After several years of out-performing the S&P 500, many dividend income oriented portfolios have under-performed in 2012. The old adage that trees don't grow to the sky certainty holds true. Obviously, that is not to say that all dividend growth stocks have under-performed.
If we look carefully we can find some gems that have performed quite well so far this year. Below are several multi-billion dollar dividend stocks that have out-performed the S&P 500 this year through August 31, 2012:
3M Co. (MMM) is a diversified global company that provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives, and other chemical additives.
Mkt. Cap: $64b | Yield: 2.5% | Adjusted Return: 15.6%
Kimberly Clark Corp. (KMB) is a global consumer products company's producing tissue, personal care and health care products. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex and Scott.
Mkt. Cap: $33b | Yield: 3.5% | Dividend Adjusted Return: 15.9%
Lockheed Martin Corp. (LMT) is the world's largest military weapons manufacturer, is also a significant supplier to NASA and other non-defense government agencies. LMT receives about 93% of its revenues from global defense sales.
Mkt. Cap: $29b | Yield: 4.4% | Dividend Adjusted Return: 16.6%
Colgate-Palmolive Company (CL) is a major consumer products company markets oral, personal and household care and pet nutrition products in more than 200 countries and territories.
Mkt. Cap: $50b | Yield: 2.3% | Dividend Adjusted Return: 17.2%
Raytheon Company (RTN), the world's sixth largest military contractor, specializes in making high-tech missiles, advanced radar systems and sensors, defense electronics, and missile-defense systems.
Mkt. Cap: $19b | Yield: 3.5% | Dividend Adjusted Return: 19.0%
Abbott Laboratories (ABT) is a diversified life science company that is planning to split into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals.
Mkt. Cap: $103b | Yield: 3.1% | Dividend Adjusted Return: 19.5%
Microsoft (MSFT), the world's largest software company, develops PC software, including the Windows operating system and the Office application suite.
Mkt. Cap: $258b | Yield: 2.6% | Dividend Adjusted Return: 21.1%
Wal-Mart Stores, Inc. (WMT) is the largest retailer in the world,Wal-Mart operates a chain of over 10,000 discount department stores, wholesale clubs, supermarkets and supercenters.
Mkt. Cap: $246b | Yield: 2.2% | Dividend Adjusted Return: 23.8%
AT&T Inc. (T) provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless).
Mkt. Cap: $211b | Yield: 4.8% | Dividend Adjusted Return: 26.2%
Illinois Tool Works Inc. (ITW) is a diversified manufacturer operates a portfolio of 60 business units that serve industrial and consumer markets globally.
Mkt. Cap: $28b | Yield: 2.6% | Dividend Adjusted Return: 28.6%
Over the same period the S&P 500 (SPY) was up 13.6%. The returns were calculated using Yahoo's dividend adjusted stock price for December 31, 2011 as the starting point. Short-term performance is never the sole reason for long-term investors to buy. What goes up significantly usually comes back down. Case in point, McDonalds (MCD) has routinely been one of my best performing dividend growth stocks; however, this year the stock is down 8.8%.
Full Disclosure: Long VFINX, MMM, KMB, LMT, CL, RTN, ABT, MSFT, WMT, T, ITW, MCD. See a list of all my dividend growth holdings here.
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(Photo: sanja gjenero)
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