Dividend Growth Index – 2012 Q2 Results

Market GraphWe are currently in our 3rd quarter of the Dividend Growth Index (DGI)which started back in September 2011 as a project to see how our picks (a group of dividend focused bloggers) would perform over time compared with an index.

Here is a background on the Dividend Growth Index (DGI).

My Picks

One of my picks (CNQ) is dragging down the index right now from a price perspective and it’s not a high dividend payer either. It’s worth pointing out that it is a Canadian Dividend Aristocrats (5 years of dividend increase) with a very low payout ratio. I did not choose this pick to see massive capital appreciation although it had a 2-for-1 stock split back in 2010, but rather for its dividend growth and relative capital growth. I have noticed that dividend investor can have a temptation to stay away from a stock in the short term because of the yield and I wanted to see what a growth stock would do with a growing yield. Other companies like that are Canadian National Railway, Saputo and Metro. In many of my technical screenings (Top 20 Stocks) , CNQ shows up high, so it might be time to have a look and take a position if it fits in your portfolio.

It’s worth noting that we could only have three picks and from a performance perspective, financials would provide a high dividend return in the short term (i.e. 5 years) but growth would be limited compared with other stocks. In fact, I have taken a profit in Bank of Nova Scotia (BNS) to purchase shares in McDonalds (MCD) last month (I share my stock trades in my newsletter – sign up it’s free!).

2012 Q2 Growth

  • Canadian National Railway (CNR) is up 10.36%
  • Canadian National Resources (CNQ) is down -17.05%
  • Aflac (AFL) is up 3.05%

2012 Q1 Growth

  • Canadian National Railway (CNR) is down -0.03%
  • Canadian National Resources (CNQ) is down -21.82%
  • Aflac (AFL) is up 4.09%

2011 Q4 Growth

  • Canadian National Railway (CNR) is up 14.29%
  • Canadian National Resources (CNQ) is up 29.87%
  • Aflac (AFL) is up 29.37%

Dividend Growth Index – 2012 Q1 Results

Since inception, the index is up 18.09%. Year-to-date (YTD), it is now slightly up at 2.15%. What’s important is how it compares with the indexes out there:

  • XIU @ -1.28% (YTD)
  • XDV @ 0.46% (YTD)
  • SPY @ 9.47% (YTD)
  • VIG @ 4.80% (YTD)

No major breakthrough here in performance. I find it to be very good since a dividend growth index is built for the marathon and not a sprint. For example, I believe my pick will shine by providing dividend growth with the 10/10 rule over a long period of time. CNR has broken out of its slump and it’s just a matter for CNQ to do the same once oil prices go back up.

For those interested in the visualization of our asset allocations, see the graph below. It’s not bad, but we did load up on oil.

Portfolio Allocations

I feel the index is moving along quite nicely and we should see the benefits of compounding in a few years. Yes, it does take that long. See how I grew my Computershare portfolio in the past 3 years. All the picks in the table below started with $1,000 each. You can see the performance if you sort by market value.

Company NameTickerStarting SharesStarting Price2012 Q2 SharesMarket PriceMarket ValueSectorMarket
FortisFTS.TO188.68$5.3056.73$32.55$1,846.56Oil & GasCDN
CML HealthcareCLC.TO106.38$9.20112.48$9.62$1,082.06HealthcareCDN
Energy Transfer EquityETE28.75$36.0930.12$40.40$1,216.85Oil & GasUS
Enter. Products PartnerEPD24.91$40.9025.89$51.59$1,335.67Oil & GasUS
Husky EnergyHSE.TO44.07$22.2645.73$25.40$1,161.54Oil & GasCDN
Royal BankRY.TO20.81$46.0921.47$52.35$1,123.95Financial ServicesCDN
Philip Moris InternationalPM16.03$63.8116.48$90.17$1,486.00Consumer ProductsUS
ScotiaBankBNS.TO18.97$50.7319.56$52.66$1,030.03Financial ServicesCDN
National BankNA.TO14.31$66.9814.75$73.47$1,083.68Financial ServicesCDN
ConocoPhillipsCOP15.79$62.5121.02$54.50$1,145.59Oil & GasUS
NovartisNVS17.93$53.7319.26$55.71$1,072.97Consumer ProductsUS
Abbott LabsABT19.55$50.7620.07$65.40$1,312.58HealthcareUS
AflacAFL28.61$31.4629.24$42.30$1,236.85Financial ServicesUS
Chevron CorporationCVX10.8$91.4911.07$104.26$1,154.16Oil & GasUS
PepsiCoPEP16.16$60.3416.55$69.88$1,156.51Consumer ProductsUS
Procter & GamblePG15.83$61.2516.22$61.59$998.99Consumer ProductsUS
McDonald’s CorporationMCD11.39$87.5611.65$89.60$1,043.84Consumer ProductsUS
StaplesSPLS75.19$13.2276.87$13.05$1,003.15Consumer ProductsUS
Coca-ColaKO14.8$67.4215.12$78.01$1,179.51Consumer ProductsUS
Progressive Waste SolutionsBIN.TO46.36$21.6847.30$19.57$925.66Waste ManagementCDN
Canadian National RailwayCNR.TO14.28$67.3414.48$85.60$1,239.49TransportationCDN
Canadian National ResourcesCNQ.TO32.5$30.2332.81$26.31$863.23Oil & GasCDN

Dividend Growth Index Participants

This quarter, we have a new index contributor with SP Brunner. She will be introducing her picks and it will replace the picks from Wealthy Canadians. We should be able to see the results of those picks at our next quarter update.

Readers: What stocks would you drop or add?

Disclamer: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your decision at your own risk - see my full disclaimer for more details.


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2 Responses to "Dividend Growth Index – 2012 Q2 Results"

  1. Peter says:

    I still hold CNQ as well, and I bought it way higher than now. But hopefully it will come back some time in the long, distant future. LOL.

  2. Not much of a dividend investor myself, but I’d choose CNQ.

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