You said, "It really isn't that hard to figure out which companies have a reliable yield and choose companies based their ability to provide the dividend. Yield plus quality screens would give you many many companies with a reliable dividend. Which incidentally also outperform the market and at lower risk."jbolden1517 wrote:Moreover, I'm not sure exactly what we are testing here. Mostly I figured we were testing a dividend strategy. Given a portfolio this non-diversified (I'm not running a mutual fund) and there are only about 4 industries you are going to have all sorts of issues gumming up the works. Particular litigation could move an equal weighted portfolio like this 15%. A single M&A could be +8%. The pipeline guys are going to swing wildly with 2019 energy prices. If those come high especially if 2020 look similar they take off like a rocket and they might not have better than a 3% yield anymore. If next year I get 100+% return off changes in pipeline demand I beat TSM for sure. But is that really a fair test? If those come in too low they might not be able to maintain the dividend in 2018 and disqualify in the other direction, USA pipeline capacity is way above current demand that's why I picked them up cheap. I'm sure if they crash and burn you'll consider that a fair test. Gilead scientific goes up another 15% and I'll look for a spot to sell off my upside (covered call). At that point do I just tell you what I got and the price or do you want to shadow trade the option? Verizon is not going to be a long term holding I don't think. When I sell what do you do? Some of these companies are too small for mutual funds to even invest in. This is way more large cap than normal because of Gilead, Verizon, Century Link and Intel. But that's chance because of when you asked the question. The small cap bias is likely to reassert itself in coming months. How much small cap vs. large cap is gumming up your test?
Currency fluctuations are the least of your problems for running this test. You have non systematic stuff gumming up the works everywhere confusing the discussion of what you want to test with my personal taste in stocks (I like depressed hard assets with lots of debt where I don't think the bondholders are marking the assets at full value for buyout, with a high chance of an earnings spike in out-of-favor industries). A lot of those stocks happen to have high dividends and certainly I consider the dividend to be a sign of insider confidence. If I can justify their confidence, its a buy. Many of these companies are too small for a mutual fund. You want to track this portfolio, you'll get to see how value works. But don't think you have any chance for controlling for random variables. The final result over any sane timeframe is a crap shoot.
This isn't diversified. The non systematic risk doesn't bother me because it is unlikely to correlate with the other non-systematic risks I'm taking all over the rest of the portfolio investing in many other things. After all, while this thread is about income investors, I'm not one. And for reasons I'm not getting into I may never be one. So if we are doing this. What is it you are testing?
That's what we're testing. If 10 companies doesn't work for you, pick as many as you like. My only conditions are that they are American (so we can have a reasonable benchmark to compare against: Total US Stock Market) and pay a dividend north of 3%.
You've made a big claim that is unsupported by all the research to date. So back it up.