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Santa’s Stock Portfolio vs. Warren Buffett

This page contains the combined updates for the pretend Santa’s Stock Portfolio created in 2013. Included are the original update, 2014, 2015, and 2016 versions of the portfolio and its performance. The portfolio return is tracked against the S&P 500 index ETF and against Warren Buffett’s Berkshire Hathaway stock.

The table directly below is an dynamic automated spreadsheet for tracking Santa’s performance going forward.


Note: The Adjusted Prices from 2013-2017 were sourced from Yahoo Finance on 12/04/2017 and will not dynamically update to account for future stock splits or dividend payouts. This table is meant for entertainment purposes only.


December 2016

What if Santa Claus & Warren Buffett battled it out in a jolly investor showdown? It's time to find out what's inside Santa's stock portfolio. Which stock picker will prevail?Welcome to the fourth installment of Santa’s Stock Portfolio review. In 2013, Santa assembled a portfolio of dividend paying stocks based on his unique perspective on Christmas and the holiday shopping season. Every year since we’ve compared the performance of his portfolio to the S&P 500 Index.

After elf-sized returns last year, Santa’s portfolio bounced back in 2016, beating the S&P 500 by more than two percentage points. So to challenge him a little more, we’re adding a new challenger to face Santa in a jolly showdown…

Santa Claus vs. Warren Buffett! Which jolly investor will prevail?

Before getting into the numbers, let’s sleigh through each industry in which Santa Claus has invested his money and highlight the naughty and nice stocks of the year. I’ll reveal the companies that deserve a wonderful bounty of gifts under the Christmas tree, and which one will find reindeer poop in its stocking.

Methodology

The Santa Claus portfolio (SNTA.NP) started as 25 stocks. Each year we add new holdings based on valuations and relevancy and remove stocks due to acquisitions or Grinch-like underperformance. This year, the portfolio consisted of 28 stocks. Being the prolific giver that he is, Santa does not invest in dividend scrooge companies.

Each year I record the Adjusted Close price (sourced from Yahoo Finance) on December 4th and then calculate the annual return of each stock individually and for the equally weighted portfolio. Then I look at the performance since inception. The numbers are compared to the S&P 500 Index ETF (SPY).

As a stocking stuffer this year, we’ll match Santa’s performance up against the jolliest investor of them all, Warren Buffett and his Berkshire Hathaway (BRK-B) stock.

Keep in mind, since Mr. Kringle is NOT required to disclose his holdings to the SEC (being a resident of the North Pole), we can only speculate on what stocks he owns in his portfolio.

Last year, Santa’s portfolio trailed the S&P 500 index by 0.32%, gaining 2.66% vs. 2.98% for the period December 4th, 2014 through December 4th, 2015.

This year Santa Claus was a big winner vs. the S&P 500. But how’d he do against Buffett?

Santa’s Portfolio Industries

Toys

The last three years have been quite a lead reversal for toy giants Mattel (MAT) and Hasbro (HAS). Mattel has finally reversed its own course and locked in a positive year in 2016. The stock was up 17%.

Hasbro, on the other hand, was up 22% over the past 12 months and is up 71% since the start of Santa’s portfolio. Mattel is still down 27% over that time period.

When my kids met Santa Claus this year, he asked my son two questions: How old are you? and Do you like Paw Patrol? Santa said HE likes Paw Patrol, that’s how popular this TV show is.

If you’re not familiar, it’s a cartoon about rescue puppies. But really, the entire show was designed around the toys. There’s so much crap to buy based on this show it’s unbelievable. The company behind it all, Spin Master, is Canadian. So the Canadian readers out there check might want to check out TOY.TO. They are raking it in.

You can watch Paw Patrol on Nickelodeon, a property of Viacom (VIA). Base on personally hearing Santa say he’s a fan of Paw Patrol himself (his favorites are Chase and Marshall, Viacom is added to the portfolio for 2016.

But let’s not forget the all-powerful Disney (DIS). Ask any parent, the company is still dominant when it comes to magically turning grandparents’ money into junk in your house. But the dramatic loss of ESPN subscribers has institutional investors nervous.

