Almost every investor has a benchmark they are trying to beat. For many investors, that benchmark is the S&P 500. It is easily followed and can be directly invested in via many different index funds such as SPDR S&P 500 (SPY) and Vanguard 500 Index Inv (VFINX).
Last year many dividend income-oriented portfolios underperformed the S&P 500. The old adage that trees don't grow to the sky certainty holds true. Obviously, that is not to say that all dividend growth stocks have underperformed.
If we look carefully we can find some gems that have performed quite well so far this year. Below are several multi-billion dollar dividend stocks that have outperformed the S&P 500 this year through March 28, 2014:
Kimberly Clark Corp. (KMB) is a global consumer products company producing tissue, personal care and health care products. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex and Scott.
Mkt. Cap: $42b | Yield: 2.7% | Adjusted Return: 5.6%
Johnson & Johnson (JNJ) is a leader in the pharmaceutical, medical device and consumer products industries.
Mkt. Cap: $278b | Yield: 2.7% | Adjusted Return: 6.7%
Microsoft (MSFT), the world's largest software company, develops PC software, including the Windows operating system and the Office application suite.
Mkt. Cap: $343b | Yield: 2.8% | Adjusted Return: 7.2%
Lockheed Martin Corp. (LMT), the world's largest military weapons manufacturer, is also a significant supplier to NASA and other non-defense government agencies. LMT receives about 93% of its revenues from global defense sales.
Mkt. Cap: $52b | Yield: 3.3% | Adjusted Return: 8.2%
Raytheon Company (RTN), the world's sixth largest military contractor, specializes in making high-tech missiles, advanced radar systems and sensors, defense electronics and missile-defense systems.
Mkt. Cap: $31b | Yield: 2.5% | Adjusted Return: 8.1%
General Dynamics (GD) is the world's fourth largest military contractor and also one of the world's biggest makers of corporate jets.
Mkt. Cap: $38b | Yield: 2.3% | Adjusted Return: 11.8%
Over the same period the S&P 500 (SPY) was up 0.9%. The returns were calculated using Yahoo's dividend adjusted stock price for Dec. 31, 2013 as the starting point. Short-term performance is never the sole reason for long-term investors to buy. What goes up significantly, usually comes back down.
Full Disclosure: Long VFINX, KMB, JNJ, MSFT, LMT, RTN, GD. See a list of all my dividend growth holdings here.
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