A Large Long-Term Diversified Dividend Growth Portfolio That Can Outperform By A Big Margin

A large diversified dividend growth portfolio, comprising companies with substantial earnings growth prospects, can give investors capital gain along with a nice income. I tried to create such a large diversified portfolio that includes 40 stocks and that should be balanced only once a year. In order to create this portfolio, I have used the following screen. It is based on an attempt to search for profitable companies with dividend yield and dividend growth rates greater than their industry averages. Those companies would also have to show good earnings growth prospects, and their last five years earnings growth should be greater than their industries' earnings growth. Back-testing the screen for the last 15 years has given much better returns than the S&P 500 benchmark. The Sharpe ratio, which measures the ratio of reward to risk, was also much better. Furthermore, the maximum drawdown, which normally is much bigger in a... Read more