Disney’s stock was down 14% over the year. But the movie hits keep coming. Moana, Rogue One, and the next installment of the Frozen franchise is on the horizon. Do not fear the dark side.

Retail

Nobody believes the whole “elves make the toys” shtick. We all know Santa buys toys from the stores just like the rest of us. With his intimate knowledge of the industry, retail makes up the largest part of Santa’s portfolio.

Retail gave us the best and worst performers of the year. The worst stock in Santa’s portfolio, worthy of a stocking full of reindeer poop, an elegant lump of coal and an ousting from the portfolio, is GameStop (GME). Who buys videos games at a single store anymore? Down 27% and saddled with gigabytes of debt, Santa’s dumping this one.

One the positive side, 2016’s best performer was nonother than Best Buy (BBY). Best Buy was left out in the cold by Wall Street investors last year, but the stock rose 47% in 2016, making it the holliest, jolliest of them all.

Another rebound stock for the year was Walmart (WMT). I no longer go to Walmart ever since they stopped selling All-Bran Bran Buds at our location (now I buy them on Amazon). But dividend investors love the company. After a difficult 2015, Walmart is up 18%.

One other reason I never go to Walmart is that it’s next to Costco (COST). The customer experience is superior, by a long-shot. But Costco’s stock is down 8% this year.

Newcomers to the list The Gap (GPS) and Kohl’s (KSS) had split success in 2016. The Gap was down 7% and Kohl’s was up 14%. Kohl’s has been a staple near the top of the Loyal3 best value rankings page and I added some to my own no-fee dividend portfolio.

The Gap has its hits and misses with fashion. But a strong balance sheet never goes out of style.

Electronics

Santa is expected to come a little early for Mr. and Mrs. RBD. Both of us have the four-year-old iPhone 5. And both of us not only feel married to each other but to our iPhone chargers.Those iPhone 5’s can’t handle the onslaught of iOS software upgrades. Not to mention the lack of storage.

So this year we’ll be purchasing the Apple iPhone 7. I know what you’re thinking, we should probably wait for the iPhone 8. We would wait, I suppose if our phones weren’t so unreliable now. But apparently, a lot of Apple (AAPL) nerds are waiting another year. Because the media keeps getting our hopes up for spectacular iPhone 8.

We won’t be buying a new iPad this year even though our iPad 2 is a sloth. Instead, we went with the Kindle Fire for Kids from Amazon (AMZN). On Black Friday they were on sale for $75. We’re taking a five-hour flight next summer with three kids under age five and need the screens.

More of an impact on Apple stock is the potential for US tax reform. If the new administration lowers taxation on the repatriation of funds held outside of the US, Apple shareholders may receive a windfall of cash in the form of dividends or buybacks.

Microsoft (MSFT) logged another decent year with the stock rising 6%. The Surface Pro 4 is starting to gain some market share, while the cloud business has driven the stock toward all-time highs. Windows 10 was a savior after the mess that was Windows 8.

TV glass maker Corning (GLW) was the second biggest gainer this year, up 30%. That’s no surprise, seeing all the beautifully curved screens on display at Costco. Our family is still sporting a 37-inch 720 LG, which is fine since we ditched cable TV.

Lighting the Way

Utilities, on the whole, outperformed the S&P 500 Index this year, up 12% in 2016 (as measured by the Vanguard Utilities ETF, VPU). The Christmas season is always a boost to the bottom line with all the ridiculously lit houses (our included). Perhaps the rise of LEDs is keeping some of our bills under control.

A former newcomer in 2014, ITC Holdings (ITC) will be saying “and to all a good night” this year, leaving the portfolio after being bought out by Fortis (FTS). The sale price of $45.50 helped Santa lock in a 17% gain.

East Coast electric Utility Dominion Power (DOM), slightly underperformed the utility index, but handily beat the S&P 500.

