The year is almost over and it’s now time to look back at what we have done in 2014 and determine if we want to pursue our actions in 2015. I don’t know about you, but I’m very happy about my performance on the market this year. A few days before the end of the year, my total return for 2014 is 17.3% slightly under my 2013 performance at 21.70%. I’ve also increased my dividend payout by 21% compared to last year. I knew I could do well in 2014, but, I can’t ask for more!

I’ve been quieter lately because I was working on two projects; My Best 2015 Dividend Stocks small eBook including 20 US and 10 CDN dividend stocks fact sheet that will be available on January 1^st and another project that I can’t yet announce. One thing I can tell you is that I’m coming back stronger with more posts in 2015 due to a shift in my schedule.

I’m now planning to retire from my day job at the age of 35, which is in two years. You read more about this crazy idea here and there. My investing platform, Dividend Stocks Rock is one of the reasons why I can achieve this goal. I truly intend to live from my passion; dividend investing!

I’ve also done extensive research in 2014 and came out with my 7 dividend investing principles, along with my case against high dividend yield stocks.  After four years invested in dividend stocks, I’ve also wrote about six lessons I’ve learned from my recent experience.

I’ve always believed in having a solid investing strategy and that is my #1 advice for new investors. Without a clear plan, you will lose yourself and let your emotion trade your account. And this will lead to losses. I never look back after a trade even if a few of them are not unanimous with my readers (remember why I sold MCD and took a gamble on an oil related stock?). I will continue to follow my investing strategy in 2015 and will shortly share with you my views of both US and Canadian stock market for next year. But first, I want to hear from you;

How were your investments in 2014?

What do you think it’s coming in 2015?

I took a pause from updating my Best 2014 Dividend Stocks portfolios over the last couple of months as I felt it was redundant to repeat the same stuff over and over again. Now that we are approaching the final countdown to the end of 2014, it was time to make a last update before we pull out the final numbers. For the first time this year, both my portfolio lag their benchmarks. This sucks… but as many portfolio managers do in real life, I’ve followed my convictions and this time, I headed in the wrong direction.

Oil is Killing my Portfolios, Is it the Same for You?

Since August, the price of a barrel oil is on a free fall. Arab countries, led by Saudi Arabia, decided to increase their production in order to keep their market share. They have seen Canadian oil sand and American energy independence policy coming their way and are afraid to lose money. Since it costs a lot less to produce oil in their territories than extracting it in North America, it created a panic in this industry.

I have other underperforming stocks in both portfolios, but if I take away those related to the oil industry, the US portfolio would beat its benchmark by 2.25% instead of lagging by 0.07% and the Canadian portfolio would also beat the benchmark by 0.67% instead of lagging by -4.14%…

This is not an excuse, it just explains a lot about portfolio management! If I had played safer, I would not have this problem in both portfolios. Still, there are also other good moves I made! Let’s take a deeper look at both portfolios…

Best 2014 US Dividend Stocks Lagging by 0.07% but Yielding 1.16% More

While the portfolio is a bit behind the benchmark, my overall performance will probably be better than the VIG. The VIG is only yielding 1.88% as my portfolio pays a 3.14% dividend yield. Considering the dividend yield, I have 7 stocks out of 20 that will show a 20%+ total return unless there is major bad luck in the last 25 days of the month!

Apple (AAPL) made a real come back this year by showing the industry that they are still in the race for the best mobile device while keeping very high margins (compared to the leader of the industry, Samsung).

Genuine Parts (GPC) surprised the market with great financial results. The automotive industry in general is picking up and GPC’s strategy of growing through both acquisitions and generating internal growth is a success.

Lockheed Martin (LMT) focused on growing earnings in 2014 and pleased investors. It is somewhat able to deal with US Government budget cuts and continue to generate a decent return. Current geo-political tensions should help the company to keep going this route in 2016.

Lorillard (LM) started a slow but consistent rally after the announcement of purchase by Reynolds American (RAI). According to many investors, LM is still trading at discount considering the whole deal. Is there money to be made from this stock before the deal closes? Check it out!

PepsiCo (PEP) showed steady growth and the rumor of spinning off their snack business is pushing the stock higher. PEP is a classic dividend payer to hold in your portfolio but as opposed to Coca-Cola (KO) it was able to generate growth in 2014.

Wells Fargo (WFC) is currently up by 18.57% and pays a 2.60% yield. Therefore, it has pretty good chances to show a total return of 20% at the end of this year. This is a strong bank that currently reaps the benefits from being strong throughout 2008 credit crisis.

Wisconsin Energy (WEC) has been part of my Best dividend stocks since 2012 and was never excluded. Throughout this period, the stock went up by 42% and the quarterly dividend payout went from $0.30/share to $0.39/share. It’s less than the S&P 500, but it is a strong performance for a utility company.

Many Bad Choices in the Canadian Stock Market (-4.14% vs Benchmark)

While I’m pretty happy with my US portfolio results, I’m not too happy with my Canadian portfolio performance. It is true that one stock is down 43% which pretty much annihilates all my chances of beating my benchmark this year. But besides the fact that I was wrong with the price of oil (I thought it would simply hold at the $100 level), I was also wrong (or too quick) about the consumer sector. I thought Dorel (DII.B) and North West Company (NWC) would benefit from a stronger economy. Both stocks are down due to okay but not great results. Nonetheless, they remain strong companies… I guess we just have to be more patient and the span of 12 months wasn’t enough to perform well.

