The first quarter is now behind us and, funny enough, it has been quite a roller coaster of emotions. If you are like me and got lucky, you had some cash set aside to buy some bargains on the stock market. I personally made 5 purchases between January and February:
Royal Bank (RY.TO)
Agrium (AGU.TO)
Union Pacific (UNP)
3M Co (MMM)
Apple (AAPL)
As you will see it on the following chart, there were 2 moments (one in January and one in February) where there was a panic feeling all over the stock market:
Source: Ycharts
But overall, we all woke up on April 1st and this wasn’t an April’s fool joke; after losing 10% since the beginning of the year, both markets entered positive territory!
So much fear for so little results. I guess the Black Swan fans were highly disappointed to see:
Relatively strong results for the last quarter of 2015
The FED not hiking rates in March
Net jobs creation being strong in both February and March
New construction rising again
Oil price recovering a part of its loss
Yes… this is not another bump before the big collapse, I truly believe we are about to see another strong year on the market.
But before we know all this, before we were even January 1st, I had put together a group of 20 US dividend growth stocks and 10 Canadian ones. The goal here is to build a great list of stock picks but that could also make portfolios by themselves.
Creating 2 Strong Dividend Growth Portfolios
Each year, I publish a book called “Best 2016 Dividend Stock Picks”. This requires several weeks or hard work; reading and researching financial statements. The purpose of this book is not to make you sell your portfolio and have you switch to this one.
The purpose of this book is to create a portfolio-like list of stocks in various sectors to provide both stock value appreciation and dividend growth perspectives. Each company has been analysed and handpicked according to the DSR investing model.
My investing model includes both parts of my portfolio; a core model with solid (read boring) stocks and an additional growth segment where I pick stocks for a time horizon of 12 to 36 months. The idea is to pick stocks that have greater risk but also greater potential over a short period of time. Mind you, both are possible for some picks.
Taking Additional Risks to Beat our Benchmarks
I’m a man of results and am not afraid to hide when I succeed or when I fail. While I believe in each single company I pick when writing the book, I’m adding additional challenges to the task. The first one is to not make repetitive choices. Some companies repeat for one or two years (the book series exists since 2012), but I’m trying to bring as much “fresh meat” I can to my readers. The goal is then to help you discover new companies or better understand the ones you already knew.
Then, the second challenge: I’m trying to have my picks been their benchmark. I’ve chosen 2 dividend paying ETFs:
Vanguard Dividend Appreciation ETF (VIG)
iShares Dow Jns Cnd Slct Dvdnd Indx Fnd (XDV)
Comparing returns over a short period of time is always dangerous. The investment results over 3 months, 6 months or even a year is a combination of both good stock selection and luck. Still, I think it is important to be transparent when you discussing investments. For fun, I went back in my previous issues and looked at the long term performance of each portfolio since their inception to March 30th 2016. This is not a perfect comparison since no transactions are allowed and any investor may have bought or sold some of his holdings. Anyways, here are the results:
I’ve included my results against my benchmark and also included the global index to show how dividend stocks performed compared to the global equity market. The “added value” line refers to the performance of my selections compared to my benchmark. I used a simple color code where green means I beat my benchmark, orange means that I’m roughly head-to-head with my benchmark and red for portfolios not beating the benchmark.
My US portfolios shows a perfect average beating my benchmarket 4 years out of 4. My Canadian selections did very well in 2012 and 2013 but I’m recently trailing behind. Overall, I’m fairly happy with my results and my selections definitely offered value to investors. Now… what about our most recent quarter?
Okay Results (Hey! It happens!)
I’m not showing astonishing in either market, but I’m not trailing by too much either:
Both US (the long list) and the Canadian portfolios are roughly 1% behind my benchmark. However, I have been able to pick some great performing companies as well. If you want to find out about my selections for this year along with a one pager analysis (including fair value calculations) you can buy my book for only $4.99 (pst! DSR members get it for free!):
Click here to get your copy!
Where to Find Strong Canadian Stock Picks
If you are looking for more than a list and you want continuous high quality information related to the Canadian Stock market only, I’ve found the guy who does that. Pat McKeough is the publisher and editor of The Successful Investor newsletter This newsletter focuses solely on the Canadian stock market. Each month, you will get his review of the stock market and read about his most recent findings.