To backfill the departure of ITC, I’m adding Southern Company (SO) to the portfolio. Southern Company has a 16-year dividend increase streak and currently yields north of 4.5%.

Holiday Foods

Santa Claus knows holiday indulgence more than anyone. How he manages to deliver all those toys, AND, stop so frequently to use the bathroom… all in a single evening is still a baffling Christmas mystery.

The top-performing stock since the inception of Santa’s portfolio is Tyson Foods (TSN), up 74% since December 2013. Tyson posted another 9.5% increase in 2016. Not bad for a turkey… producer.

For the first time in 2016, we added Hershey (HSY) to the portfolio thanks to a reader suggestion. It gave us sweet returns, rising 12% up to $97. The stock traded as high as $113 in August on talks about a merger with food maker Mondelez (MDLZ).

Makers of sugar, spice, and everything nice, McCormick & Company (MKC) was a laggard gaining just 3% for the year. The company is a Dividend Aristocrat, having paid and increased its dividends for the past 31 years without interruption. The 10-year dividend growth rate is a steady 10%. So grab a gingerbread man cookie, put a little nutmeg in your eggnog and raise your glass to McCormick & Company.

Shipping

Fuel prices remained low in 2016, helping shipping powerhouses FedEx (FDX) and United Parcel Service (UPS). After poor performances last year, the stocks are up 24% and 13% respectively.

Santa Claus has left Amazon off the list each year since it doesn’t pay a dividend. But man, we get so many packages every year and the cardboard boxes are out of control. That’s why I’m adding cardboard box maker, Sonoco (SON) to Santa’s portfolio for 2016.

Sonoco is a consumer packaging company based in Hartsville, SC. It’s a Dividend Champion, having paid and raised its dividend for each of the past 36 years. Thanks, in part, to being a major supplier of boxes to Amazon, the stock is up 33% over the past year, now near 52-week highs. It’s forward PE ratio is a little rich at 19, but the stock yields 2.74% and has a 10-year dividend growth rate of 4%.

Payments

Last but not least are the payments companies. The three on our list all had so-so years, despite being the darlings of many stock prognosticators. Visa (V) was actually down more than 5% year-over-year, possibly providing an entrance opportunity for dividend growth investors. It’s newly lucrative deal with Costco hasn’t seemed to move the needle for the company. However, those of us who rely on Visa cards for travel rewards welcome the changeover from AMEX.

Mastercard (MA) and American Express (AXP) (last years winner of the Lump of Coal award for losing the Costco deal), were about as flat as a credit card. Apple Pay, the feared boogie man for the payments companies, doesn’t seem to be taking hold as much as expected.

Santa Claus vs. The S&P 500

Unlike most portfolio managers, Santa beat the S&P 500 in 2016. His portfolio of 28 stocks gained 6.96%, compared the SPY ETF which returned 4.80%, a difference of 2.16%. Since inception, Kris Kringle is up 24.11% but is still trailing the S&P 500 index (up 27.12%) by 3.01%.

Turns out the over-weighting of retail stocks was the key to his stellar returns this year, finally catching up to the market. With the stock markets reaching new highs this December, perhaps consumer confidence will help Santa catch up to the index next year.

Santa Claus vs. Warren Buffett

So the numbers you’ve all been waiting for are finally here. Santa beat the S&P 500 Index this year, but how did he perform about the Jolly Oracle?

To calculate Buffett’s performance (and to keep this simple), I’ve taken the stock price of Berkshire Hathaway’s (BRK-B) stock on December 4th for the past four years and made a side-by-side comparison to Santa.

What if Santa Claus & Warren Buffett battled it out in a jolly investor showdown? It's time to find out what's inside Santa's stock portfolio.

In a head-to-head Jolly Showdown, Buffett EASILY beat Santa. Buffett’s Berkshire Hathaway stock was up 16.79% in 2016 and is up 38.24% since the inception of the Santa Portfolio. Buffett’s numbers easily beat the S&P 500 index too.

