High Dividend Yield portfolio outperforms S&P 500
December 14th, 2010 by Stephen CoxAs we approach the end of the year we must take stock (pardon the pun) of our performance during year. It is a great time to learn about your successes and failures in the market.
As i look back on the performance of the year, the real stand out was the performance of the High Dividend Yield Portfolio. I constructed this portfolio on the 8th June and it comprised of 10 stocks:
- AT&T
- Verizon
- Duponte
- Pfizer
- Merck
- McDonalds
- Johnson & Johnson
- Chevron
- Kraft
- Coca Cola
The performance of the portfolio was +19.45%. Annualising the return is equivalent to a return of 38.9% not to mention a 4.79% Dividend yield which would give you a total return of 43.65% (annualised).
When I look back on this portfolio the thing i liked most about it (apart from the return) was the simplicity of constructing it an monitoring its performance.
Here is a couple of questions for you to consider when building a High Dividend Yield portfolio:
- Is the company a large cap?
- Has it got a 10-15 year track record of paying dividends?
- Has the company got enough cash and the ability to generate profits to continue paying dividends in the future?
- Is the payout ratio realistic?
If you would like to investigate further please eel free to call us +353 1 8359032
High Dividend Portfolio continues to outperform
October 26th, 2010 by Stephen CoxJust a quick update on the high dividend yield portfolio. Profit since the 8th June 2010 is 18.99%.
This is outperforming the return on the benchmark by 7.66%.
It pays dividends to know what your doing!
Share Navigator portfolio continues to outperform the S&P 500
August 27th, 2010 by Stephen CoxJust a quick update on our portfolio. Currently the portfolio is in profit of 8.45% since the 8th June.
The S&P 500 is up just 0.25% in the same period of time.
The Share Navigator portfolio is outperforming the market by 8.15% – we also have an annual dividend yield of 4.79% to look forward to.
It pays to know what your doing!
Bye for now.
Our High Dividend Portfolio continues to outperform the S&P 500
August 11th, 2010 by Stephen CoxJust a quick update on the High Dividend Yield Portfolio developed by Share Navigator on the 8th June:
Our portfolio is up 8.59%.
S&P 500 is up 2.97% in the same period of time.
Our portfolio is outperforming the S&P 500 by a whopping 5.62%!!!!!
It pays dividends to know what your doing!
Attend a Master Class with Share Navigator – simply register on the home page of our website
Keeping an eye on the VIX
August 5th, 2010 by Stephen CoxThere is a saying on Wall Street ……. ‘When the VIX is high its time to Buy & When the VIX is low its time to go’.
How true is this saying! Well we are putting it to the test. Above you will see 2 charts. A chart of the VIX and a chart of the S&P 500 ETF. Lets have a look:
- End of August – Vix was high – buy SPY @ $100
- Middle of Oct – VIX was low – sell SPY then for $110 – a $10 profit
- End of Oct – Vix was high – buy SPY @ $105
- End of Nov – Vix was low – Sell SPY for $110 – a $5 profit
- VIX continued to trend lower from Dec to April
- VIX extremely high towards end of May – buy SPY @ $107
- Toady – VIX trending lower approaching the support area – SPY @ $112 – a $5 profit
Conclusion: Like everything else in the stock market, using the VIX is not an exact science but a useful indicator to know when to increase risk and reduce risk.
Looking at the chart above for the VIX you can see that 20 appears to be the support area on the low side for the VIX. We are fast approaching that support area. If you have been lucky enough to participate in the recent run in the markets then it might be time to lock in some of the profits. Assuming that you are Long in the market you can lock in profits in many ways:
- Sell all or part of your current position
- Put stop losses in place (although these do not guarantee protection)
- Apply a protective collar strategy – this allows you to still benefit from upside potential whilst locking in some of your profits (but not all). You may also benefit from additional premium by applying this strategy. What I like about this is that you know your worst case scenario in advance.
Whilst the current run up in the market may last for a number of weeks (who knows, anything can happen) – the prudent investor knows when to take some profit off the table. The protective collar strategy is excellent in these situations as it allows you profit to the upside whilst protecting some of your profits (but not all of them).
Keep an eye on the VIX.
High Dividend Portfolio rises 8.9% in 8 weeks
August 4th, 2010 by Stephen CoxThe High Dividend yield portfolio that we created on the 8th June is up by 8.9% and continues to outperform the broader indices by a whopping 4%!!!!!
The S&P 500 is up by 4.9% in that same period of time.
You see – It pays dividends to know what you are doing!
In our opinion, the responsible investor will apportion at least 50% of their portfolio to a High Dividend Yield Strategy. This will at the very least bring some resemblance of stability to the portfolio but it also gives you some regular income from your investments. With Bond Yields at historic lows a High Dividend Portfolio offers a real alternative. But investors should be careful, there are a couple of rules and conditions you need to apply when selecting the stocks for your portfolio.
- Make sure that the company is fundamentally sound – Large Cap is preferable
- Ensure that the company has at least a 5 year track record of paying out Consistent Dividends
- you must take a long term view on this strategy
The historic volatility in our high dividend portfolio is pretty low which should serve us well when the markets take a turn for the worse. Do you know what risk is attached to your current portfolio? If not, you should really start assessing it.
Call us to find out more +353 1 5143866.
How to build a High Dividend Yield Portfolio?