On the good news part, Lassonde (LAS.A) with its purchase of the American Apple & Eves burst by 27%. Royal Bank (RY) impressed with strong results and is nearly generating a 20% total return this year. Telus (T) is the second stock with Lassonde to generate over 20% return in 2014. Now that the cloud of a foreign competitors has dissipated (for now!), the company continued to post solid results and grow its dividend.

Currently Preparing my Best 2015 Dividend Stocks

While the year is about to end, I’ve already pulled my first list of stocks to analyze for 2015. I started this tradition backin 2012.  I select 20 US and 10 Canadian stocks for each year. So far, my global portfolio has always beaten my benchmark. 2014 will probably be the first year where my Canadian performance won’t be strong enough to beat the overall benchmark. Still, in three years, 4 out of 6 portfolios (US and CDN) beat the benchmark by great numbers. I am very happy with this performance since the idea of picking stocks for 12 months is to take greater risk than when you pick your stock for a long term horizon portfolio.

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I’ve admitted it in the past; I’m not the typical dividend investor. I started investing by trading, buying & selling every two weeks while most dividend investors usually buy and hold completing the sale transaction after several years holding their shares. In my opinion, the dividend investor is the upgraded version of the buy & hold investors. More often than not, the buy & hold and dividend investor is the same guy. I strongly believe in dividend investing, that is why 100% of my portfolio is composed of dividend paying stocks. I even wrote two books and created a whole investing platform around dividend stocks called Dividend Stocks Rock. Still, I’m not convinced a 100% buy & hold strategy is the best way to maximize your investment these days.

The Investment Thesis Behind the Buy & Hold Strategy

Before I present my view of investing, I think it’s important to mention why the buy & hold philosophy is so seductive for many investors. First, several famous investors have used this method in the past. Guys like Warren Buffett have reputations for success to make following their path seem logical. Invest in solid companies that you can understand and buy only if you intend to hold the stock for ten years… or more. This is roughly what you can learn from the buy & hold strategy.

Then, there will be a horde of investors with shocking examples of company success over the years such as Coca-Cola (KO) which shows a total return of over 5,000% since 1978. But my point is not to debate as to whether or not you should buy & hold stocks for several years. This totally makes sense for your core portfolio, but if you want to maximize your return, I think you should add more trading habits to your investing strategy.

The Way I See Things: a Buy & Hold Core + a Growth Segment

I’ve had several reactions about my latest trade: selling a dividend aristocrats (McDonald’s  NYSE:MCD) to buy a speculative company working in the oil industry which is down 35% since January 2014 (Black Diamond Group TSE:BDI). For many, this transaction looks like a trader’s move at best and like a gambler for others.

I told you already: I’m not the typical dividend investor. I have a set of 7 investing principles I follow religiously and I also allow some cash to make “growth additions” to my dividend portfolio. The point is simple: I have most of my portfolio in shares of companies I truly want to hold forever (such as JNJ, KO, Telus(T), ScotiaBank (BNS), DIS, WMT, etc) but I also allow myself to forget about 1 of my investing principles if I think there is a great opportunity on the market. I have done it in the past with STX, INTC and HSE which all reported profits over 25% over a short period of time. I’m currently holding AAPL, HP, Gluskin & Sheff (GS) and Balck Diamond Group (BDI) in my “additional growth” segment. When I sold MCD to buy BDI, I simply sold a part of my core portfolio to transfer it to my “growth” segment. My point is the following, what if MCD is the new KO that did an astronomic 1.82% (plus dividend) over the past 16 years???

You see it right, someone who bought and held Coca-Cola (KO) since June 30^th 1998 until today only made 1.82% in appreciation. Thank god there is a dividend attached to this stock!

BDI’s drop in price is directly linked to the oil sand industry. BDI rents & sells modular equipment for remote areas. Its biggest market is renting modular homes in Northern Alberta for oil sand exploration businesses. However, nothing is stopping BDI from exploring other markets (basically any company with an interest to develop in a remote area) and generate additional revenue. The company shows solid fundamentals and pays over 5% in dividend yield right now. Between a stagnating company like MCD which is probably going to trade around $95-$100 in three years and BDI which can easily trade at $30 (from $19 right now) in 12 months, I’ll take the chance. Keep in mind that I’m not buying a weak company with shaky financials, if you look at BDI’s fundamentals, you will see that the company shows strong basics. Now it’s only a matter of going through the oil barrel storm before we see the light. The 5% dividend is more than enough to keep me waiting in the meantime.

To be honest, in this specific situation, the perfect scenario would have been to keep MCD and use new money to buy BDI. But since I didn’t have more liquidity at the moment and have been following BDI for the past 18 months, I thought it was the right time to make this move.

I’ve been using this strategy for a few years now and it has served me very well. Let’s see if its only luck or a solid investing strategy. I personally think it’s the latter!