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All Contents © 2017The Kiplinger Washington Editors
By the editors of Kiplinger's Personal Finance
| November 2014
As part of Kiplinger's annual best list, which rounds up the year's best financial products and services, we selected not just stocks and funds, but information sources that shape our thinking—and that can help your investing as well.
Take a look.
All data is as of October 3.
The best performer in Standard & Poor’s 500-stock index was a sleepy coffee company, Green Mountain Coffee Roasters. Then Green Mountain bought Keurig Inc. in 2006 and began to focus on single-cup hot drinks. If you had shelled out $2,500 for 100 shares at the end of 2004, you’d now own 1,350 shares in Keurig Green Mountain (GMCR), which at $133, would be worth almost $180,000—a stunning 7,100% increase.
Keurig’s growth is slowing now that K-Cups are ubiquitous. Prospects are brighter for the S&P 500’s second-best performer, Priceline (PCLN), which soared by nearly 60-fold, from $20 to $1,141, since the end of 2004.
Shareholders looking for dividend growth hit a gusher with Helmerich & Payne (HP). Business has been booming for the Tulsa oil contractor, a leader in the horizontal drilling services that coax oil and gas out of shale. Helmerich has shared the wealth by boosting its quarterly dividend nearly 10-fold in the past two years.
Courtesy Dover Corp.
Dover Corp. (DOV), a maker of industrial components, doesn’t hit a lot of home runs, but when it comes to paying dividends, no other big U.S. company has hit as many singles. Dover has hiked its dividend payments for 59 straight years, a record unmatched among large firms.
Start with Vanguard Total Stock Market ETF(VTI), an exchange-traded fund that holds U.S. companies of all sizes. For bond exposure, add Vanguard Total Bond Market ETF (BND). Because these are Vanguard funds, expenses are super low: 0.05% and 0.08% a year, respectively.
An actively managed ETF, AdvisorShares Peritus High Yield ETF (HYLD) yields 8.2%, well above the 4.7% average for junk-bond ETFs. To do so, it takes on more credit risk than the typical high-yield ETF, but it mitigates that a bit by buying more bonds with shorter maturities than its peers.
The Federal Reserve will probably start to raise interest rates in 2015. When the Fed is in hiking mode, energy stocks have beaten the S&P 500 three-fourths of the time since 1972, logging an average 18% gain. In the first six months following an initial Fed rate hike, look for tech stocks to beat the pack, with an average gain of 7%, compared with 4% for the S&P. Income investors should look for interest payments that adjust upward. Fidelity Floating Rate High Income (FFRHX), yielding 3.6%, invests in variable-rate bank loans made to companies. For savings, a CD ladder with certificates of deposit that mature at regular intervals lets you keep reinvesting at increasingly higher rates.
FPA Crescent (FPACX), a Kiplinger 25 fund, can invest in virtually anything, anywhere. It shines brightest in gloomy markets, and its price-conscious managers aren’t afraid to watch an expensive bull market from the sidelines. Among ETFs, iShares MSCI USA Minimum Volatility (USMV) is less loaded with interest-rate-sensitive utilities stocks than competing ETFs—a plus if rates rise.
Harding Loevner Emerging Markets (HLEMX), also a member of the Kiplinger 25, is the best-diversified choice. Among funds with a regional focus, Matthews Asia Growth and Income (MACSX), another Kip 25 fund, is a lower-volatility pick. T. Rowe Price Africa & Middle East (TRAMX) offers investors with a greater appetite for risk a way to focus on fast-growing economies in so-called frontier markets. Matthews India (MINDX) should benefit from the country’s new government and promising economic reforms.
Bloomberg via Getty Images
Activist Carl Icahn likes to buy into companies and unlock value by restructuring a balance sheet or shaking up the board of directors. Shares in Icahn Enterprises (IEP) are lagging Buffett’s Berkshire Hathaway (BRK.B) this year, but they have crushed Berkshire by an average of 10 percentage points per year over the past five years. Trading at $107, Icahn has returned an annualized 26.6% over that period.
Over the past 12 months through October 3, Dodge & Cox International Stock (DODFX) gained 10.0%, outpacing 99% of its peer group. On the domestic front, Dodge & Cox Stock (DODGX) beat 94% of its peers, with a 19.8% return. These team-run funds share many of the same managers, and they boast superb long-term records. Both funds are members of the Kiplinger 25.
Fidelity New Markets Income (FNMIX)—another member of the Kip 25—has returned 8.4% over the past year, more than twice the 3.0% return of the typical emerging-markets bond fund. In his nearly 20-year tenure at New Markets Income, manager John Carlson has rarely stumbled.
Hodges Small-Mid Cap Retail (HDSMX) gained 8.1% since its debut at the start of 2014, far outpacing the 4.1% slide in the small-company Russell 2000 index. The fund may be new, but its managers aren’t: They also run Hodges Small Cap (HDPSX), which has a five-year annualized return of 23.1%.
At Vanguard Dividend Growth (VDIGX), a Kip 25 fund, manager Don Kilbride sifts through companies that have raised dividends consistently over the past five years. But price matters, too. Kilbride prefers to buy stocks trading near their 52-week lows. Since taking over in early 2006, Kilbride has delivered a 9.0% annualized return, which beats the S&P 500 by 1.7 percentage points per year.
Stock Newsletter. Picks of The Utility Forecaster, which follows high-yielding stocks and investments, returned an average of 11.6% annually over the 10-year period that ended August 31, according to the Hulbert Financial Digest. Cost: $149 for 12 issues ($99 during a recent promotion).
Fund Newsletter. The four portfolios recommended by No-load Mutual Fund Selections & Timing ($180 per year) returned an average of 6.1% annualized over the past decade. Taking into account the volatility of its picks, the letter delivered the best risk-adjusted return among fund newsletters, according to Hulbert.
Twitter Feed. Joshua Brown, a New York City–based financial adviser at Ritholtz Wealth Management, offers a steady stream of smart (and sometimes funny) insights about the economy and the markets at @ReformedBroker.
Investing Blog. Dr. Ed’s Blog, written by Ed Yardeni, president of Yardeni Research, makes sense of market and economic data, with daily charts and smart commentary. Access to the full daily reports is limited to investment professionals and the press, but the posts that are available to all investors still provide plenty of insight.
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