Performance Review
This is a review of the analyst estimates based on the U.S. Dividend Watch List dated February 12, 2016. Companies on the far left were expected by analysts to underperform while companies on the far right were expected to outperform.
This past year was a vindication to analysts and their generally rosy outlook for the stocks that they cover. Average gain for the entire list was 29.15%. In the categories that we have indicated (high return, average return and low return) the group that did the best was the “average prospects, average returns”.
Overall, the various categorizations of the watch list performed in line with our expectations and exceed the most major indexes except the S&P MidCap 400 and the Russell 2000. When an investor can managed to achieve small cap performance with tried & true mid to large-cap stocks, then we know that we’re on the right track.
In our continuing effort to refine our investment process, we added a high and low confidence ranking of the analyst estimates of stocks on our watch list. Our thinking was that the low confidence stocks would outperform the high confidence stocks, on the theory that the analysts are usually wrong, most of the time. The actual performance, in the last year, provided resounding evidence that there may be credence to the level of confidence in the range in earnings estimates of the coming year.
Analyst Estimates
Below are the price projections based on analyst earnings estimates for on our recent U.S. Dividend Watch List dated February 3, 2017. These estimates project the price change for the respective stocks over the next 12 months. Additionally, we’ve included the high and low confidence stocks.