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Top Stock Picks 2012 – Q3 Results


Over the past few years, a group of bloggers have enlisted in a friendly competition as to who can pick the best stocks for the year.   As per tradition, we all report quarterly results to see how we are doing relative to each other, and more importantly, the market. This year, I picked a financial stock (BNS.TO), a big US consumer stock (MMM), a large Canadian minerals company (TCK-B.TO), and a well known Canadian oil company (SU.TO).

Up to the end of Q2, the portfolio returned 1.73% including dividends – not bad relative to the 0% return of the TSX.  How did Q3 turn out?  Lets take a look!

Bank of Nova Scotia (BNS.TO) – With Canadian banks retreating from their highs in late 2011, their dividend yields have reached an attractive range. Scotia Bank, with a current yield of approximately 4%,  is known for their international operations and I believe has some upside coming in 2012.  That is providing that we don’t have a global financial meltdown. :) Trading price as of closing Dec 30, 2011: $50.83. Disclaimer: I own shares of BNS.TO.

Even though the first half of the year was volatile, at the end of Q2, BNS returned 5.92% including dividends.  With things turning brighter, stocks generally moved up in Q3. Trading price as of September 30, 2012: $53.92. Combined with a $1.67 dividend equates to a return of 9.36% after Q3 2012. Disclaimer: I own shares of BNS.TO.

3M Co. (MMM) –  This company is a great example of a Dividend Achiever where it has increased their dividend for 53 consecutive years with a current yield of 2.69% and P/E ratio of 13.74.  Who is 3M?  They are a  large diversified technology company with seven large divisions.  However, they are likely most well known as the inventor of the Post-It note.  3M shares sold off in late 2011 but it looks like the stock has already started its recovery.  Trading price as of closing Dec 30, 2011: $81.73. Disclaimer: I own shares of MMM.

I picked this one to get exposure to the US market and that it appeared oversold at the beginning of the year.  This one has been a winner as the US market remains strong, especially for top US dividend stocks. Trading price as of September 30, 2012: $92.42. Combined with a $1.77 dividend equates to a return of 15.25% after Q3 2012. Disclaimer: I own shares of MMM.

Teck Resources (TCK.B.TO) –  Teck Resources is my mineral play where the company is engaged in the exploration, development and production of copper, coal, gold and zinc.  It faced a steep decline in 2011 and I believe will start climbing again once confidence in the economy thus commodities returns. Teck currently yields 2.23% with a P/E ratio of 8.92. Trading price as of closing Dec 30, 2011: $35.91. Disclaimer: I own shares of TCK.B.

The most volatile stock in the portfolio has continued to drag down the others. Trading price as of September 30, 2012: $29.01 combined with a $0.40 dividend equates to a return of -18.1% after Q3 2012. Disclaimer: I own shares of TCK-B.TO.

Suncor Energy (SU.TO) –  Suncor Energy is Canada’s largest integrated energy company.  It has a large stake in the oil sands and is involved in numerous other energy plays across the country. While this is not a huge dividend stock with a yield of 1.50%, I believe that the energy sector is oversold and has a large upside should the buyers return.    Trading price as of closing Dec 30, 2011: $29.38.Disclaimer: I own shares of SU.TO.

Canadian oil stocks picked up a bit in Q3 which helped prop up Suncor’s gain by about 10%.  Trading price as of September 30, 2012: $32.34. Combined with a $0.37 dividend equates to a return of 11.33% after Q3 2012. Disclaimer: I own shares of SU.TO.

While the portfolio beat the TSX in Q2, it has become a laggard in Q3.  Overall, the portfolio has returned 4.46% year to date, with the TSX returning approximately 6% including dividends (via XIU.TO). The SP500 has been on a tear through three quarters returning 15% including dividends (via XSP.TO).

Net worth update coming up on Wednesday!

Here are the the picks and results from the other bloggers:

  1. Where Does All My Money Go: 21.99%
  2. Intelligent Speculator: 17.52%
  3. My Traders Journal: 10.67%
  4. Dividend Growth Investor: 10.39%
  5. Dividend Mantra: 5.32%
  6. Million Dollar Journey:  4.46%
  7. The Passive Income Earner:  1.34%
  8. Wild Investor: -2.21%
  9. The Financial Blogger: -11.04%
  10. Beating The Index: -13.77%

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FrugalTrader About the author: FrugalTrader is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 11 comments… add one }

  • Joe S October 1, 2012, 11:34 am

    Based on benchmarks, it looks like only 4 of 10 beat the TSX and 2 of 10 beat the S&P 500. Tough year…

  • abraxas October 1, 2012, 3:19 pm

    Looking at your results it’s quite obvious you’d be better off indexing with a diversified portfolio. Have you considered something unique like the Harry Browne Permanent Portfolio (i.e. 25% stocks, 25% LT bonds, 25% gold, 25% short term treasuries)? I have had good luck with it.

    • FrugalTrader FrugalTrader October 1, 2012, 3:41 pm

      Yep, stock picking can be tough, no doubt. Note that this is meant to be a game, not many investors would base their portfolio on 4 stocks. For me, a large portion of my portfolio is indexed (in registered accounts), but I do have leveraged dividend portfolio as well.

  • SST October 1, 2012, 9:40 pm

    “Overall, the portfolio has returned 4.46% year to date, with the TSX returning approximately 6% including dividends (via XIU.TO). The SP500 has been on a tear through three quarters returning 15% including dividends (via XSP.TO).”

    Year-to-Date
    Gold: 13.5%
    Silver: 24.5%

  • Cherleen @ My Personal Finance Journey October 2, 2012, 12:59 am

    Great picks! I understand how tough it is in picking which company to invest your money with.

  • Doug Willson October 3, 2012, 2:10 pm

    CMG.TO is amazing.
    Won’t be long till it is worth 1 Billion
    Look up its chart and dividend history on google finance or whatever.

    Every year’s stock price and earnings is much higher than the last. It reaches All Time High after All Time High.

  • SST October 4, 2012, 4:13 am

    CMG: 55% annual average return since 1999.

    Nice.
    Of course all parabolas are subject to collapse.

  • EngineeringIncome October 4, 2012, 7:15 pm

    Thought I’d run mine since I started out picking stocks for this contest but then got lazy tracking them. Anyway, my selection of BAC, RIMM, FAS, UPRO is up by my calculation 30.8% to the end of the 3rd quarter. What’s really interesting is that I only hold one of them (BAC), but my portfolio was up almost exactly the same amount (in Canadian Dollar terms anyway) than the 4 stocks I picked. Talk about a coincidence!

    Keep up the good work.

  • FrugalTrader FrugalTrader October 5, 2012, 2:12 pm

    @EngineeringIncome – congrats on the picks! What other stocks do you like?

  • EngineeringIncome October 7, 2012, 12:04 pm

    I think BAC is still very undervalued for anyone with a few years investment horizon. Similarly AIG. I think the US market as a whole isn’t as undervalued as in January so I’m currently not a big fan of the index ETFs I used (UPRO & FAS) for new investment dollars.

    The rest of my portfolio is a smattering of DELL, DWA, BRK.B, and DNB picked up at varying prices. Of those, DELL currently seems the most undervalued to me, though the technology space is always a tough one for investors. BRK.B probably has the best downside protection due to the Buffett put. I also think FFH.TO also looks attractive at these levels for those who want a buy and forget stock.

  • FrugalTrader FrugalTrader October 7, 2012, 8:12 pm

    @EngineeringIncome – thanks for the tips!

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