Select Page

The return on my Jubak Picks Portfolio
from May 1997 through the end of 2014: 445%
ArrowCircle100

() () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () ()

%

Jubak Picks Portfolio Performance 1997-2014

Jubak Picks
Portfolio

Buy and hold? Not really.

Short-term trading?
Not by a long shot.

So what is the stock-picking style of The Jubak Picks portfolio?

Click to expand...

I try to go with the market’s momentum when the trend is strong and the risk isn’t too high, and I go against the herd when the bulls have turned piggy and the bears have lost all perspective. What are the results of this moderately active—the holding period is 12 to 18 months—all-stock portfolio since inception in May 1997? A total return of 334% as of December 31, 2012. That compares to a total return on the S&P 500 stock index of 125% during the same period.

Click to View Jubak Picks Portfolio

%

Jubak Top 50 Portfolio Performance for 2017

Jubak Top 50
Portfolio

This long-term, buy-and-holdish portfolio was originally  based on my 2008 book The Jubak Picks.

Trends that are strong enough, global enough, and long-lasting enough to surpass stock market averages.

Click to expand...

In The Jubak Picks I identified ten trends that were strong enough, global enough, and long-lasting enough to give anyone who invested in them a good chance of beating the stock market averages.

To mark the publication of my new book on volatility, Juggling with Knives, and to bring the existing long-term picks portfolio into line with what I learned in writing that book and my best new ideas on how to invest for the long-term in a period of high volatility, I’m completely overhauling the existing Top 50 Picks portfolio.

You can buy Juggling with Knives at bit.ly/jugglingwithknives

Click to view Jubak Picks Top 50 Portfolio

%

Dividend Income Portfolio Performance for 2017

Dividend Income
Portfolio

Every income investor needs a healthy dose of dividend stocks.

Why bother?

Why not just concentrate on bonds or CDs?

Click to expand...

Because all the different income-producing assets available to income investors have characteristics that make them suited to one market and not another. You need all of these types of assets if you’re going to generate maximum income with minimum risk as the market twists and turns.

For example: bonds are great when interest rates are falling. Buy early in that kind of market and you can just sit back and collect that initial high yield as well as the capital gains that are generated as the bonds appreciate in price with each drop in interest rates.

CDs, on the other hand, are a great way to lock in a yield with almost absolute safety when you’d like to avoid the risk of having to reinvest in an uncertain market or when interest rates are crashing.

Dividend stocks have one very special characteristic that sets them apart from bonds and CDs: companies raise dividends over time. Some companies raise them significantly from one quarter or year to the next. That makes a dividend-paying stock one of the best sources of income when interest rates start to rise.

Bonds will get killed in that environment because bond prices will fall so that yields on existing bonds keep pace with rising interest rates.

But because interest rates usually go up during periods when the economy is cooking, there’s a very good chance that the company you own will be seeing rising profits. And that it will raise its dividend payout to share some of that with shareholders.

With a dividend stock you’ve got a chance that the yield you’re collecting will keep up with rising market interest rates.

But wouldn’t ya know it?

Just when dividend investing is getting to be more important—becoming in my opinion the key stock market strategy for the current market environment—it’s also getting to be more difficult to execute  with shifting tax rates and special dividends distorting the reported yield on many stocks.

I think there’s really only one real choice—investors have to pull up their socks and work even harder at their dividend investing strategy. That’s why I revamped the format of the Dividend Income portfolio that I’ve been running since October 2009. The changes aren’t to the basic strategy. That’s worked well, I think, and I’ll give you some numbers later on so you can judge for yourself. No, the changes are designed to do two things: First, to let you and me track the performance of the portfolio more comprehensively and more easily compare it to the performance turned in by other strategies, and second, to generate a bigger and more frequent roster of dividend picks so that readers, especially readers who suddenly have a need to put more money to work in a dividend strategy, have more dividend choices to work with.

Why is dividend investing so important in this environment? I’ve laid out the reasons elsewhere but let me recapitulate here. Volatility will create repeated opportunities to capture yields of 5%–the “new normal” and “paranormal” target rate of return–or more as stock prices fall in the latest panic. By using that 5% dividend yield as a target for buys (and sells) dividend investors will avoid the worst of buying high (yields won’t justify the buy) and selling low (yields will argue that this is a time to buy.) And unlike bond payouts, which are fixed by coupon, stock dividends can rise with time, giving investors some protection against inflation.

The challenge in dividend investing during this period is using dividend yield as a guide to buying and selling without becoming totally and exclusively focused on yield. What continues to matter most is total return. A 5% yield can get wiped out very easily by a relatively small drop in share price.

Going forward, I will continue to report on the cash thrown off by the portfolio—since I recognize that many investors are looking for ways to increase their current cash incomes. But I’m also going to report the total return on the portfolio—so you can compare this performance to other alternatives—and I’m going to assume that an investor will reinvest the cash from these dividend stocks back into other dividend stocks. That will give the portfolio—and investors who follow it—the advantage of compounding over time, one of the biggest strengths in any dividend income strategy.

