Wednesday, March 22, 2017

My 4 Largest Dividend Growth Stock Positions Have Double-Digit Lifetime Returns

Over time stocks fall in and out of favor with the media, analysts and investors. It is too easy to fall in love with a stock only to have your heart, and brokerage account, broken. As an investor that takes a value approach to selecting the best dividend growth stocks, I tend to focus on fundamentals with a heavy dose of analysis. It may be surprising but even this approach will favor certain stocks over time.

Sometimes an irrational market will pull down the good stocks with the bad. This is an exciting time for long-term value-focused investors -- it creates opportunity. Over time the idiom 'the cream rises to the top' has merit and works quite well in the investing world. Great stocks won't stay down forever. Eventually, they will surge back to the top.

Taken to the next level, certain stocks in my dividend growth portfolio tend to be purchased more often than others. This will often pushes the limit on my maximum allocation limit of 5% per holding in the portfolio. Sometimes, the high allocations are a result of buying up to the limit when the price is down. While other times it is a conscious decision to slightly exceed the 5% threshold.

Below are my largest Dividend Growth Stocks positions based on market value, along with their percentage of my dividend growth portfolio and lifetime return:

Johnson & Johnson (JNJ) is a leader in the pharmaceutical, medical device, and consumer products industries. The company has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 54 consecutive years.
Yield: 2.5% | % of DG Portfolio: 6.0% | Lifetime Return 14.7%

Microsoft (MSFT), the world's largest software company, develops PC software, including the Windows operating system and the Office application suite. The company has paid a cash dividend to shareholders every year since 2003 and has increased its dividend payments for 15 consecutive years.
Yield: 2.4% | % of DG Portfolio: 6.0% | Lifetime Return 23.3%

General Dynamics (GD) is the world's fourth largest military contractor, and also one of the world's biggest manufacturers of corporate jets. The company has paid a cash dividend to shareholders every year since 1979 and has increased its dividend payments for 26 consecutive years.
Yield: 1.8% | % of DG Portfolio: 6.5% | Lifetime Return 26.8%

Raytheon Company (RTN), the world's fifth largest military contractor, specializes in making high-tech missiles, advanced radar systems and sensors, defense electronics, and missile-defense systems. The company has paid a cash dividend to shareholders every year since 1964 and has increased its dividend payments for 12 consecutive years.
Yield: 1.9% | % of DG Portfolio: 6.5% | Lifetime Return 29.7%

Capital appreciation has played a significant part in the above stocks weighting. As you can see, all of the highlighted stocks are above my 5% maximum allocation, and thus I am not currently adding to my position. From a risk standpoint, it is important to define a maximum percentage holding. This helps define boundaries when emotion (greed or fear) is knocking on the door.

Full Disclosure: Long JNJ, MSFT, GD, RTN in my Dividend Growth Stocks Portfolio. See a list of all my Dividend Growth Portfolio holdings here.

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- Managing Risk With Dividend Stocks

(Photo Credit)


Tags: JNJ, MSFT, GD, RTN,

3 comments:

  1. what amount of time does Lifetime return reflect?

    ReplyDelete
    Replies
    1. Each were first purchased at different times:

      JNJ February 2008
      MSFT October 2011
      GD August 2010
      RTN June 2012

      Each had subsequent purchases after the initial buy.

      Thanks for reading.

      Best Wishes,
      D4L

      Delete
  2. JNJ is one of my favorites.

    I like CSCO and INTC going forward. Lots of opportunities with the self driving cars and other new technologies in the pipeline.

    ReplyDelete

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