Wed. Jul. 14, 2010

8 Dividend Stocks With Above Market Performance *

My goal as a dividend growth investor is to build a steadily increasing income and not necessarily to outperform the market via capital gains. However, as numerous research projects have shown, a conservative dividend-based investment strategy has consistently outperformed the market over time. Now that we are passed mid-year, let’s take a look at some of the above average dividend performers for the first six months.

As a benchmark, the S&P 500 (SPY) was down 6.93% on a dividend adjusted basis. The following dividend growth stocks were able to best the S&P and provide a positive return:

Procter & Gamble Co. (PG) is focused on providing branded consumer goods products. The Company markets its products in more than 180 countries.
– YTD Dividend Adjusted Return: 0.40%
– Current Yield: 3.10%

Pepsico, Inc. (PEP) is a global snack and beverage company. The Company manufactures, markets and sells a range of salty, convenient, sweet and grain-based snacks, carbonated and non-carbonated beverages and foods.
– YTD Dividend Adjusted Return: 1.74%
– Current Yield: 3.00%

Clorox Corporation (CLX) is a diversified producer of household cleaning, grocery and specialty food products and is also a leading producer of natural personal care products.
– YTD Dividend Adjusted Return: 3.55%
– Current Yield: 3.40%

Sysco Corp. (SYY) engages in the marketing and distribution of a range of food and related products primarily for foodservice industry in the United States and Canada.
– YTD Dividend Adjusted Return: 4.00%
– Current Yield: 3.40%

Genuine Parts Company (GPC) is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products.
– YTD Dividend Adjusted Return: 6.08%
– Current Yield: 4.00%

Canadian National Railway Company (CNI) operates Canada’s largest railroad, linking customers in Canada, the U.S., and Mexico through approximately 20,400 miles of track.
– YTD Dividend Adjusted Return: 6.54%
– Current Yield: 1.80%

McDonald’s Corp. (MCD) is the largest fast-food restaurant company in the world. Its restaurants serve a varied, yet limited, value-priced menu in more than 100 countries around the world.
– YTD Dividend Adjusted Return: 7.28%
– Current Yield: 3.20%

Realty Income Corp. (O) engages in the acquisition and ownership of commercial retail real estate properties in United States.
– YTD Dividend Adjusted Return: 20.45%
– Current Yield: 5.50%

Obviously, not all dividend stocks outperformed the S&P. Below are some high-profile under-performers during the first 6-months of 2010:

Chevron Corp. (CVX) is a global integrated oil company that has interests in exploration, production, refining and marketing, and petrochemicals.
– YTD Dividend Adjusted Return: Down (10.18%)
– Current Yield: 4.00%

The Coca-Cola Company (KO) The Coca-Cola Company is the world’s largest soft drink company. It engages in the manufacture, distribution, and marketing of nonalcoholic beverage concentrates, fruit juices and syrups worldwide.
– YTD Dividend Adjusted Return: Down (10.60%)
– Current Yield: 3.40%

Abbott Laboratories (ABT) is engaged in the discovery, development, manufacture and sale of a diversified line of healthcare products including: drugs, nutritional products, diabetes monitoring devices and diagnostics.
– YTD Dividend Adjusted Return: Down (11.99%)
– Current Yield: 3.70%

Nucor Corporation (NUE) is engaged in the manufacture and sale of steel and steel products. As the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas.
– YTD Dividend Adjusted Return: Down (16.56%)
– Current Yield: 3.60%

So what does all this mean? For me, the more relevant list is the latter. When a stock under performs the market (assuming there is not a fundamental reason for doing so), two important things are happening: 1.) it is becoming relatively cheaper and 2.) its dividend is becoming more attractive relative to the market. The opposite is occurring for the stocks listed in the first group.

Full Disclosure: Long PG, PEP, CLX, SYY, GPC, MCD, O, CVX, KO, ABT, NUE. See a list of all my income holdings here.

Related Posts
Increasing Dividend Yield Part I: Utilities
10 Best U.S. Dividend Stocks
Managing Risk With Dividend Stocks
Focus On Stocks, Not The Market
Increasing Dividend Yield Part V: MLPs

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3 Responses to “8 Dividend Stocks With Above Market Performance *”

  1. bob merritts says:

    Q: When you say these stocks have a “YTD Dividend Adjusted Return” what exactly is that? BTW, I read and appreciate your articles which I read thru Seeking Alpha website. From time to time I find some nugget in them that relates to my “bet the world” attitude towards dividends. I have some high flying dividend yielding stcoks that most advisors would not approve of as a regular diet but then it’s just “play” money, right? If you can’t afford to lose it, you shouldn’t play with it. Any rate, good job; I enjoy your efforts.

  2. D4L says:

    Bob: Thanks for your kind words.

    “Dividend adjusted return” means I am using the “Adj Close” column from Yahoo finance. The share price is adjusted for dividends and splits.

    Best Wishes,


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