Dividend Growth Newsletter Portfolio Delivers Again in 2019

By Brian Nelson, CFA 

 

Hi everyone!

 

I haven’t forgotten about you, our dividend growth friends. At Valuentum, we’re huge fans of dividend growth stocks, and we use our valuation expertise to augment a newsletter portfolio of some of the best dividend growers on the market. Unlike other shops and most blogs that focus more on dividend growth track records, we also like to look forward, not only in the application of the forward-looking Dividend Cushion ratio, but also as it relates to our enterprise valuation process.

 

Many of you are still ecstatic from the awesome performance of the Best Ideas Newsletter portfolio this year. Thank you, thank you, thank you. But I have to tell you, beating the S&P 500 with the simulated Best Ideas Newsletter portfolio was not easy. You read my write up but let me tell you more as we set the tone for the performance of the Dividend Growth Newsletter portfolio, too. According to Societe Generale in a note from CNBC, “In a universe of 16,000 global and emerging market stocks, only 22% have beat the S&P 500 in the past two years…only 34% have performed better than the S&P 500 in the last year.”  

 

Many of you think that we’re a tad bit promotional, but in a market where few stocks are outperforming, we not only had to identify winners, but we had to overweight the right ones, too! We’re not going to brush this achievement under the rug. No way. We want you to know because you are our biggest fans, and we want you to be happy about it. Remember – we’re not a money manager. We only do well when our research and processes work, and in one of the toughest markets for stock pickers, we want you to know that we hit the ball out of the park. Our research and effort roll up into how our newsletter portfolios perform. Please don’t lose the forest for the trees. Let us work the Valuentum process and the report cycle.

 

Okay – let’s talk about the performance of the Dividend Growth Newsletter portfolio. The story of the Dividend Growth Newsletter portfolio this year was one dominated by big tech. Apple (AAPL) trounced the return of what could be considered our benchmark by about 80 percentage points. It basically beat the S&P Dividend ETF SDPR (SDY) by a factor of about 5 times! 2019 was simply the year to own Apple, and my goodness we had it right near the top of both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. You would think this was a no-brainer, as everyone loves Apple, but many a portfolio manager did not own Apple this year. Apple also upped its dividend 5%+ during 2019.

 

Another standout was Microsoft (MSFT). Shares of the company beat the dividend benchmark by about 40 percentage points, or by a factor of about 3. The software giant also raised its dividend by more than 10% during the year. Our hands are tired and bruised from absolutely pounding the table for years now on Microsoft as the quintessential Valuentum dividend growth stock. Top-weighted Intel (INTC) was also a star performer this year, beating the dividend index by roughly 10 percentage points, it also raising its dividend by 5% in the year. If you overweighted Apple, Microsoft and Intel, you could do a lot of wrong and still put up a fantastic year!

 

A good number of our other dividend growth ideas advanced in the mid-teens during 2019, including Johnson & Johnson (JNJ), Cisco (CSCO), Digital Realty Trust (DLR), iShares Int’l Select Dividend (IDV), General Motors (GM), Oracle (ORCL) and Realty Income (O). Cracker Barrel was the only stock held at the beginning of the year through today in the Dividend Growth Newsletter portfolio to face some headwinds, but we still are big fans of its special dividends. We’re also okay with the Invesco Senior Loan (BKLN) position holding the line as its near 5% yield helps add a little more income to a portfolio that has experienced substantial capital appreciation in recent years.

 

All told, we didn’t make any big mistakes on the year, and most of the holdings in the Dividend Growth Newsletter portfolio raised their dividends at a pace greater than that of the benchmark. Oracle even raised its payout more than 26% on the year! With the Nasdaq breaching 9,000 recently, big tech led the charge for the dividend growth crowd during 2019, and the Dividend Growth Newsletter portfolio was right there with it! We expect stock picking to be easier in the future than it was during the past couple years, and we hope you are pleased with how the Dividend Growth Newsletter portfolio rounded out 2019.

 

We’re looking forward to a very exciting 2020, and we hope you are, too!  

 

 

Kind regards,

 

Brian Nelson, CFA

President, Investment Research

Valuentum Securities, Inc

brian@valuentum.com