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Introducing the Dividend Growth Index

Several bloggers focusing on dividends got together to create a virtual portfolio of dividend picks. Eight bloggers each selected three companies that pay dividends to be included in the index. Information about it can be found here, and the list is below:

Company List
Abbott (ABT-US)
ScotiaBank(BNS-T)
CML Healthcare (CLC-T)
Intel (INTC-US)
Coca Cola (KO-US)
National Bank of Canada (NA-T)
Energy Transfer Equity (ETE-US)
Novartis (NVS-US)
Walmart (WMT-US)
Husky Energy (HSE-T)
Pepsico (PEP-US)
Staples (SPLS-Q)
Canadian National Railway (CNR-T)
Canadian National Resources (CNQ-T)
Aflac (AFL-US)
Royal Bank of Canada (RY-T)
Daylight Energy (DAY-T)
Progressive Waste Solutions (BIN-T)
ConocoPhillips (COP-US)
Phillip Morris (PM-US)
Procter & Gamble (PG-US)
Enterprise Products Partners (EPD-US)
Chevron (CVX-US)
McDonalds (MCD-US)

.

The purpose is to be a group project rather than a contest on stock picking. Putting forth only three choices can make for some serious swings (for instance, if this was started last year, and I had included BIP, then my three picks would have probably greatly outperformed the market, but if I had included HCBK, my three picks would have greatly underperformed the market. I analyzed and own both.) And most investors on this list are long-term investors anyway, which means the end goal is not annual increases, but a good rate of return over a longer period.

That said, the index of 24 companies is more diversified in aggregate than any of the seven individual sets of three picks, so it’s an interesting actively-selected index with low turnover to follow. A lot of the bloggers in the group are Canadian, so the index has a big Canadian segment as well as a big US segment. (I don’t know what it is about my neighbor up north, but Canada seems to output a disproportionately large number of quality dividend blogs!)

The rules are pretty simple- each of us picked three companies, and annually, virtual dividends will be collected and invested in one of the picks. In a week, I will publish my overview of why I selected the three companies that I did- Walmart, Novartis, and Energy Transfer Equity.

The following is a list of the publishers involved, and their picks, as well as my brief comments on their picks.

The Dividend Guy

The Dividend Guy has quite a bit of investing experience, and focuses on investing in companies that pay dividends that increase annually. He offers a free e-book on dividend investing. His three selections are:
Intel
Coca Cola
National Bank of Canada

I view Intel as a strong value play, and it’s on my real-life watchlist for possible purchase. Coca Cola is a nearly bulletproof pick; perhaps not at a great price, but unlikely to perform poorly. I’m not too knowledgeable about specific banks, but Canada’s banks in general are top notch.

Dividend Mantra

Dividend Mantra started investing in early 2010, but is already on a roll. His monthly income/expense reports show disciplined frugality as he amasses wealth and passive income on an everyday income. His three selections are:
ConocoPhillips
Phillip Morris Intl.
Procter & Gamble

All three are good picks, in my view. ConocoPhillips offers a large dividend, and the company split promises to increase it even more. Phillip Morris has a lot of debt, but sells cigarettes to people outside of the US and this business isn’t going away any time soon. Procter and Gamble is among the most well-known blue-chip companies, with decades and decades of consecutive dividend growth.

My Own Advisor

My Own Advisor is a Canadian DIY investor that focuses on indexes, DRIPs, and dividends. His selections are:
Bank of Nova Scotia
Abbott
CML Healthcare

Canadian banks are strong, Abbott is a premier health care and dividend pick, and CML Healthcare is an interesting smaller Canadian medical company that focuses on diagnostics.

The Passive Income Earner

The Passive Income Earner is a married Canadian man who, according to his blog, spends at least an hour per day on average researching investments. His three selections are:
Canadian National Railway
Canadian National Resources
Aflac

I’m not too familiar with Canadian National Resources. Last year, I analyzed Canadian National Railway, and am bullish towards it. Railroads have wide economic moats around their business. Aflac is his American pick, and I recently analyzed the company. It’s a fairly risky, deep value pick, but the long-term fundamental business operations of the company are solid, and I think it’s a wise pick.

Dividend Ninja

Dividend Ninja switched from Mutual Funds to self-directed long-term investing with a discount brokerage. He focuses on passive indexes and blue-chip dividend payers in order to keep costs low and returns high. His three selections are:
Husky Energy
Pepsico
Staples

I consider Pepsico to be a solid choice, and while I’ve never directly investigated Staples or Husky- Stables appears to be an interesting value pick, and looking at Husky from a macro perspective as a Canadian energy producer, I’m bullish.

The Wealthy Canadian

The Wealthy Canadian invested his money starting at an early age, and in his mid-30′s, he’s semi-retired, and can leave the workforce at any time he sees fit. His three selections are:
Royal Bank of Canada
Daylight Energy
Progressive Waste Solutions

Being Canadian companies, I’m not too familiar on the details, but going with a Canadian bank, an energy producer, and a trash remover, looks like a solid set of choices to me.

