- Who wouldn’t want more income with less volatility?
- Average Dividend Yield of 4.66%
- Year-to-Date Return of 20.78%
- Trailing 1 Year Return of 13.77%
- Lifetime Return of 11.02%
This week, Durig takes a closer look at the various benefits that its Dogs of the S&P 500 Portfolio may provide investors in light of today’s unpredictable financial markets. September Performance Highlights (See bullet points above).
A Multi-Benefit Income Strategy
Durig’s Dogs of the S&P 500 Portfolio has the dual benefit of growth and income from a variety of the highest yielding (with regard to dividends) blue chip companies listed on the S&P 500. The portfolio is able to capture the highest quality blue chip dividends through its use of strategic weighting, achieving an average dividend yield of 4.66%, with the growth component of this strategy helping to boost the total year-to-date portfolio return to 20.78%, and a trailing 1 year return of 13.77%, outpacing the S&P 500 itself in both year-to-date return and trailing 1 year return. This multi benefit strategy allows investors to capture strong growth in principal, while still generating a healthy level of diversified income and realizing strong historical returns.
Treasuries Becoming Less Attractive
With interest rates in decline, Durig’s Dogs of the S&P 500 Portfolio’s average high dividend yield of 4.66% is becoming more and more attractive to investors eager to earn honest yields without having to wait years and years to realize them (see US Treasury Yields Below).
Why would investors reach out 30 years to earn a return of 2.19% when they have the opportunity to realize more than double that in a one year period?
Less Historical Volatility, More Peace of Mind
While many investors are apprehensive about equity investments these days, Durig’s Dogs of the S&P 500 Portfolio actually contains far less historical volatility than the S&P 500 itself, with a beta of only 0.71 (vs. the S&P 500). In essence, this reduced correlation improves Durig’s Portfolio by helping to smoothen the sharp ups and downs that burden today’s equity markets.
For example, take a look at the historical chart of Durig’s Dogs of the S&P 500 Portfolio versus the chart of the S&P 500 (below).
Year-to-Date Chart of the S&P 500
Note how the S&P 500 appears to experience far more significant downturns than Durig’s Portfolio (above). This helps investors to participate in the upside of blue chip equity, without the sharp downturns that the equity markets often experience. We believe the portfolio’s lower, and far more preferable correlation to the S&P 500 / the market as a whole and the selection of high quality, high yielding blue chip companies are part of what have allowed us to successfully weather the erratic movements of equity markets.
Year-to-Date Chart of Durig’s Dogs of the S&P 500 Portfolio
Who wouldn’t want more income with less volatility?
Blue Chip Resiliency
Patrick Healy, founder and president of Caliber Financial Partners, had this to say in a recent article about blue chip dividend producers’ ability to mitigate downside risk in tough markets:
“Investors can take advantage of selloffs and potentially score some bargain buys when valuations are depressed. In that type of scenario, dividend producing stocks Procter & Gamble (PG) or Coca-Cola (KO) could be a good choice because they tend to be resilient and trade well even during periods of declining interest rates. Healy says holding these types of stocks, along with blue chip companies such as Johnson & Johnson (JNJ) or Walmart (WMT), which have sustainable cash flow and the ability to grow earnings over time, can offer a buffer against downside risk.”
The key is that these companies are blue chip because they have proven to be resilient in periods of market turmoil or changing interest rates with respect to their ability to generate stable and growing earnings, maintain the high dividends paid to shareholders, and solid execution of strategic business initiatives, etc.
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Durig’s Dogs of the S&P 500 Portfolio appears to have found the best of both worlds via blue chip equity; growth and reliable income via high quality dividends. These benefits, combined with the portfolio’s lower, and far more preferable correlation to the market as a whole help to insulate investors from market volatility and provide additional peace of mind. Considering that treasury yields continue their downward slide, Durig’s Dogs of the S&P 500 Portfolio’s annualized yield of 4.66% appears far superior than the 2.19% yield offered to investors of the 30 Year US Treasury.
For investors seeking a well diversified, less volatile portfolio targeting growth and income from various asset types and industries, Durig’s Dogs of the S&P 500 Portfolio may be the solution.
For More Information
Durig Capital has several high yield portfolios available, click below to learn more.
TD Ameritrade Advisors
We have now started offering our highly successful Fixed Income 2 (FX2) Portfolio and our Dividend Aristocrats 40 Portfolio, and our Income Aristocrats Portfolio to clients of other Registered Investment Advisors through segregated accounts at TD Ameritrade Institutional. Please ask us to learn how this might work for you and your current advisor.
Disclaimer: Past performance is no indication of future success. Any performance shown is this publication is as of 9-11-19. * The Primary Benchmark used is S&P 500 TR Idx. The high yield strategies presented in this review by Durig Capital may not be suitable for all investors. This is not investment advice from Durig Capital, nor a specific recommendation to buy or sell securities. If you have any questions or concerns about its suitability for your personal investment, you should seek specific investment advice from a registered professional before making an investment decision.