Investing in dividend growth stocks is a long-term proposition. One of the beauties of following a dividend growth strategy is that you don't have to watch your portfolio or the market on a daily basis. For the most part, daily, monthly and yearly movements are just noise in the system.
My normal practice is to refresh my analytical spreadsheets each Friday with updated price information on the 220+ stocks that I follow. Even then, I don't normally look at the value of my portfolio or the performance of individual stocks.
However, each quarter I update my income portfolio's performance and benchmark it against the S&P 500 and other portfolios. At that time I will look at performance of individual stocks to understand the overall performance the portfolio.
Saturday, I updated my Income Portfolio's performance
for the second quarter. Building on that, here are my income portfolio's top and bottom 5 performers for the year, through June 30, 2012:
Top Performers#5. Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. is the largest retailer in the world,Wal-Mart operates a chain of over 10,000 discount department stores, wholesale clubs, supermarkets and supercenters. WMT has enjoyed significant price appreciation this year from around $60 at the beginning of the year to nearly $70 at the end of June.
Yield: 2.1% | 6-Month Return: 37.21%#4. AT&T Inc.
AT&T Inc. provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless). T making the Top 5 was somewhat of a surprise. Like WMT, T has enjoyed significant price appreciation this year from around $30 to nearly $36 at the end of June. The stock has benefited from investors looking for yield.
Yield: 4.7% | 6-Month Return: 40.61%#3. Realty Income Corp
Realty Income Corporation is an equity real estate investment trust that owns a diversified portfolio of 2,496 retail properties as of Dec. 31, 2010. O is another stock that has benefited from investors looking for yield. It started the year around $34 and closed June near $42.
Yield: 4.2% | 6-Month Return: 42.81%#2. Cincinnati Financial Corp.
Cincinnati Financial Corp. is an insurance holding company that primarily markets property and casualty coverage. It also conducts life insurance and asset management operations. Last time I did this analysis CINF was #5... in my bottom performing stocks. With its stock moving from around $30 at the beginning of the year to over $38 on June 29th, CINF was able to move to a more desirable neighborhood.
Yield: 4.2% | 6-Month Return: 55.15%#1. United Technologies Corp.
United Technologies Corp. is an aerospace-industrial conglomerate's portfolio includes Pratt & Whitney jet engines, Sikorsky helicopters, Otis elevators, and Carrier air conditioners, among other products. UTX's stock price has been on a roller coaster in 2012. It started the year around $74, peaked at over $86 in March, then fell back to $75 in June. Fortunately, I had decided to liquidate my UTX holdings in March so I was able to sell right before the stock hit its high. UTX's elevated price drove the yield down to a level where I was able to find more desirable investments. If I had continued to hold the stock, it would not have been in this position due to price declines after the March peak.
Yield: 2.9% | 6-Month Return: 88.53%
Bottom Performers#5 AFLAC Incorporated
Aflac Incorporated provides supplemental health and life insurance in Japan (80% of earnings) and the U.S. Products are marketed at work sites and help fill gaps in primary coverage. Late 2011 I got back into AFL. In spite of being on the Bottom 5 list, I still feel good about the company's long-term prospects.
Yield: 3.0% | 6-Month Return: -3.69%#4. Nucor Corporation
Nucor Corporation is the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas. NUE is one of the best run corporations in America. Unfortunately, it is in one of the most troubled industries.
Yield: 3.8% | 6-Month Return: -6.21%#2. Leggett & Platt, Inc.
Leggett & Platt Inc. makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as diversified products for non-furnishings markets. LEG is another company struggling from the industry it is in.
Yield: 4.9% | 6-Month Return: -10.32%#2. Procter & Gamble
The Procter & Gamble Company is a leading consumer products company that markets household and personal care products in more than 180 countries. With all of the negative press coming out , PG and its management may begin feel snake-bite. Good fundamental companies that appear snake-bit often make excellent long-term buys.
Yield: 3.5% | 6-Month Return: -12.32%#1. McDonald's Corporation
McDonald's Corporation is the largest fast-food restaurant company in the world, with about 33,500 restaurants in 119 countries. MCD has been on the top performing list virtually every time I compiled it. Alas, trees don't grow to the sky. Pullbacks on great stocks are one of the things that make me smile.
Yield: 3.1% | 6-Month Return: -17.73%
To avoid short-term anomalies, I excluded stocks that I did not own on January 1, 2012 from the above lists. Investing in dividend growth stocks is a long-term proposition, but sometimes it is nice to see that our portfolio is performing well, in addition to collecting higher dividends
each month.Full Disclosure: Long in all the aforementioned securities, except UTX. See a list of all my income holdings here.