U.S Dividend Watch List: December 8, 2017

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from December 9, 2016 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2015 Price 2016 Price % change
KMB Kimberly-Clark Corp. 114.61 120.11 4.8%
MDT Medtronic 73.35 81.07 10.5%
CLX Clorox 115.29 145.23 26.0%
HRL Hormel Foods Corp. 34.39 37.24 8.3%
PPL PP&L Corporation 33.51 34.50 3.0%
      Average 10.5%
         
DJI Dow Jones Industrial 19,756.85 24,329.16 23.1%
SPX S&P 500 2,259.53 2,651.50 17.3%

The top five companies gained 10.5% on average. The best performer was Clorox (CLX) which rose 26.0%. Clorox's P/E at the time of our watch list publication was 23, a high multiple for large company. One of theory we have been pondering about is the exceptional return from high P/E stocks that appear on our watch list. More assessment of this thesis is to come.

Although the average gain didn't exceed the market return of 17.3% from S&P500 or the Dow Jones Industrial gain of 23.1%, we consider return of more than 10% to be satisfactory.

The worst performer is a utility holding company,PP&L Corporation (PPL). Interestingly, PP&L is appearing on this week watch list as shares fell from $40 to $34.50. One story our team is discussing has to do with the energy usage pertaining to mining of Bitcoin or other cryptocurrency. Could this be the catalyst that propel utilities companies to higher profitability? It's certainly possible. This article on WIRED highlights important data point in that regard.

U.S Dividend Watch List: December 8, 2017

The relentless bull market marched forward. There's little sign of slowing down but a correction surely is in the future and healthy. The difficulty of seeking viable new investment in this environment is challenging but not impossible. Every now and then, the market give us the opportunity to establish a position. Many of those companies can be found by tracking our watch list for fundamental and track its technical for better timing. Below are companies on our list this week. Continue reading

Taxes and the Market

Does the stock market and economy contract with the increase of taxes?  The chart below should put such thinking to rest.

Silver: December 2017

Below is a comparison chart showing the price of silver since 2012 and our view on the direction of the “poor man’s gold.”

Interest Rate Monitor: December 2017

So far, all indications are that interest rates are due to be increased by the Federal Reserve Bank.  There will be many explanations for why interest rates should be increased, however, we believe, as demonstrated by over 40 years of evidence, that the Fed follows market rates and gives an economic justification for their decision afterwards.

Performance Review: December 6, 2013

Below is the 4-year total return performance of our Dividend Watch List from December 6, 2013 to December 6, 2017 as compared to the Dow Jones Industrial Average.