Below is the one year performance of our March Dividend Watch Lists for 2010, 2011, 2012 and 2013. While the Wall Street adage says “Sell in May and Go Away,” we’d like to know what the market would look like if an investor bought our “Top Five” stocks before May and held for the following year.
First up is the March 26, 2010 watch list (found here). The chart is organized based on the stocks nearest the new low on the left. For the year, our Top Five stocks (XOM, FPL, MON, TMP, BRO) gained an average of +20.86% as compared to the Dow Jones Industrial Average gains of +12.63%. In this example, the Top Five stocks provided above average gains. Within the context of the gains that were made one year later, the Dow Jones Industrial Average experienced a decline of –14.60% from the April 2010 high to the July 2010 low. As a note, FPL bought PGN and trades under a new symbol NEE.
Next up is the 2011 watch list (found here). For the year, our Top Five stocks (SJW, SYY, WABC, PPL, TGT) gained an average of +8% as compared to the Dow Jones Industrial Average gains of +7.04%. In this example, the Top Five stocks provided moderate gains. Within the context of the gains that were made one year later, the Dow Jones Industrial Average experienced a decline of –19.19% from the May 2011 high to the October 2011 low. As a note, HGIC and TRH were both acquired.
The Dividend Watch list below is from March 23, 2012 (found here). For the year, our Top Five stocks (TR, CHRW, CLX, ATO, CWT) gained an average of +18.32% as compared to the Dow Jones Industrial Average gains of +10.94%. In this example, the Top Five stocks provided exceptional gains. Within the context of the gains that were made one year later, the Dow Jones Industrial Average experienced a decline of –10.70% from the May 2012 high to the June 2012 low. Additionally, the Dow Jones Industrial Average declined –8.71% from October 2012 to mid-November 2012.
The next Watch List is from March 22, 2013 (found here). The Top Five stocks (CATO, FDS, CTWS, EXPD, BCR) gained an average of +20.78% which was below the +23.12% gained by the entire list. During the same period of time, the Dow Jones Industrial Average gained +12.53%.
Even with the view of “Sell in May and Go Away,” the Top Five stocks on our U.S. Dividend Watch List have performed quite well. The average gain over the four periods reviewed was +16.99% compared to average gain of the Dow Industrials at +10.78%.
All good things must come to an end. We do not expect that the stock market will be as forgiving in the next four years as it has in the last four years. However, we recommend considering our Top Five stocks from the latest dividend watch list for potential short and long-term investment opportunities, even if the mantra is “Sell in May.”