A Bulletproof Dividend Growth Portfolio For 2014

Studies show that individual investors usually do not perform as well as the market does. Rather than get an average 7% rate of return like the S&P 500 does over time, individuals often average only 3% annually. One study says this may be due to selling low, attributed to the fear of losing more money in a down market. Tim's hypothesis suggests that part of the reason is that investors do not have confidence in their stocks. That is, the kind of confidence that one might have in perennial performers, blue chips like Johnson & Johnson (JNJ), Procter & Gamble (PG) and Exxon (XOM).

The Solution: Almost all misery in the stock market for income investors could be avoided if you: 1. Limit your exposure to the financial industry to 10% or below. 2. Own companies that have been raising dividends for 20-plus years. 3. At the time of purchase, own companies that have been growing earnings and dividends by 5% annually for the past decade. 4. Diversify into 20-plus holdings across 6-plus sectors that share those characteristics (20-plus years of dividend growth, and 10-year track records of at least 5% earnings and dividend growth) with limited exposure to the financial sector."

Source: Seeking Alpha

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