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My Five Top And Bottom Performing Dividend Stocks

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November 01, 2011 – Comments (0) | RELATED TICKERS: KMB , MCD , GD

Investing in dividend growth stocks is a long-term proposition. One of the beauties of following a dividend growth strategy is that you don't have to watch your portfolio or the market on a daily basis. For the most part, daily, monthly and yearly movements are just noise in the system.

My normal practice is to refresh my analytical spreadsheets each Friday with updated price information on the 210+ stocks that I follow. Even then, I don't normally look at the value of my portfolio or the performance of individual stocks.

However, each quarter I update my income portfolio's performance and benchmark it against the S&P 500 and other portfolios. At that time I will look at performance of individual stocks to understand the overall performance the portfolio.

Saturday, I updated my Income Portfolio's performance for the third quarter. Building on that, here are my income portfolio's top and bottom 5 performers for the year through September 30, 2011:

Top Performers

#5. Integrys Energy Group, Inc. (TEG)
Integrys Energy Group, Inc., serves about 485,000 regulated electric and 1,674,000 regulated gas customers. It also operates an unregulated retail marketing business. This is one of my "Golden Stocks" in which I have fully recovered by original investment through dividends and sales.
Yield: 5.3% | 2011 Total Return: 14.1%

#4. Kimberly-Clark Co. (KMB)
Kimberly Clark Corp. is a global consumer products company that produces tissue, personal care and health care.  Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott and Kimberly-Clark.
Yield: 3.9% | 2011 Total Return: 16.7%

#3. Consolidated Edison, Inc. (ED)
Consolidated Edison, Inc. is an electric and gas utility holding company that serves parts of New York, New Jersey and Pennsylvania. This is an old holding in which I haven't added to since January 2009.
Yield: 4.1% | 2011 Total Return: 19.5%

#2. McDonald's Corporation (MCD)
McDonald's Corporation is the largest fast-food restaurant company in the world, with about 32,900 restaurants in 117 countries. MCD is one of my strongest long-term performers. I am currently over-allocated in it.
Yield: 2.8% | 2011 Total Return: 20.9%

#1. Harleysville Group Inc. (HGIC)
Harleysville Group Inc. underwrites a broad array of personal and commercial coverages. These insurance coverages are marketed primarily in the Eastern and Midwestern United States. On my last review HGIC was my worst performing stock. Funny how a buyout offer can change things fast.
Yield: 2.5% | 2011 Total Return: 84.5%

Bottom Performers

#5 Cincinnati Financial Corp. (CINF)
Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations. Although its return has declined since the last review, it has improved one spot from #4 to #5.
Yield: 5.7% | 2011 Total Return: -17.2%

#4. General Dynamics (GD)
General Dynamics is the world's fifth largest military contractor and also one of the world's biggest makers of corporate jets. Given the financial issues of the U.S. government, all defense contractors have reason to be concerned.
Yield: 2.8% | 2011 Total Return: -17.%

#2. CenturyLink Inc. (CTL)
CenturyLink, Inc. provides voice service to 6.5 million customers and Internet service to 2.4 million customers in rural towns as well as larger cities such as Las Vegas. CTL maintained the #2 slot from the last review. Its free cash flow payout has been rising, so I am watching it closely for as a possible sell.
Yield: 8.3% | 2011 Total Return: -23.1%

#2. Illinois Tool Works Inc. (ITW)
Illinois Tool Works Inc. is a diversified manufacturer that operates a portfolio of 60 business units that serve the industrial and consumer markets globally. Recent weakness has provided me an opportunity to add to my position.
Yield: 3.0% | 2011 Total Return: -23.4%

#1. Nucor Corporation (NUE)
Nucor Corporation is the largest minimill steelmaker in the U.S., and has one of the most diverse product lines of any steelmaker in the Americas. Based on improved financials, I recently added to my position.
Yield: 4.0% | 2011 Total Return: -24.5%

To avoid short-term anomalies, I excluded stocks that I did not own on January 1, 2011 from the above lists. As noted above, investing in dividend growth stocks is a long-term proposition, but sometimes it is nice to see that our portfolio is performing well, in addition to collecting higher dividends each month.

Full Disclosure: Long in all the aforementioned securities, except HGIC. See a list of all my income holdings here.

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