Dividend stocks aren’t usually known for bringing quick and large gains to your portfolio, but these 3 stocks are different. With high yields and strong dividend growth prospects, these not-so-boring dividend stocks could bring income and share price growth to your portfolio.
After a six-year bull market run, the stock market took a breather in 2015. It will be a year branded by high volatility, but in the end, the S&P 500 finished the year with a minus 0.73% price return and a small 1.38% total return with dividends included. With share prices that peaked early in the year for several market sectors including REITs and energy, the results from 2015 feel and look a lot worse for a lot of us.
What we as investors often don’t see is the tremendous return differences between different market sectors and subsectors. Over the last 10 years, each year the average return difference between the best and worst performing sectors has been greater than 30%. Even inside of the larger sectors, there will be tremendous differences. For example, in 2015 the energy sector was at the bottom of the performance list, down 23.6% for the year. Yet the Oil and Gas Refining and Marketing subsector posted a positive 24.6% return. Low energy prices are good for this group of energy companies. For income investors, the worst performing sectors of energy, financials, and utilities are the homes for the majority of high yield stocks. As we move from year to year, the worst performing sectors typically move up in the rankings in the following year and the best-performing sectors will move down.
In 2016, I am looking for another flat performance for the overall market. With the economy stuck in a 2% annual growth mode, it’s hard to foresee a set of factors that would produce the types of broad-based stock market returns investors desire. There will be money to be made (as there always is) with individual stock picks. There are several themes and stocks that I will be following and analyzing for the opportunity to earn outsized returns in 2016.
