DividendMax Model Portfolio 2016
Following a disappointing performance in 2015, we produce our model portfolio for 2016. In 2015, the DividendMax model portfolio outperformed the FTSE 100 and FTSE 350, although it underperformed the FTSE 250 significantly. The model portfolio ended the year up 1.1%.
We are not going to pull out of the beleagured Oil and Gas and Mining sectors with one additonal company over last years total, but neither are we going to pile in.
As in previous years, we will select 20 stocks with an equal weighting of 5% and review at the half yearly stage.
Update
The model portfolio rose by 14.1% in 2016 slightly below the 15% increase posted by the FTSE 350. The biggest performers were Ashtead, BHP, BP and Rio Tinto. The laggards were Easyjet, Next and TalkTalk.
Company | 3 Div Yield | P/E | Cover | FDI | Sector | Price | Weighting |
---|---|---|---|---|---|---|---|
AMEC Foster Wheeler | 6.03% | 6.6 | 2.0 | -33.0% | Oil Equipment, Services & Distribution | £4.23 | 5.0% |
Next plc. | 2.54% | 18.0 | 2.8 | 6.0% | Retailers | £72.00 | 5.0% |
Aberdeen Asset Management | 11.34% | 13.4 | 1.9 | 7.7% | Financial Services | £2.82 | 5.0% |
Rio Tinto plc | 10.33% | 12.1 | 1.2 | 11.0% | Mining | £19.03 | 5.0% |
Pearson plc | 10.39% | 12.3 | 1.5 | 7.8% | Media | £7.20 | 5.0% |
BP plc | 9.44% | 14.6 | 2.1 | 6.8% | Oil & Gas Producers | £3.45 | 5.0% |
Lloyds Banking Group plc | 6.09% | 9.6 | 0.0 | 133.3% | Banks | £0.71 | 5.0% |
Old Mutual Limited | 7.28% | 10.1 | 3.9 | 8.0% | Life Insurance | £1.70 | 5.0% |
Galliford Try plc | 5.97% | 11.5 | 2.0 | 17.6% | Construction & Materials | £15.06 | 5.0% |
Paragon Banking Group Plc | 5.68% | 11.5 | 3.5 | 16.4% | Financial Services | £3.47 | 5.0% |
Ashtead Group plc | 2.18% | 13.6 | 4.1 | 31.1% | Support Services | £10.94 | 5.0% |
Dignity | 1.07% | 22.9 | 4.6 | 10.0% | Retailers | £25.00 | 5.0% |
Smiths News Plc | 9.28% | 8.6 | 2.3 | 5.4% | Support Services | £1.69 | 5.0% |
GSK Plc | 7.37% | 17.0 | 1.6 | 0.0% | Pharmaceuticals & Biotechnology | £13.58 | 5.0% |
Talk Talk Telecom Group Plc | 8.75% | 20.0 | 1.4 | 15.1% | Telecomms | £2.18 | 5.0% |
Pennon Group | 4.84% | 23.0 | 1.6 | 4.8% | Gas, Water & Multiutilities | £8.47 | 5.0% |
Easyjet plc | 4.95% | 11.2 | 3.1 | 10.5% | Travel & Leisure | £17.45 | 5.0% |
Tritax Big Box Reit Plc | 7.72% | 20.9 | 1.0 | 26.2% | Real Estate Investment Trusts | £1.29 | 5.0% |
BHP Group Plc | 14.07% | 24.0 | 0.5 | 3.3% | Mining | £7.40 | 5.0% |
Diageo plc | 4.11% | 20.0 | 2.0 | 8.9% | Beverages | £18.23 | 5.0% |
Banks
Lloyds Banking Group plc
This year we go for Lloyds bank for its massive market position and simple business model. It also has a prospective yield of over 5%
Beverages
Diageo plc
Once again we go for Diageo for its defensive qualities and reasonable yield.
Construction & Materials
Galliford Try plc
This year we are going to go for one of the best performers from a dividend perspective in recent times across the whole DividendMax database. Galliford Try.
Financial Services
Aberdeen Asset Management, Paragon Banking Group Plc
This year we are going for Aberdeen Asset Management whose resliant performance in the face of poor emerging markets is commendable. They have a prospective yield of over 6%.
We also go for the Paragon Group of companies for its recent excellent perfomance with a prospective yield of over 5%
Gas, Water & Multiutilities
Pennon Group
We choose Pennon for their sector leading dividend policy of RPI plus 4%
Life Insurance
Old Mutual Limited
This Year we have gone for a stock that we have never chosen before in Old Mutual with a prospective yield approaching 5%
Media
Pearson plc
We are going to stick with Pearson which has a prospective yield of 6.9%
Mining
Rio Tinto plc, BHP Group Plc
We are going to stick with Rio Tinto as it looks best placed of all of the miners to weather the current storm and has a prospective yield of over 7%.
We also go for BHP billiton which will yield over 5% even if they halve the dividend.
Oil Equipment, Services & Distribution
AMEC Foster Wheeler
This year, we are going to select Amec Foster Wheeler who had a terrible year in 2015. The dividend was halved and profit forecasts tumbled to leave them on a PE of under 7 and a prospective yield of over 7%.
Oil & Gas Producers
BP plc
We are going to stick with BP, which has a prospective yield of 7.2%
Pharmaceuticals & Biotechnology
GSK Plc
This year we go once again for GlaxoSmithkline who will pay a special dividend this year of 20p in addition to the company stated dividend policy of 80p for the full year for a yield of over 7%.
Real Estate Investment Trusts
Tritax Big Box Reit Plc
We go for Tritax Big box for their near 5% yield.
Retailers
Next plc., Dignity
This year we go for Next whose strategy of share buybacks or dividends depending upon the share price means that at the current share price the yield is above 5%.
We go for the excellent operational and profit performance of Dignity who have grown their dividends in double digits for years. They have high cover and whilst the yield is not fantastic, this is more than compensated for by other high yielding stocks in the portfolio.
Support Services
Ashtead Group plc, Smiths News Plc
We go for the excellent operational and profit performance of Ashtead who have grown their dividends in double digits for years. They have high cover and whilst the yield is not fantastic, this is more than compensated for by other high yielding stocks in the portfolio.
We also go for Connect group for its low PE and solid track record of dividend increases.
Telecomms
Talk Talk Telecom Group Plc
Atfer a very successful choice last year when we sold before their security scare, we buy in for the yield approaching 7% after the company promised a further 15% increase in the dividend at the finals stage.
Travel & Leisure
Easyjet plc
Once again, we choose Easyjet as a major beneficiary of the low oil price