This report highlights last month’s top performers and features a stock from the current portfolio.
Recap from November’s Picks
Our Dividend Growth Stocks Model Portfolio outperformed the S&P 500 in November. The Model Portfolio rose 2.0% on a price return basis and rose 2.3% on a total return basis. The S&P 500 rose 1.7% on both a price and total return basis. The portfolio’s best performing stock was Discover Financial Services (DFS), which was up 12%. Overall, 17 out of the 30 Dividend Growth Stocks outperformed the S&P last month, and 23 had positive returns.
The long-term success of our model portfolio strategies highlights the value of our Robo-Analyst technology, which scales our forensic accounting expertise (featured in Barron’s) across thousands of stocks.
The methodology for this model portfolio mimics an All-Cap Blend style with a focus on dividend growth. Selected stocks earn an Attractive or Very Attractive rating, generate positive free cash flow (FCF) and economic earnings, offer a current dividend yield >1%, and have a 5+ year track record of consecutive dividend growth. This model portfolio is designed for investors who are more focused on long-term capital appreciation than current income, but still appreciate the power of dividends, especially growing dividends.
Featured Stock from December: Amgen Inc.
Amgen Inc. (AMGN), hybrid biotech and pharmaceuticals firm, is the featured stock from December’s Dividend Growth Stocks Model Portfolio. AMGN was a featured Long Idea in May 2017 and also earns a spot on the Focus List – Long and Most Attractive Stocks Model Portfolios.
Over the past decade, AMGN’s revenue has grown by 5% compounded annually while after-tax profits (NOPAT) have grown by 8% compounded annually, per Figure 1. AMGN’s NOPAT margin has improved from 27% in 2006 to 39% over the last twelve months. In addition to NOPAT growth, AMGN’s return on invested capital (ROIC) has improved from 15% in 2006 to a top-quintile 22% TTM.
