Sometimes an irrational market will pull down the good stocks with the bad. This is an exciting time for long-term value-focused investors -- it creates opportunity. Over time the idiom 'the cream rises to the top' has merit and works quite well in the investing world. Great stocks won't stay down forever. Eventually, they will surge back to the top.
Taken to the next level, certain stocks in my dividend growth portfolio tend to be purchased more often than others. This will often pushes the limit on my maximum allocation limit of 5% per holding in the portfolio. Sometimes, the high allocations are a result of buying up to the limit when the price is down. While other times it is a conscious decision to slightly exceed the 5% threshold.
Below are my largest Dividend Growth Stocks positions, based on market value, that have double-digit annualized lifetime returns:
Lockheed Martin Corp. (LMT) is the world's largest military weapons manufacturer, and also a significant supplier to NASA and other non-defense government agencies. The company has paid a cash dividend to shareholders every year since 1995 and has increased its dividend payments for 18 consecutive years.
Yield: 2.3% | % of DG Portfolio: 6.7% | Lifetime Return 14.7%
Mercury General Corp. (MCY), operating primarily in California, writes a full line of automobile coverage for all classifications of risk. The company has paid a cash dividend to shareholders every year since 1986 and has increased its dividend payments for 32 consecutive years.
Yield: 5.9% | % of DG Portfolio: 5.9% | Lifetime Return 18.8%
Abbvie Inc. (ABBV) is a global research-based pharmaceuticals business that emerged as a separate entity following its spin-off from Abbott Laboratories at the start of 2013. AbbVie's key drug is Humira for rheumatoid arthritis. The company has paid a cash dividend to shareholders every year since 1926 and has increased its dividend payments for 48 consecutive years.
Yield: 5.0% | % of DG Portfolio: 4.5% | Lifetime Return 21.4%
Erie Indemnity Co. (ERIE) is a management services company that provides sales, underwriting, and policy issuance services to the policyholders of Erie Insurance Exchange in the United States. The company has paid a cash dividend to shareholders every year since 1991 and has increased its dividend payments for 30 consecutive years.
Yield: 2.1% | % of DG Portfolio: 4.8% | Lifetime Return 32.4%
Microsoft (MSFT), the world's largest software company, develops PC software, including the Windows operating system and the Office application suite. The company has paid a cash dividend to shareholders every year since 2003 and has increased its dividend payments for 18 consecutive years.
Yield: 1.1% | % of DG Portfolio: 12.5% | Lifetime Return 49.7%
Capital appreciation has played a significant part in the above stocks weighting. As you can see, all of the highlighted stocks are above my 5% maximum allocation, and thus I am not currently adding to my position. From a risk standpoint, it is important to define a maximum percentage holding. This helps define boundaries when emotion (greed or fear) is knocking on the door.
Full Disclosure: Long ABBV, ERIE, LMT, MCY, MSFT,
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Tags: ABBV, ERIE, LMT, MCY, MSFT,
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