Author: Chris Santiago
Covestor model: Dividend Value
The past month has been a noisy time period for equity markets, with many sharp up or down days for the major indexes. Investors have been hanging on the headlines – mostly centered around Greece and other Euro economies, most recently Italy.
During market turbulence such as we are experiencing now I am happy to tune out the day-to-day noise, and focus on our long-term investment strategy. For the Dividend Value model, that means focusing on opportunities to buy companies at attractive prices with above-average and growing dividend yields. This conservative approach helps eliminate the temptation to trade on the news and prevents us from developing tunnel vision on the daily headlines.
As I mentioned last month, we have been looking to initiate a position in 3M (MMM) when both the price, and consequently the yield, became attractive. In the beginning of the October an opportunity to buy the stock presented itself at around $72, but I hesitated and the stock has since moved back into the $78-82 range. We will be patient and wait for the right time to step in.
Another company that has popped up on the radar is B&G Foods (BGS). B&G Foods owns many brands and produces a multitude of food products. The company just reported a great quarter of strong sales and net income growth, and also announced in 9.5% increase in the quarterly dividend. Currently yielding around 4%, the stock has been on a tear during the last month; we’d love to start a position in this company but are looking for the stock to pull back a little before we do.
The Dividend Value portfolio is still outperforming the S&P 500 since inception and I believe the conservative, patient strategy has played a major role thus far. It’s anyone’s guess what the next headline will be and how the market will react. But I believe our focus on dividend-paying stocks will continue to guide us through the rough times ahead. We will anxiously await our future buying opportunities.
