Well, I hope my readers haven’t forgotten about the Dividend Growth Index. This was in index started in September of 2011 and involved many fellow respected investment bloggers. We all picked three stocks each, for a total of 24 companies comprising the index. We are all tracking our individual positions, and the index as a whole to show the power of long-term compounding. You can read a full synopsis of the performance so far here.
My first pick was Philip Morris International (PM), which is also one of my picks for the best dividend stocks of 2012. According to the spreadsheet we are tracking, PM is up 27.25% since we started tracking it in the index. I’ve discussed my affinity for this company many times on this blog and am confident it will be a strong performer over the next couple decades and is one of my largest positions.
My second pick was ConocoPhillips (COP). This is a strong integrated energy company that plans on splitting into two individual companies this year. One company will concentrate on upstream operations, and the other company will focus on downstream operations. I think it has offered many opportunities for value over the last year whenever oil dips. It produces a product that has global demand that increases every day, it offers a solid yield and the company split may unlock shareholder value. This pick is up 18.29%, according to the index spreadsheet.
My third selection for the index was Procter & Gamble (PG). This company is a no-brainer in my opinion. They are a core holding of mine and they produce a myriad of consumer products that have brand name appeal and global reach. Unless something changes dramatically with PG, I plan to hold this one for the long-term. It hasn’t been as strong a performer as some of the other selections in the index, but that’s ok with me. This isn’t a race, it’s a marathon. It’s up 6.63%.
It’s important to note that a lot of the strong performance with the Dividend Growth Index was fueled by the strong performance of the S&P 500 over the last few months of 2011. I think the entire index is made up of strong long-term performers, but I wouldn’t expect growth like this to continue. I would expect, if anything, a correction in the overall market in the short-term along with drops in value for all of my picks and the index as a whole.
It’s also important to note that these are not “stock picks”. This is a virtual index we are tracking to show the long-term power of compounding. Short-term fluctuations are expected, and I actually look forward to fluctuations and volatility as it offers a value investor opportunities to invest for the long-term.
You can read about the other bloggers and their individual performance:
Full Disclosure: I’m long PM, COP, PG.
Thanks for reading.