Tags: Hulbert | boring | volatility | stocks

Hulbert: Boring, Low-Volatility Stocks Pay Off

By    |   Friday, 12 September 2014 03:19 PM

Investors often choose sexy, volatile stocks to juice their portfolio returns, but they'd be better off going for boring, low-volatility stocks, says Mark Hulbert, editor of Hulbert Financial Digest.

"You pay a high price for investing in popular and trendy stocks," he writes on MarketWatch.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

Researchers comparing low-volatility stocks to high-volatility stocks "found that greater investor and media attention begets more volatility, which in a vicious cycle begets yet more attention, eventually translating into lower future returns," Hulbert says.

Meanwhile, boring stocks tend to stay that way, enduring little volatility and "outperform[ing] the volatile stocks getting all the attention," he writes.

A portfolio that always held the least volatile 10 percent of U.S. stocks over the trailing 24 months outperformed the most volatile 10 percent by 19.9 percentage points a year from 1990 through 2013, Nardin Baker, a global equity manager at Guggenheim Partners, told Hulbert.

Many stock market participants view dividend stocks as boring, but research from Jeremy Siegel, a finance professor at the University of Pennsylvania, shows that re-invested dividends account for more than half of stocks' long-term returns.

Kiplinger lists eight strong dividend stocks that you might not have heard of before. All of them have raised their dividend for at least each of the last 20 years:
  • Aqua America
  • Becton Dickinson
  • Dover
  • Genuine Parts
  • Helmerich & Payne
  • T. Rowe Price
  • UGI
  • V.F. Corp.
"A lot of them probably get overlooked because they're just sort of boring," Sam Stovall, chief equity strategist for S&P Capital IQ's stock research group, tells Kiplinger.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

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Investors often choose sexy, volatile stocks to juice their portfolio returns, but they'd be better off going for boring, low-volatility stocks, says Mark Hulbert, editor of Hulbert Financial Digest.
Hulbert, boring, volatility, stocks
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2014-19-12
Friday, 12 September 2014 03:19 PM
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