Results calculated by Hulbert Financial Digest, an independent authority on published investment advice, show that McKeough’s advice has generally surpassed returns from market averages. MarketWatch has called McKeough “one of the top investment letter editors on the continent”.[7] His proprietary ValuVesting System focuses on assembling a low-risk investment portfolio of stocks[3] that appear to have exceptional quality at a relatively low price.[5][6]
Anyone who wants to subscribe this newsletter will have to pay $139 and I got it for $40!
Click here to sign-up for this offer which is only good this APRIL!
For only $40, your subscription includes The Successful Investor newsletter delivered each month (12 x a year), this is $3.33 per newsletter. It also includes their weekly email Hotline Service (value $75.00, free with your subscription) and a monthly portfolio supplement. Subscribers will also receive access to the complete library of back issues and previous hotlines.
Click HERE To Get Your Newsletter Deal
PSST! If you are a DSR member, send me your confirmation and I’ll send you another rebate by check!
The bargain alert was not clear enough for me and I did not buy extras at that time. Next time, I will have to be less greedy and buy a little sooner. In fact, I have rules about it, but I am not able to follow them…!
Hello AT,
hahaha! I guess this is the secret of success; following your investing rules 😉
I don’t really believes in market timing, however, this was a pretty good one!
Cheers,
Mike.
There is still too much need in me to time the market. I am curious to see how this will evolve. I will tolerate it for a few more months while looking for a solution. full automation is not yet possible… 🙁
I read this article this morning, just before checking my investment account. And AGU stock just plummeted. I thought I’d gotten a good discount at $111.86. Its since dropped down as low as $104.74. What do you make of this? Cause for alarm or do you think AGU will weather it out?
Hello Jono,
There hasn’t been any news in regards to the company. Just a few updates from analysts firms. My investment thesis on AGU stands as farmers will need AGU products in the upcoming years. Sometimes we have to be patient 🙂
Cheers,
Mike
Hi Jono,
I’m just a regular guy trying to build a “good dividend paying blue chip” portfolio of stocks and ETFs. Yes, I do own a few growth stocks i.e. Telus, but they really have to be top notch on my list and of a number of analysts that follow the stock. I just don’t like AGU. Someday it might become a buy, but it is still a highly cyclical company. On the other hand, in your favor, Mike has set rules about stocks and he is quite often right!
Hello Michel,
thx for the vote of confidence! However, I have stated in the past that AGU is a riskier (read more volatile) stocks than other dividend paying stocks. This is nothing compared to banks, telecoms or CNR for example.
Cheers,
Mike
Hey Mike,
Do you track your stock picks for longer than 1 year? For example, how did your 2012 picks do each subsequent years?
The reason I ask is that rarely do we just turn over our portfolio every year and a stock selection is meant to perform for more than a year.
Cheers!
Hey Eric,
I guess you skip this part of the article 😉 The chart in the middle shows how the previous picks did since 2012. However, some companies would definitely not be part of my portfolio today (for example, RadioShack was in 2012 😉 hahaha!).
Cheers,
Mike
Thanks. I mis-interpreted the chart. I thought you were sharing the result of each year as opposed to show
2012 for 4 years
2013 for 3 years
2014 for 2 years
2015 for 1 year
I would have expected an annual return for each year to compare them overall.
Anyways, thanks!
I can see the engineer background 😉 it would have been ideal, but it’s a lot of work to keep up with all stocks for each year. Especially since they are not actively traded.
cheers,
Mike
Hi Mike,
It’s always fun to track how investments go. I think Apple has got a great future (and a balance sheet nearly every other company in the world would die for). The iPhone might be slowing down a little bit, but you know they will be right there with whatever new technology happens. I’m surprised we haven’t heard much about any iCar from them though.
Tristan
Hello Tristan,
I’m sure we will hear about the iCar when they will be close to a launch 🙂
cheers,
Mike.
Great list of stock picks here. I added RY last month and will likely buy more on the next dip. UNP is another holding of mine. I want to buy more as well, but I think it could see another dip if energy stays depressed.
Thanks for sharing
Hey IH,
I bought UNP and CNI (well CNR since I’m Canadian 😉 ). I think it is the perfect timing to buy railroads!
Cheers,
Mike