Through June 3, the Dividend Growth portfolio was up 17.3% in 2016, including dividends and allowing for a 1.5% management fee. That compares to a 2.7% return for the S&P 500. And Dividend Growth generated those returns while actually taking less risk than the S&P 500. The portfolio had a beta of 0.95 and an R-squared of 0.60, meaning that only 60% of my portfolio’s returns were explained by movements in the S&P 500.
Much of the outperformance in 2016 can be attributed to the portfolio’s allocation to REITs (about 22%) and MLPs (about 15%). So the portfolio’s continued performance will depend on the performance of these sectors. Given that I consider these sectors to be rare pockets of value in an otherwise expensive market, I’m optimistic on that count.
Charles Sizemore is the principal of Sizemore Capital, a wealth management firm in Dallas, Texas.