DivGro's Best and Worst Performers in 2019

Now that 2019 is in the rearview mirror, I wanted to review the best and worst performers in my DivGro portfolio in 2019. Unlike 2018, when DivGro's performance was a mixed bag, 2019's performance has been stellar!

Of the 53 positions I've owned throughout the year, only four stocks are trading down for the year. On average, these stocks are up 24% for the year!

My worst performer was Walgreens Boots Alliance (WBA), down 13.7% since January 2019. On the other hand, my best performer (by far) was Apple (AAPL), whose stock price increased by 86.2% since January 2019.

Here is a chart showing the 2019 price performance of DivGro stocks I owned each and every day in 2019:


This truly is a stunning chart and I'm very thankful that DivGro benefitted from 2019's great stock market run-up. AAPL's performance, in particular, was stunning... and head and shoulders above the rest!

It is also informative to look at the annualized returns of these positions, including dividends:


Only Gilead Sciences (GILD) do not have a positive annualized return! The top performers are two Information Technology sector stocks, Microsoft (MSFT) and AAPL, followed by Air Products and Chemicals (APD), a Materials sector stock.

I have nine positions with triple-digit percentage returns:



Of these, Main Street Capital (MAIN) is the top dividend-paying stock and also the stock that I've held the longest in my DivGro portfolio. In fact, I've collected dividends equivalent to 77.5% of the capital I invested in MAIN and, following years of dividend increases, my MAIN position has a yield on cost (YoC) of 10.71%.

Ten Worst Performers

The following table presents DivGro's ten worst performing positions in 2019. These are all stocks I owned on 1 January 2019 and that I still own today:

DivGro's Worst Performers of 2019
Ticker	Company	Sector	Total Return
WBA	Walgreens Boots Alliance	Consumer Staples	-13.7%
PFE	Pfizer	Health Care	-10.2%
MMM	3M	Industrials	-7.4%
ABBV	AbbVie	Health Care	-4.0%
MO	Altria	Consumer Staples	1.1%
XOM	Exxon Mobil	Energy	2.3%
GILD	Gilead Sciences	Health Care	3.9%
HRL	Hormel Foods	Consumer Staples	5.7%
VZ	Verizon Communications	Communication Services	9.2%
NNN	National Retail Properties	Real Estate	10.5%

Let's briefly look at the three worst-performing stocks.

WBA rallied in November when rumors surfaced of a possible leveraged buyout, though financing the deal seems challenging. WBA is a Dividend Aristocrat with a Dividend Safety Score of 79 and a Quality Score of 19 out of 25.

I opened a position in WBA in December 2013 and added shares on several occasions. My YoC is 2.96%, whereas WBA yields 3.10%. My fair value estimate of WBA is $65 per share and the stock is trading about 9% below fair value. Given that my WBA position is larger-than-average at 1.92% of portfolio value, I'm not interested in adding shares at this time.

Pfizer (PFE) traded mostly sideways through July 2019 until the company announced that it would be shedding Upjohn, its off-patent branded and generic established medicines business. The market reacted negatively and the stock lost about 20% of its value, only recouping some of the losses through the rest of the year.

PFE is a high-quality stock with a quality score of 24 and, according to Simply Safe Dividends, PFE's dividend is Safe (with a dividend safety score of 75). But the dividend likely will be affected by the spin-off.

My PFE position is an above-average sized position at 1.27% of portfolio value, so I'm not interested in adding to my position, even though PFE is trading at a discount of about 7% to fair value. The YoC of my position is 4.10%, whereas PFE currently yields 3.90%. I'll hold onto my PFE shares through the spin-off, but I'll probably dispose of any new shares that get issued as a result.

Shares of 3M (MMM) slumped 28% in late April and May 2019 after the company announced disappointing earnings and cut guidance for a fifth consecutive quarter. Other headwinds include the as-yet unresolved trade dispute with China and a large acquisition that will challenge MMM's financials.

MMM has a quality score of 24 and a dividend safety score of 75, which is deemed to be Safe. With a yield of 3.23% at $178.45 per share, I think the stock offers good value for patient, long-term investors.

I own 100 MMM shares at a YoC of 3.21%. That's the equivalent of about 1.94% of total portfolio value and, therefore, a larger-than-average position. I'm not interested in adding to my position at this time.

Ten Best Performers

Now let's consider DivGros ten best performing positions in 2019:

DivGro's Best Performers of 2019
Ticker	Company	Sector	Total Return
AAPL	Apple	Information Technology	86.2%
MSFT	Information Technology	Microsoft	55.3%
LMT	Lockheed Martin	Industrials	48.7%
APD	Air Products and Chemicals	Materials	46.8%
RTN	Raytheon	Industrials	43.3%
V	Visa	Information Technology	42.4%
ITW	Illinois Tool Works	Industrials	41.8%
ROST	Consumer Discretionary	Ross Stores	39.9%
NEE	NextEra Energy	Utilities	39.3%
SWK	Stanley Black & Decker	Industrials	38.4%

Let's also briefly look at the three best-performing stocks.

In May 2019, AAPL's share price fell about 18%, mainly due to concerns about declining iPhone shipments. These concerns now seem to have been overblown, especially as accelerating growth from the company's Services, Wearable, and iPad segment fueled record Q4 revenue.

AAPL's yield of 1.04% at $297.43 per share is quite small, so I'm looking at the company's growth prospects (and its attractive 5-year dividend growth rate of 10.8%) as the main reasons for owning the stock. Additionally, AAPL's quality score is 23 and its dividend is deemed Very Safe (with a dividend safety score of 99).

AAPL is my largest position at 3.23% of portfolio value. The position has a YoC of 2.95%. I think a fair valuation is $270 per share, so AAPL is trading at a premium price of about 10%. I'm not looking to add more shares at this time.

Microsoft is by far DivGro's best-performing position with total returns of 256% (62% annualized)! I bought 80 shares in August 2013 at $31.76 per share and later added another 20 shares at $106.14 per share. My average cost basis is $46.63 and the position's average YoC is 4.37% (MSFT currently yields 1.29% at $158.62 per share).

The stock has a perfect quality score of 25 and its dividend is deemed Very Safe dividend by Simply Safe Dividends (with a dividend safety score of 99). Additionally, I like MSFT's 5-year dividend growth rate of 12.1%.

My position in MSFT is larger-than-average at 1.72% of portfolio value. The stock is trading about 4% above my fair value estimate of $153 per share. I'm not looking to increase my position at this time.

Rounding out the top three is Lockheed Martin (LMT), a Dividend Contender with 17 consecutive years of dividend growth. Shares currently yield 2.27%. The company is benefiting from expanded global military spending and U.S. modernization efforts. The stock is trading near its all-time high of $417.17 per share.

LMT has a quality score of 24 and a dividend safety score of 84 (Very Safe). Its 5-year dividend growth rate of 11.4% is quite attractive.

I own a relatively small position of 14 shares (about 0.63% of total portfolio value), so I'm interested in adding shares. Unfortunately, the stock is trading about 5% above my fair value estimate of $395. Nevertheless, I'm considering adding some shares given the escalating conflict in the Middle East. Additionally, Defense stocks typically do well in an election year.

Concluding Remarks

Of the stocks I owned throughout 2019, only four failed to close out the year at higher share prices.

I looked at the three worst-performing stocks, noting reasons and headwinds that would explain their poor performance. I don't see serious reasons that would convince me to close out these positions.

I also looked at the three best-performing stocks. Only LMT is a below-average size position and, given its growth prospects, I think paying a small premium to buy more shares is appropriate.

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I wish you a healthy, happy, and prosperous 2020!