If I am achieving my goal of creating an ever-increasing income stream from dividend investments, I would not drastically change my investing strategy if I were to under-perform the S&P. However, the opposite isn't true. If I were not consistently growing dividend income, but nearly always beating the S&P, it would be time to totally rethink my strategy.
To go a step further, I believe in long term my dividend income will rise AND I will beat the S&P 500. Otherwise, it would not be a realistic desire. This has been the case since I have been publicly tracking my dividend growth portfolio (see year by year results here).
Year to date, my investment in Vanguard 500 Index Investor (VFINX), which I use as a proxy for the S&P 500, was up 0.9%. Below are several dividend growth stocks with double-digit total annualized returns (as of last Friday) that have out-performed the S&P 500 so far this year:
Consolidated Edison, Inc. (ED) is an electric and gas utility holding company serves parts of New York, New Jersey and Pennsylvania. The company has paid a cash dividend to shareholders every year since 1885 and has increased its dividend payments for 43 consecutive years.
Yield: 3.6% | YTD Return: 53.7%
Leggett & Platt Inc. (LEG) makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as products for non-furnishings markets. The company has paid a cash dividend to shareholders every year since 1939 and has increased its dividend payments for 43 consecutive years.
Yield: 2.6% | YTD Annualized Return: 55.8%
National Retail Properties, Inc. (NNN) is an equity real estate investment trust that invests in high-quality, freestanding retail properties subject to long-term net leases with major retail tenants. The company has paid a cash dividend to shareholders every year since 1985 and has increased its dividend payments for 25 consecutive years.
Yield: 3.7% | YTD Annualized Return: 56.5%
Sysco Corporation (SYY) is a large distributor of food and related products, primarily to the foodservice or food-away-from-home industry. The company has paid a cash dividend to shareholders every year since 1970 and has increased its dividend payments for 45 consecutive years.
Yield: 2.5% | YTD Annualized Return: 78.9%
Realty Income Corporation (O) is an equity real estate investment trust that owns commercial retail real estate properties in the United States. The company has paid a cash dividend to shareholders every year since 1994 and has increased its dividend payments for 22 consecutive years.
Yield: 3.8% | YTD Annualized Return: 82.6%
Note that my returns above include the the timing of current year purchases.
My goal is to generate an ever-increasing income stream from dividends. My desire is to beat the S&P 500 over time. We should never confuse desires with goals. In the end, I will not sell a great dividend stock for under-performing the S&P.
Full Disclosure: Long ED, LEG, NNN, SYY, O in my Dividend Growth portfolio. See a list of all my Dividend Growth Portfolio holdings here.
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(Photo: peter mueller)
Tags: ED, LEG, NNN, SYY, O,