Forecasting dividends to accelerate returns
Today's top yield: 13.9% Updates daily

DividendMax Model Portfolio 2016

Following a disappointing performance in 2015, we produce our model portfolio for 2016. In 2015, the DividendMax model portfolio outperformed the FTSE 100 and FTSE 350, although it underperformed the FTSE 250 significantly. The model portfolio ended the year up 1.1%.

We are not going to pull out of the beleagured Oil and Gas and Mining sectors with one additonal company over last years total, but neither are we going to pile in.

As in previous years, we will select 20 stocks with an equal weighting of 5% and review at the half yearly stage.

Update

The model portfolio rose by 14.1% in 2016 slightly below the 15% increase posted by the FTSE 350. The biggest performers were Ashtead, BHP, BP and Rio Tinto. The laggards were Easyjet, Next and TalkTalk.

Aerospace & Defence

No company in this sector meets our criteria

No Company meets our criteria

Alternative Energy

No company in this sector meets our criteria

No Company meets our criteria

Automobiles & Parts

No company in this sector meets our criteria

No Company meets our criteria

Banks

Lloyds Banking Group

This year we go for Lloyds bank for its massive market position and simple business model. It also has a prospective yield of over 5%

Beverages

Diageo

Once again we go for Diageo for its defensive qualities and reasonable yield.

Chemicals

No company in this sector meets our criteria

No Company meets our criteria

Commercial Transportation

No company in this sector meets our criteria

No Company meets our criteria

Construction & Materials

Galliford Try

This year we are going to go for one of the best performers from a dividend perspective in recent times across the whole DividendMax database. Galliford Try.

Consumer Staples

No company in this sector meets our criteria

No Company meets our criteria

Electricity

No company in this sector meets our criteria

No Company meets our criteria

Electronic & Electrical Equipment

No company in this sector meets our criteria

No Company meets our criteria

Equity Investments

No company in this sector meets our criteria

No Company meets our criteria

Financial Services

Aberdeen Asset Management, Paragon Group of companies

This year we are going for Aberdeen Asset Management whose resliant performance in the face of poor emerging markets is commendable. They have a prospective yield of over 6%.

We also go for the Paragon Group of companies for its recent excellent perfomance with a prospective yield of over 5%

Food and Drug Retailers

No company in this sector meets our criteria

No Company meets our criteria

Food Producers

No company in this sector meets our criteria

No Company meets our criteria

Forestry & Paper

No company in this sector meets our criteria

No Company meets our criteria

Gas, Water & Multiutilities

Pennon Group

We choose Pennon for their sector leading dividend policy of RPI plus 4%

 

General Financial

No company in this sector meets our criteria

No Company meets our criteria

General Industrials

No company in this sector meets our criteria

No Company meets our criteria

Health Care Equipment & Services

No company in this sector meets our criteria

No Company meets our criteria

Hedge Funds

No company in this sector meets our criteria

No Company meets our criteria

Household Goods

No company in this sector meets our criteria

No Company meets our criteria

Household Goods and home construction

No company in this sector meets our criteria

No Company meets our criteria

Industrial Engineering

No company in this sector meets our criteria

No Company meets our criteria

Industrial Metals

No company in this sector meets our criteria

No Company meets our criteria

Industrial Transportation

No company in this sector meets our criteria

No Company meets our criteria

Investment Trusts

No company in this sector meets our criteria

No Company meets our criteria

Leisure Goods

No company in this sector meets our criteria

No Company meets our criteria

Life Insurance

Old Mutual

This Year we have gone for a stock that we have never chosen before in Old Mutual with a prospective yield approaching 5%

Media

Pearson

We are going to stick with Pearson which has a prospective yield of 6.9%

Mining

Rio Tinto, BHP Billiton

We are going to stick with Rio Tinto as it looks best placed of all of the miners to weather the current storm and has a prospective yield of over 7%.

We also go for BHP billiton which will yield over 5% even if they halve the dividend.

Mobile Telecommunications

No company in this sector meets our criteria

No Company meets our criteria

Nonlife Insurance

No company in this sector meets our criteria

No Company meets our criteria

Oil Equipment, Services & Distribution

AMEC foster Wheeler

This year, we are going to select Amec Foster Wheeler who had a terrible year in 2015. The dividend was halved and profit forecasts tumbled to leave them on a PE of under 7 and a prospective yield of over 7%.

Oil & Gas Producers

BP

We are going to stick with BP, which has a prospective yield of 7.2%

Personal Goods

No company in this sector meets our criteria

No Company meets our criteria

Pharmaceuticals & Biotechnology

GlaxoSmithKline

This year we go once again for GlaxoSmithkline who will pay a special dividend this year of 20p in addition to the company stated dividend policy of 80p for the full year for a yield of over 7%.

Property

No company in this sector meets our criteria

No Company meets our criteria

Real Estate

No company in this sector meets our criteria

No Company meets our criteria

Real Estate Investment & Services

No company in this sector meets our criteria

No Company meets our criteria

Real Estate Investment Trusts

Tritax Big Box REIT

We go for Tritax Big box for their near 5% yield.

Retailers

Next, Dignity

This year we go for Next whose strategy of share buybacks or dividends depending upon the share price means that at the current share price the yield is above 5%.

We go for the excellent operational and profit performance of Dignity who have grown their dividends in double digits for years. They have high cover and whilst the yield is not fantastic, this is more than compensated for by other high yielding stocks in the portfolio.

 

Software & Computer Services

No company in this sector meets our criteria

No Company meets our criteria

Support Services

Ashtead Group, Connect Group

We go for the excellent operational and profit performance of Ashtead who have grown their dividends in double digits for years. They have high cover and whilst the yield is not fantastic, this is more than compensated for by other high yielding stocks in the portfolio.

We also go for Connect group for its low PE and solid track record of dividend increases.

 

 

Technology Hardware & Equipment

No company in this sector meets our criteria

No Company meets our criteria

Telecomms

TalkTalk Telecomms group

Atfer a very successful choice last year when we sold before their security scare, we buy in for the yield approaching 7% after the company promised a further 15% increase in the dividend at the finals stage.

Tobacco

No company in this sector meets our criteria

No Company meets our criteria

Travel & Leisure

Easyjet

Once again, we choose Easyjet as a major beneficiary of the low oil price