This is no surprise, as Buffett is one of the greatest investors of all-time, while Santa is merely an amateur. Though Buffett will end up being one of the greatest philanthropists in history as well, nobody can compare to the joy Santa delivers to millions of children around the world each year. Not even the Oracle.

Santa’s Stock Portfolio

2016: 28 Stocks
Removed: ITC, GME
Added for 2017: VIA, SON, SO

What if Santa Claus & Warren Buffett battled it out in a jolly investor showdown? It's time to find out what's inside Santa's stock portfolio.

 

Merry Christmas and Happy Holidays! Thanks for reading, subscribing to my email list, commenting and sharing. -RBD

Disclosure: The author is long BRK-B, SPY, HAS, DIS, TGT, KSS, GPS, AAPL, MSFT, GIS. See the complete portfolio here


December 2015 – Santa’s Stock Portfolio – Elf-sized Returns

What if Santa Claus & Warren Buffett battled it out in a jolly investor showdown? It's time to find out what's inside Santa's stock portfolio.

Welcome to the third annual installment of Santa’s Stock Portfolio! Each year I take a look at Santa’s stock portfolio to see how he performed against the S&P 500 index.

Santa spends most of the year semi-retired with plenty of time to rethink over his investments. Come December, he’s busy making lists and rechecking them (twice) to see who is naughty and nice.

Hedge funds and investment professionals pay close attention to the “man with the belly” for investment ideas during the busiest shopping season of the year. Because who better understands Christmas than Santa?

Since Mr. Kringle is NOT required to disclose his holdings to the SEC (being a resident of the North Pole), we can only speculate on what stocks he owns in his portfolio based on his unique perspective.

Arguably the world’s most prolific giver, Santa only invests in stocks that give back, in the form of dividends. For this reason, he stay’s away from the likes of Amazon (AMZN) and GoPro (GPRO)… holiday staples, but dividend scrooges.

Last year, Santa’s portfolio trailed the S&P 500 index by 0.40%, gaining 17.40% vs. 17.80% for the period December 4th, 2013 through December 4th, 2014.

The original post outlying Santa’s stock portfolio was published in 2013.

Now that another year has passed, it’s time to see how his portfolio has performed compared to the market. For simplicity sake, I’ll compare his portfolio to the S&P 500 using the SPY ETF. I use the adjusted close numbers (adjusting for dividends and splits) sourced from Yahoo Finance historic prices for the same period from 2014 to 2015 and since inception. This is an equally weighted portfolio.

After unloading Sony (SNE) (dividend canceled) and Family Dollar (bought by Dollar Tree (DLTR)/scrooge) last year, no stocks were removed from the list of 25. But Santa is adding two more stocks to further diversify this holiday season. Read on to see which ones.

For the one-year period, the S&P 500 had a total return of 2.98% as measured using the SPY. Before we see how Santa’s stock portfolio performed against the market, let’s take a look at the industries he’s invested in.

Toys

Toy stocks, of course, are core holdings for Santa. For the second year in a row, Mattel (MAT) disappointed by returning -11.54%. However, it’s no longer the worst stock in his portfolio.

Hasbro (HAS), on the other hand, has been far more successful winning lucrative licensing agreements such as the Star Wars toys. The anticipation of a strong Christmas shopping season has driven Hasbro’s share price up nearly 25% since last year.

Now that Disney’s (DIS) first Frozen movie is in the rear-view mirror, Mattel’s keystone franchise Barbie has a good chance of recovering this holiday season. The National Retail Federation’s annual toy survey found Barbie back on top of the most wanted list for girls, finding 1 in 5 adults plan to buy a Barbie gift this Christmas shopping season. Could this finally be a turnaround year for Mattel?

Elsa, Anna, and the Frozen gang are still popular at #2 on little girls lists (while Olaf is the #1 choice of underwearfor my almost four-year-old son). And Disney shareholders rejoice now that a second movie is in the works. Hasbro has secured the rights to making most of the Frozen toys too. So between Star Wars and Frozen, Hasbro’s lead positioning has been rightly acknowledged by Wall Street.