July 26th, 2010 by Stephen CoxIn this post Share Navigator will show even the complete beginner how to build a High Dividend Yield stock market portfolio. This post is the first in a 2 part series.
In this post we will show you how to build a high dividend yield portfolio – in our next post we will teach you how to generate additional monthly revenue from the portfolio.
Why invest in a High Dividend portfolio?
Over the past 100 years High Dividend Yield portfolio’s have outperformed the benchmark indexes by an average of 3% on an annual basis. They are also extremely easy to build. Just follow a few simple rules and you shouldn’t have a problem:
- Only invest in fundamentally sound quality companies
- Make sure that the company has a track record of paying dividends – the company should have a long record (at least 5 years) of paying solid dividends
- It’s the Dividend Yield that counts – Make sure you know the difference between the dividend amount and the dividend yield!
- You must take a long term view
How do you construct the Portfolio?
This strategy can be applied to any stock exchange – for illustration purposes we will use the NYSE.
- Once per year, analyse the DJIA 30 stocks – identify the top 10 highest Dividend Yield stocks
- Invest in equal amounts into each of the 10 stocks
- Check on the portfolio the following year – replace any stocks which are no longer in the top ten Dividend paying stocks
Yes its that simple.
We have included a 14 minute video which goes into more detail. Finally, have you attended a FREE Masterclass yet? If not, you can register on the homepage of our website.
European Stocks trade as American Depository Receipts (ADR’s) on the US Stock Markets – But what are they?
July 17th, 2010 by Stephen CoxBank of Ireland, AIB, Ryanair and many other Irish companies trade on the US Stock Markets as ADR’s. Share Navigator will now explain what they are.
ADR’s American Depository Receipts (ADR’s) represent the ownership in the shares of a foreign company trading on US stock markets. The stock of many non-US companies can trade on US exchanges through the use of ADRs.
Why ADR’s?
ADRs enable US investors to buy shares in foreign companies without undertaking cross-border transactions. ADRs carry prices in US dollars, pay dividends in US dollars, and can be traded like the shares of US-based companies. For Investors, it can be very costly to transact and buy shares in companies through foreign exchanges. For US based investors ADR’s solved those problems. Now you can invest in countries from all over the world via ADR’s on the NYSE & Nasdaq. With online trading it is also much cheaper for international investors to buy foreign based companies on the US markets because online brokerage fees are so small in comparison to the home market.
How do ADR’s work?
1.U.S. banks simply purchase a bulk lot of shares from the company e.g. Bank of Ireland
2.The banks bundle the shares into groups, and reissues them on either the New York Stock Exchange (NYSE), American Stock Exchange (AMEX) or the Nasdaq.
3.The depositary bank sets the ratio of U.S. ADRs per home-country share. This ratio can be anything less than or greater than 1. (This is done because the banks wish to price an ADR high enough to show substantial value, yet low enough to make it affordable for individual investors.)
An Irish Example – Bank of Ireland
At the time of writing Bank of Ireland trades on the Irish market currently at €0.77 but also trades on the Us markets via the ADR at $3.88 – This begs the questions in there a price anomaly there/arbitrage opportunity – the answer is unfortunately no.
The US bank issuer of the Bank of Ireland American Depository Receipt issues them at a ratio of 1:4.
Lets do the math!
Bank of Ireland trades on the Irish market currently at €0.77 but also trades on the Us markets via the ADR at $3.88. ADR ratio is 1:4 = 4 Irish shares for every 1 ADR.
Therefore = €0.77 * 4 = €3.08
Now we must do a currency exchange into $US
= €3.08 * 1.26 (current euro dollar exchange rate) = $3.88
So as you can see there is no arbitrage opportunity.
We have included a short video of ADR’s we do hope you enjoy it. if you would like to learn more why not book in for a FREE Online stock market master class.
Why Diversification works in the Stock Market
July 12th, 2010 by Stephen CoxIn this blog I want to briefly explain why diversification in the stock market works. Most retail investors have heard that you ‘should not put all of your eggs in one basket. But I wonder how many actually understand why? I will not bombard you with the mathematical formulas and standard deviations etc… in explaining the ‘why’. I will explain in basic english – why diversification works. I have also attached a brief video for you perusal.
The bottom line is this – stocks do not move exactly together, on any given day stock A may go up while stock B may go down. By having more stocks in your portfolio you are reducing the ‘unique risk’ associated with individual companies. Stocks which are negatively correlated (stock prices move in opposite directions) give you better diversification e.g. Airline Stocks and oil prices are negatively correlated. When oil prices go up airline stocks usually go down because they have higher costs associated with running their business (unless they have hedged their risk to adverse oil prices).
Stocks which are positively correlated (i.e. stock prices move in the same direction) do not give you the same diversification benefits e.g. AIB & Bank of Ireland. If you invest your money into banking stocks it is likely that they will go down and up together depending on market conditions.
In our video we give you a number of examples as why diversifcation works – i hope you enjoy and would love to receive any feedback .
Please leave comments after you have watched the video.
Share Navigator are here to help you please register for a FREE Online Masterclass.
How to Buy and Sell Shares online
July 11th, 2010 by Stephen CoxShare Navigator will teach you how to become a professional investor in the stock market. During this tutorial you will learn how to start buying and selling shares online. We will teach you how to practice risk free with the virtual trader. This will give you ‘monopoly money’ to start investing with. So you can practice as often as you wish with no risk. This video tutorial is a must for total beginners.