed Martin	LMT	$79,98	12,50	$1 000,00	$4,60	$57,51	$115,50	44,41%	$1 444,11
Microsoft	MSFT	$24,98	40,03	$1 000,00	$0,92	$36,83	$31,77	27,18%	$1 271,82
PepsiCo	PEP	$66,04	15,14	$1 000,00	$2,28	$34,52	$86,18	30,50%	$1 304,97
RadioShack	RSH	$9,71	102,99	$1 000,00	$0,00	$0,00	$3,01	-69,00%	$309,99
Seagate Technology	STX	$16,39	61,01	$1 000,00	$1,52	$92,74	$47,29	188,53%	$2 885,30
Sunoco Logistics Partners	SXL	$38,94	25,68	$1 000,00	$2,28	$58,55	$61,75	58,58%	$1 585,77
Wisconsin Energy	WEC	$33,97	29,44	$1 000,00	$1,52	$44,75	$43,47	27,97%	$1 279,66
Waste Management	WM	$32,72	30,56	$1 000,00	$1,48	$45,23	$42,48	29,83%	$1 298,29
				$20 000,00		$833,67		33,72%	$26 743,27
					Dividend Yield (%)	4,17%		Total $	$27 576,95
								Return	37,88%
Vanguard App Div ETF	VIG	$54,06	369,96	$20 000,00	$1,36	$503,14	$69,86	29,23%	$25 845,36
					Dividend Yield (%)	2,52%		Total $	$26 348,50
								Return	31,74%

From an okay result of trailing the benchmark by almost 1.50%, my portfolio went to outperforming the benchmark by 6.14% (total return). The whole portfolio generated a 37.88% total return with 7 stocks over 40% growths (not counting the dividend payout) and only 2 picks are showing negative metrics. Obviously RadioShack was by far the worst pick I’ve ever made… brain freeze I guess!

 

Best Canadian Dividend Stocks 2012

Company Name	Ticker	Price	Shares	Amount	Dividend Per Share	Dividend Received	Jul 22th 2013	Stock % YTD	Current Value
BCE	BCE	$42,47	23,55	$1 000,00	$2,32	$54,63	$43,29	1,93%	$1 019,31
Corus Entertainment	CRJ.B	$20,00	50,00	$1 000,00	$1,08	$54,00	$24,43	22,15%	$1 221,50
Gamehost	GH	$11,33	88,26	$1 000,00	$0,84	$74,14	$13,30	17,39%	$1 173,87
IGM Financials	IGM	$44,23	22,61	$1 000,00	$2,16	$48,84	$47,25	6,83%	$1 068,28
Leon\'s Furniture	LNF	$12,40	80,65	$1 000,00	$0,40	$32,26	$12,24	-1,29%	$987,10
Magna International	MG	$33,97	29,44	$1 000,00	$1,32	$38,86	$77,88	129,26%	$2 292,61
National of Canada	NA	$71,98	13,89	$1 000,00	$3,48	$48,35	$78,82	9,50%	$1 095,03
Telus	T	$28,82	34,70	$1 000,00	$1,36	$47,20	$31,62	9,73%	$1 097,35
TD Bank	TD	$76,26	13,11	$1 000,00	$3,24	$42,49	$88,03	15,43%	$1 154,34
				$9 000,00		$440,75		23,44%	$11 109,38
					Dividend Yield (%)	4,90%		Total	$11 550,13
								Return	28,33%
iShares Dow Jones Cdn Div	XDV	$20,56	437,74	$9 000,00	$0,96	$420,23	$22,55	9,68%	$9 871,11
					Dividend Yield (%)	4,67%		Total	$10 291,34
								Return	14,35%

 

The Canadian market has been fairly hostile in 2013 where banks are slowing down and resources are stuck with low growth exports to China. This is why I wasn’t too sure I could continue to beat the benchmark as I did for just 12 months. I was shocked to see that I beat XDV total return by 13.98%! However, the big difference comes from Magna International (MG) which was quite a homerun with +129% in 18 months! If I put a 0% growth on this stock, I’m down to almost the same result as XDV… still not too bad!

 

These Were Great Picks but I Can’t Hold Them Forever

 

The key point of this article is not that I made great selections or to show you how great stocks that were picked based sound investment strategy can perform over time. The key point is how you should keep your nose close to your portfolio all the time. If you look at both virtual portfolios, you have stocks that don’t fit my investing criterion anymore. A real life example was when I sold Seagate Technology (STX) in my own portfolio this year since I don’t believe it can keep up with increasing sales.

 

If this was my own portfolio, I would have sold RSH right after the dividend cut and get over with my loss instead of keeping the stock. I noticed that several of these stocks didn’t make the cut for my 2013 Best Dividend Stock book. So a closer look at your portfolio can definitely prevent you from holding a stock for too long or not seizing a new portfolio pick. This is why I continuously follow-up with my portfolio and do a deeper analysis at least twice a year. In the meantime, you can always check my picks for 2013 by buying my book:

It’s doing pretty well so far this year and I’m fairly confident these stocks will continue to outperform the benchmark in 2014 😉

 

Readers, how often do you follow-up with your portfolio?

 

disclaimer: I hold CVX, INTC, JNJ, NA and Telus

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