Dividend Growth Investor

As an edit to this article, Dividend Growth Investor has joined as the eighth member in the project. So now there are 24 rather than 21 companies in the index, and his picks have been added to the above list. His selections are:
Enterprise Products Partners
Chevron
McDonalds

I think Dividend Growth Investor’s picks are great. EPD is a partnership, similar to my own pick of ETE, and McDonalds and Chevron are both companies that I think are excellent long-term picks.

Dividend Monk

The Dividend Monk that isn’t even really a monk. I’m an engineer by trade, and have been an avid investor for about six years now. My selections are:
Walmart
Novartis
Energy Transfer Equity

My picks span retail, health care, and energy, with a solid average dividend yield. My post explaining my picks is here.

Full Disclosure: At the time of this writing, I own shares of KO, ETE, NVS, ABT, CVX, and PG. In addition, WMT and INTC are on my watch list for possible purchase.
You can see my portfolio here.

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Comments

  1. Very good project DM and excellent picks! I just saw (and commented on) this in Dividend Guy’s blog!

  2. Think Dividends says:

    I predict that CML Healthcare and Daylight Energy will cut their dividends in the next 6-12 months!

  3. Nice idea. Im surprised noone picked Johnson & Johnson. Id choose Exxon, J&J and PMI.

  4. There are several good picks to choose. Many of the ones on this list are Canadian, due to the high proportion of Canadian investors involved, and I have little or no direct experience with most Canadian companies. It’ll be interesting, Think Dividends, to see if those two do indeed cut their dividends. Out of the 21 on the index, only 3 are within my control to select.

  5. Great job listing all of the dividend-paying stocks DM!

    I’m looking forward to being a part of this initiative. You’re right, we’ll have to see how DAY performs (and its dividend); I wanted a mix of varying risk with my 3 selections.

    I think there are a lot of great picks among all of the participants. It’s going to be a lot of fun. I’m bullish on Novartis and made a position in this earlier this past summer. A great selection IMO.

    All the best,
    TWC

  6. Hey Matt,

    Putting this list together was an awesome idea! I’d feel good about having any of you guys managing my money.

    Cheers,

    Andrew

  7. Wealthy Canadian,

    I did the same thing with my selections- a variety of risk. I view WMT as my lower risk choice, NVS as my middle risk choice, and ETE as my riskier choice.

    Andrew,
    I’m glad you think it’s a good idea. Thanks for the comment.

  8. Thanks for the kind words.

    I think there are some strong picks up there. I don’t know about anyone else, but it’s incredibly difficult to pick just 3! :)

    I agree with some of the above comments. I like your picks. WMT is a safe play and NVS seems really solid right now!

  9. Thanks for the write-up Matt.

    Looking forward to getting this index going!

    Actually, CLC is a bit of a flyer, purposely. I’m willing to take this risk. Even if CLC cuts its dividend by 20%, which it might at some point, yield would still be 6%.

    This is a great list! Some very stable companies, some with growth, some with risk. Just what a balanced portfolio should be.

  10. Rock the Casbah says:

    This sounds like a great project and I look forward to following the results. As I read about it and the participants, I couldn’t help thinking about some of the alliances of comic book superheroes (Marvel Avengers, D.C. Justice League, etc.) I followed as a kid. And, well OK, still occasionally enjoy as an adult. Almost like a collection here of dividend investor superheroes. Hmmm, maybe this is a comic book concept in the making. In the meantime, don’t let the analogy go to your heads. :)

    But seriously, it sounds like collection of solid choices from a group of dedicated dividend investors. I try to follow three of the blogs (D. Mantra, Ninja and Monk) as often as possible and I’ll definitely have to check out the others. I also feel good that at least one pick out of each set of three is either a stock in my portfolio (ABT, PG, PEP), or a stock I came close to picking and still might at some point in the future (INTC, CNI, RY and NVS).

    I know some posters have been offering their three picks as food for thought. So, here’s my very modest two cents worth.

    Johnson and Johnson (JNJ)
    Exelon (EXC)
    TD Bank (TD – US)

  11. I have also noticed there are a lot of Canadian dividend bloggers.

    Does anyone have any guesses as to why that is?

  12. Think Dividends says:

    On October 9, 2011, Daylight Energy announced that it has entered into an agreement to be acquired by Sinopec for $10.08 per share, representing a total cash consideration of approximately $2.2 billion.

    Too bad we won’t see how the Daylight’s dividend story would have played out.

  13. Interesting update, Think Dividends.

    Quite a premium, and quite the rate of return.

  14. I’ve recently been traveling to your blog post for quite a while now and that i usually locate a treasure with your brand-new articles. Appreciate your expressing!

  15. That’s a solid list. Just investing an equal dollar amunt in each of these companies will likely out perform the market over the long term.

Trackbacks

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  2. [...] article covers my three selections for the Dividend Growth Index. The Dividend Growth Index is a fun project between eight dividend growth bloggers, where each [...]

  3. [...] article covers my three selections for the Dividend Growth Index. The Dividend Growth Index is a fun project created by Mike over at The Dividend Guy, [...]

  4. [...] in September, several dividend bloggers created a Dividend Growth Index of 24 companies. Eight members each chose three [...]

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