Monday, June 24, 2019

5 Dividend Stocks Beating the S&P With Positive Returns In Excess of 50% YTD

It is my goal to create an ever-increasing income stream from dividend growth stocks, while it is my desire to beat the S&P 500 index over the long-term. If you have too many goals, often they will start to conflict with each other. We need to determine what is most important, then set those aside as goals and leave everything else as desires.

If I am achieving my goal of creating an ever-increasing income stream from dividend investments, I would not drastically change my investing strategy if I were to under-perform the S&P. However, the opposite isn't true. If I were not consistently growing dividend income, but nearly always beating the S&P, it would be time to totally rethink my strategy.

To go a step further, I believe in long term my dividend income will rise AND I will beat the S&P 500. Otherwise, it would not be a realistic desire. This has been the case since I have been publicly tracking my dividend growth portfolio (see year by year results here).

Year to date, my investment in Vanguard S&P 500 ETF (VOO), which I use as a proxy for the S&P 500, was up 39.4% (annualized). Below are several dividend growth stocks with total annualized returns (as of last Friday) greater than 80% that have out-performed the S&P 500 so far this year:

Cincinnati Financial Corp. (CINF) is an insurance holding company that primarily markets property and casualty coverage. It also conducts life insurance and asset management operations. The company has paid a cash dividend to shareholders every year since 1954 and has increased its dividend payments for 58 consecutive years.
Yield: 2.3% | YTD Return: 95.1%

Erie Indemnity Co. (ERIE) is a management services company that provides sales, underwriting, and policy issuance services to the policyholders of Erie Insurance Exchange in the United States. The company has paid a cash dividend to shareholders every year since 1991 and has increased its dividend payments for 28 consecutive years.
Yield: 1.7% | YTD Return: 298.9%

Lockheed Martin Corp. (LMT) is the world's largest military weapons manufacturer, and also a significant supplier to NASA and other non-defense government agencies. LMT receives about 93% of its revenues from global defense sales. The company has paid a cash dividend to shareholders every year since 1995 and has increased its dividend payments for 17 consecutive years.
Yield: 2.6% | YTD Return: 92.7%

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 17 consecutive years.
Yield: 1.5% | YTD Return: 82.4%

Universal Health Realty Income Trust (UHT) is a real estate investment trust (REIT) that invests in healthcare and human service related facilities. The company has paid a cash dividend to shareholders every year since 1987 and has increased its dividend payments for 33 consecutive years.
Yield: 3.3% | YTD Return: 126.5%

Note that my returns above include the the timing of current year purchases.

My goal is to generate an ever-increasing income stream from dividends. My desire is to beat the S&P 500 over time. We should never confuse desires with goals. In the end, I will not sell a great dividend stock for under-performing the S&P.

Full Disclosure: Long CINF, ERIE, LMT, MSFT, UHT,

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