What are some of the numbers on this portfolio? $29,477 in dividends received from October 2009 through December 31, 2013. On the original $100,000 investment in October 2009 that comes to a 29.5% payout on that initial investment over a period of 39 months. That’s a compound annual growth rate of 8.27%.

And since we care about total return, how about capital gains or losses from the portfolio? The total equity price value of the portfolio came to $119,958 on December 31, 2012. That’s a gain of $19,958 over 39 months on that initial $100,000 investment or a compound annual growth rate of 5.76%.

The total return on the portfolio for that period comes to $49,435 or a compound annual growth rate of 13.2%.

How does that compare to the total return on the Standard & Poor’s 500 Stock Index for that 39-month period? In that period $100,000 invested in the S&P 500 would have grown to $141,468 with price appreciation and dividends included.) That’s a total compounded annual rate of return of 11.26%.

That’s an annual 2 percentage point advantage to my Dividend Income portfolio. That’s significant, I’d argue, in the context of a low risk strategy.

Portfolio Related Posts

Saudis push OPEC to go for $70 a barrel

The goal was to cut production enough to reduce global oil inventories to their five-year average. The hope of the coalition of OPEC and Russia that reduction in production would get oil prices up to $60 a barrel. Now with that inventory reduction just about in place and with oil at $60 a barrel, the Saudis are pushing for further production cuts and a target price of $70 a barrel.

Big earnings report from MGM Resorts before the market open tomorrow

Tomorrow’s earnings report from MGM Resorts International (MGM) could be make or break for the call options that I hold on this stock in my Volatility Portfolio. The options have been all over the block in recent weeks from up 50% to down 30% on market volatility and on anticipation of the opening of the company’s new hotel and casino on Macao’s Cotai strip.

Bristol-Myers puts up potential $3.6 billion in deal for 35% of a Nektar cancer drug

In the deal announced today Bristol-Myers Squibb (BMY) pays Nektar Therapeutics $1 billion upfront, $850 million for stock valued at a price of $102 a share, and a potential $1.78 billlion in milestone payments in exchange for access to NKTR 214, a drug candidate still in trials and that has shown the ability to extend the range of Bristol-Myers Opdivo

Diamondback Energy beats on earnings and starts dividend

After the close of New York trading today, Diamondback Energy (FANG) announced fourth quarter earnings of $1.56 a share (excluding one-time items). That beat the Wall Street consensus by 5 cents a share. Revenue climbed 116% year over year to $399 million, above expectations for $366 million. As of today, February 13, I’m raising my target price to $140 a share from the prior $130 a share.
 

China slides into correction too: Are Chinese stocks better buy on the dip candidates?

While our eyes have been glued to the volatility in U.S. markets, Chinese stocks have staged their own correction. The Shanghai Composite is down 12.1% from its high on January 24 to the low on Thursday, February 8. With the Lunar New Year and the week-long Spring Festival Holiday almost upon us, it’s not surprising that this is a volatile week.

Corning drops on accounting loss from tax cut bill

Shares of Corning (GLW) took a 5.61% hit Tuesday, January 30,as the company reported a huge quarterly loss of $1.66 a share–or $1.412 billion. But all that loss was due to a $1.8 billion accounting write down as a result of the Tax Cuts and Jobs Act. Excluding that one-time item Corning reported earnings of 49 cents a share, slightly above Wall Street expectations for 47 cents a share. Sales climbed 7.4% year over year, above analyst estimates

Autoliv earnings beat and spinoff plans buck yesterday’s market plunge

While the Standard & Poor’s 500 stock index was falling 1.04% yesterday and the Dow Jones Industrial Average was giving up 362 point, auto safety supplier Autoliv (ALV) was busy climbing 8.07% on the day to close at $149.48. (The stock, a member of my Jubak Picks Portfolio, is up 22.05% since I added it to the portfolio on April 29, 2016 to close at $149.48. As of yesterday, January 30, I’m raising my target price to $170 from the prior $134. The reasons for the gains today start with an earnings beat

PayPal beats on earnings and revenue, but falls after hours on profit taking

PayPal Holdings (PYPL) reported fourth quarter earnings of 55 cents a share, 3 cents a share above Wall Street estimates, and revenue of $3.71 billion (on a foreign-exchange neutral basis) vs projections for $3.63 billion. Revenue climbed 24% year over year for the quarter. After climbing during the regular session, shares of PayPal fell 4.14% in after-hours trading as investors took profits. Not surprising since PayPal shares were up 114.48% in the last 12 months as of the close on January 31.

Jim’s Daily Email Alerts:

Every post from Jubak Picks straight to your mailbox. And they're free!

Get Jim’s Special Offers:

Jim Jubak’s Special Offers
go out from time to time
(but never too often!)

Get Even More Jim!

  • • More profiles of hot (and cold) sectors
  • • More strategies for profiting from volatility
  • • More about macro trends driving the market
  • • More on where the market is heading – short-, medium- and long-term – including a Saturday Night Quarterback look at the week ahead!

Subscribe now for a year for just $199

Stock Trader's Almanac 2016 Best Investing Book