Combating 2014's Icy Start

Solid companies continue to operate, even when the market heads south.

Jan 7, 2014 at 8:06PM

The market started off 2014 with losses in its first couple of trading sessions, losing the incredible buoyancy that it showed throughout most of 2013. Weak manufacturing data out of China started the sell-off that spread over to the states. The market's chill was matched only by the weather itself, as Winter Storm Hercules rampaged across much of the country.

Still, for the real-money Inflation-Protected Income Growth portfolio, the weather and market conditions were no match for consistent execution and a commitment to deliver on promises. Three companies paid their expected dividends over the holiday-shortened and ice-covered week, and the portfolio made good on its promise to buy its newest selection. While the portfolio did drop a bit less than 0.75% in market value since last week's update, that's almost an expected level of noise in the system.

Promises kept
Last Tuesday, Becton, Dickinson, & Co. (NYSE:BDX) finished off 2013 in awesome style, paying its owners, including the iPIG portfolio, a $0.545-per-share dividend. That's around a 10% increase versus what the medical-devices company paid the previous quarter. That dividend increase showcased Becton, Dickinson's ability to thrive despite the relatively new tax burden levied on medical-device manufacturers like it.

Similarly, railroad giant Union Pacific (NYSE:UNP) started the New Year by delivering its promised dividend on Thursday, its second at $0.79 per share. That dividend is up almost 14.5% from the $0.69 per share Union Pacific paid around the same time a year ago.

Auto parts titan Genuine Parts (NYSE:GPC) also celebrated the New Year by handing its shareholders a dividend on Thursday. Genuine Parts' $0.5375 per share is the company's fourth dividend at that level. If the company keeps to its recent pattern, we should know by mid-February if Genuine Parts will be able to keep its string of dividend increases alive. 

In addition to the dividends it received, the iPIG portfolio bought shares of lawn care company Scotts Miracle-Gro (NYSE:SMG) on Friday, per its selection article last Monday. Scotts Miracle-Gro looked like an attractive pick for the portfolio due to its solid balance sheet, recent trend of increasing its dividend, and reasonable valuation.  

In addition, Scotts Miracle-Gro was recently able to refinance its debt at lower rates and relax some restrictive covenants from its credit facility. That improved borrowing profile should help Scotts Miracle-Gro reach its margin improvement goal for 2014, which would help solidify its valuation.

Life and business go on
All told, despite the icy start to 2014, last week's dividend payments serve as a key reminder that healthy businesses continue to operate as expected, regardless of what the market does to their stocks. In addition, the iPIG portfolio was able to pick up its shares in Scotts Miracle-Gro for less than they traded the day its selection article was published. That shows the upside of the down market that greeted us at the start of 2014; prices are better for those looking to buy.

All told, the table below shows the state of the iPIG portfolio as of the market's close on Jan. 3, 2014:

Company Name

Purchase Date

Total Investment (including commissions)

Value as of
Jan. 3, 2014

Yield as of
Jan. 3, 2014

United Technologies (NYSE:UTX)

Dec. 10, 2012

$1,464.82

$2,032.20

2.09%

Teva Pharmaceutical (NYSE:TEVA)

Dec. 12, 2012

$1,519.40

$1,515.44

3.19%

J.M. Smucker (NYSE:SJM)

Dec. 13, 2012

$1,483.45

$1,725.67

2.29%

Genuine Parts (NYSE:GPC)

Dec. 21, 2012

$1,476.47

$1,893.36

2.61%

Mine Safety Appliances (NYSE:MSA)

Dec. 21, 2012

$1,504.96

$1,846.80

2.34%

Microsoft (NASDAQ:MSFT)

Dec. 26, 2012

$1,499.15

$2,030.05

3.03%

Hasbro (NASDAQ:HAS)

Dec. 28, 2012

$1,520.60

$2,326.73

2.96%

United Parcel Service (NYSE:UPS)

Jan. 2, 2013

$1,524.00

$2,061.80

2.41%

Walgreen (NASDAQ:WBA)

Jan. 4, 2013

$1,501.80

$2,272.80

2.22%

Texas Instruments (NASDAQ:TXN)

Jan. 7, 2013

$1,515.70

$2,034.63

2.77%

Union Pacific (NYSE:UNP)

Jan. 22, 2013

$805.42

$1,001.10

1.89%

CSX (NASDAQ:CSX)

Jan. 22, 2013

$712.50

$966.62

2.11%

McDonald's (NYSE:MCD)

Jan. 24, 2013

$1,499.64

$1,544.64

3.36%

Becton, Dickinson (NYSE:BDX)

Jan. 31, 2013

$1,518.64

$1,968.66

1.99%

AFLAC (NYSE:AFL)

Feb. 5, 2013

$1,466.35

$1,786.05

2.24%

Air Products & Chemicals (NYSE:APD)

Feb. 11, 2013

$1,510.99

$1,890.74

2.55%

Raytheon (NYSE:RTN)

Feb. 22, 2013

$1,473.91

$2,398.14

2.48%

Emerson Electric (NYSE:EMR)

April 3, 2013

$1,548.12

$1,942.36

2.48%

Wells Fargo & Co (NYSE:WFC)

May 30, 2013

$1,525.48

$1,677.58

2.65%

Kinder Morgan (NYSE:KMI)

June 21, 2013

$1,518.37

$1,510.74

4.56%

Scotts Miracle-Gro (NYSE:SMG)

Jan. 3, 2014

$1,974.68

$1,978.56

2.83%

Cash

   

$766.91

 

Total Portfolio

 

 

$39,171.58

 

Data from iPIG portfolio brokerage account, as of Jan. 3, 2014.

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To follow the IPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the IPIG portfolio, simply click here.

Chuck Saletta owns shares of Aflac, Air Products & Chemicals, Becton Dickinson, CSX, Emerson Electric, Genuine Parts Company, Hasbro, J.M. Smucker, McDonald's, Microsoft, Mine Safety Appliances, Raytheon Company, Teva Pharmaceutical Industries, Texas Instruments, Union Pacific, United Parcel Service, United Technologies, Walgreen Company, Scotts Miracle-Gro, Kinder Morgan, and Wells Fargo.

The Motley Fool recommends Aflac, Becton Dickinson, Emerson Electric, Hasbro, Kinder Morgan, McDonald's, Mine Safety Appliances, Teva Pharmaceutical Industries, United Parcel Service, and Wells Fargo. The Motley Fool owns shares of CSX, Hasbro, Kinder Morgan, McDonald's, Microsoft, Raytheon Company, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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