matisse capital management

The Dividend Achievers Index Funds (PKW, PFM, PEY, PID)

Diversified dividend yield. I am a dividend investor, tending toward shares that have consistent dividend growth.  When looking for these stocks, a good research starting point is the Dividend Achievers list created by Indixs.  To qualify for this list, a company must i) trade on the NYSE or NASDAQ, ii) have increased its annual dividend payments for the last ten or more consecutive years, and iii) have a daily cash volume over $500,000 in the Nov. and Dec. before the yearly list revision.  There is a US list (213 companies), a Canadian list and an international list.   In contrast, the Dividend Aristocrats list, created by S&P, requires companies to have annual dividend increases over 25 consecutive years.  Dividend Achiever stocks are available in several index funds at Powershares here, under "equity income funds;" the fees are relatively low.  These funds include:

Buyback Achievers Portfolio (PKW), the Dividend Achievers Portfolio (PFM), the High Yield Equity Achievers (PEY), and the International Dividend Achievers Portfolio (PID).  For me the most interesting of these if the Buyback Achievers, which has the added requirement that the company repurchased 5% or more of its outstanding shares for the last 12 months, so appreciation and yield.  Below are the top holdings of PKW:

Aetna Inc.   5.28%   Philip Morris International Inc.   5.23%   Sears Holdings Corp.   5.19%   DIRECTV   5.10%   Travelers Cos. Inc.   4.97%

Raytheon Co.   4.97%   WellPoint Inc.   4.76%   Exxon Mobil Corp.   4.75%   Quest Diagnostics Inc.   4.65%   Zimmer Holdings Inc.   4.39%

The Top Small Cap Fund Holdings

I often look at the holdings of the best performing mutual funds to identify their single best stock as a candidate for investment.  According to Kiplinger, here are the three best performing small cap mutual funds, year to date:

While any of these funds would be worthy of holding on their own, their returns were largely driven by a few outstanding stocks.  The best of the their best were as follows, with returns through June 30:

1. Sonic Innovations, SNCI    +68%

2. Genco Shipping, GNK   +53%

3. Tidewater, TDW   +47%

Sonic Innovations produces digital hearing aids and was founded in 1991.  Major institutional holders are T. Rowe Price and Gabelli.  GNK is an ocean transport company founded in 2004 and paying a 5% dividend and Vanguard is a major holder.   TDW provides support to offshore rigs and was founded in 1956.  Goldman Sachs, AXA, and TIAA CREF are major holders. Of these three companies, analysts are most bullish on Sonic.   

Great Mutual Funds: PRWCX - T. Rowe Price Capital Appreciation

PRWCX seeks "long-term capital appreciation," investing primarily in US companies with "above-average" potential for capital growth.  In the last 20 years of operation, it has only had a negative return once; that was in 1990 at -1.3%.  Even in the tech bubble years 2001-2002, PRWCX had a positive return.  Year to date, the fund is up 7.9% and the expense ratio is 0.73%.  It is a no load fund.  I find that, for myself, the holdings of well-performing mutual funds can be a good place to hunt for stock ideas.  At right are the top 10 holdings.  Year to date, the best performers are T, TYC, MUR, WYE, and PPL.