As some of you may remember, I was picked to be part of a Dividend Growth Index back in September of 2011. I joined a number of well-known and respected dividend bloggers, where we formed an index of high-quality dividend stocks that we all decided we would keep track of over the long-term. It’s an exercise determined to show the power of dividend investing over the long haul.
A total investment of $24,000 on September 30, 2011 in the Dividend Growth Index would now be worth $28,978.
As we compare the index to applicable benchmarks, the SPY would be worth $30,188 and the XDV would be worth $26,328.
I’m going to remind everyone of my picks below, and their performance in the index thus far. I picked my three stocks based on solid fundamentals of the underlying companies, strong cash flows, durable competitive advantages, attractive valuations and most important: solid dividends that are growing at a pace that exceeds inflation.
Philip Morris International Inc. (PM)
My favorite stock right now, and the largest position in my personal stock portfolio. Even with the huge run it’s had over the last six months, I think this is still a winner long-term. I think there is still a lot of growth behind this company and the strong yield, coupled with the huge dividend growth rate, should provide loyal shareholders healthy returns for years to come.
Performance since DGI inception: 44.74%
This was a tough stock to put into the index, to be honest, only because its price is based on the underlying commodity of oil which can fluctuate wildly. Even so, I felt confident in the long-term health of this company and with a large yield, healthy balance sheet and commitment to rewarding shareholders I think this is a solid company to own. The split that’s occurring soon appears to unlock further value from this company.
Performance since DGI inception: 22.32%
The Procter & Gamble Company (PG)
There are few companies I can think of that would be more of a “core” holding to an index like the DGI. PG is such a dividend growth stalwart there are no words I can add to this short paragraph that will somehow enlighten you. It’s a solid company that sells necessary products all over the world. With 55 years of dividend growth behind it, I see no signs of PG slowing down.
Performance since DGI inception: 8.09%
It’s important to note that these are companies that I believe in holding for the long-term. Short-term price fluctuations due to a market that is not always efficient means nothing to a dividend growth investor like myself. I picked these three companies for the index because I believe that long-term they’ll provide outsized returns to loyal shareholders.
Please check the websites of the other bloggers involved for their individual picks and performance:
Full Disclosure: I’m long PM, COP, PG.
Thanks for reading.