Stop-Loss Strategy For Dividend Growth Stocks: 2012 Data Update

In January 2012, I outlined a stop-loss strategy that I use for three of my dividend growth [DG] model portfolios. Essentially, I look for four consecutive weekly closes where the stock has underperformed the S&P 500 (SPY) by 20% from a common starting date. The original goal was to use price as a proxy for identifying DG stocks that may be in trouble and hence could potentially cut their dividend. After collecting some data, I found that the "-20% rule" was better at predicting further losses, overdue dividend raises, and small dividend raises, as opposed to cuts. However, for DG investors, these are still useful things to detect. More recently in one of my monthly portfolio updates, an SA member asked if I had any data on portfolio stocks that had triggered the -20% rule and their performance. This article reviews these stocks, as well as some others from my... Read more