Beyond toys, ridiculous Star Wars merchandise is everywhere…like this Darth Vader Toaster.

Retail

Santa’s best and worst performing stocks were in the retail industry this past year. Leading the toboggan downhill was Macy’s (M), falling nearly 36%. Not far behind, Walmart (WMT) and Tiffany’s (TIF) were both down more than 27%, showing bad stock performance does not discriminate based on customer affluence. Those three should expect a stinkin’ sack of reindeer poopin their stockings Christmas morning.

Conversely, just because it’s a big box store doesn’t mean it can’t perform for shareholders.

Home Depot (HD) was Santa’s top performing stock in 2015, gaining a jolly 38%. Added to last year’s gains, the stock is up 78% in just two years.

Another respectable performer was Costco (COST). As a member myself, I can vouch for the excellent customer experience in Costco stores. Shopping carts are big enough for my two oldest kids, aisles and parking spaces are super-wide, and the free samples are gloriously free-flowing. My annual savings on beer alone covers the cost of our membership dues. Mrs. RBD appreciates the selection of organic products. Costco’s stock was up over 21%.

Wall Street’s love affair with Amazon has helped put a damper on much of the retail space. Macy’s is an obvious victim. But Santa always likes a good value play. So this year he’s doubling down on retail by adding not one, but two brick and mortar retailers. The Gap (GPS) is down 35% in the past 52 weeks while Kohl’s (KSS) is down 15%. Adding these two stocks increases the total companies in Santa’s portfolio to 27.

Headed into the holiday season, the economy is performing well with 5% unemployment. While The Gap is seeing a decrease in same-store sales, the yield is plump at 3.5% and the payout ratio lean at 34%. The balance sheet is strong and fashion trends are fast and fickle, making this company a potential turnaround candidate in 365 days.

Kohl’s is yielding 3.75% with a payout ratio of 44%.

Those predicting an end to brick and mortar stores have been doing so for the last 20 years. While Amazon has experienced incredible growth and appears to be taking over the world, Santa, like most of us, would never buy a pair of jeans online and isn’t a believer.

Electronics

Every year I take a jab at Microsoft (MSFT). Whether it’s the Zune or a Microsoft Surfacetablet nobody wants. But money talks and the stock is up 17% for the year. I’ve been adding the stock to my own portfolio, enamored by the 22% 10-year dividend growth rate and healthy balance sheet.

With a new CEO at the helm and the flagship Windows 10 operating system receiving strong reviews (not difficult compared to Windows 8), the company is still a behemoth cash generating machine.

I’ve recently purchased a brand new Windows 10 computer through my Costco membership, splitting the household computing duties between a powerful iMac (photos, videos, iPhone syncing) and the PC (spreadsheets, investing, blogging). After all these years, Microsoft, I can’t quit you.

But let’s not forget Apple (AAPL). We love our iPhones, the iMac, and the everything about the Apple ecosystem. Apple is my biggest holding and still seems cheap at these levels. Apple will surely be on everyone’s gift list this year, whether it be a new iPad, iPhone, iTunes gift card, laptop, Apple Watch, or Apple TV.

TV glass maker Corning (GLW) was down 12% this year. That’s hard to believe since it seems everyone’s Christmas list includes a 60-inch screen. But currency concerns have taken this stock down.

While earnings have suffered, the company has promised to return $10 billion back to shareholder in the form of stock buybacks and dividend increases by 2019. Management pledged to increase the dividend by at least 10% each year.

Our family is still sporting a 37-incher, which is fine since we ditched cable TV. But every time I walk into Costco, I’m tempted by the ghost of Christmas extravagance.

Lighting the Way (Electric Utilities)

Rudolph’s nose, while “so bright”, isn’t enough to light the way for Santa’s sleigh. Folks who are truly in the Christmas spirit, happily decorate their homes with bright lights to help Santa navigate his way around all the rooftops in all the world.

If you thought Christmas wasn’t commercialized enough, even the electric companies rake in the extra dough during December.

Our neighborhood boasts one of the most ridiculously cheerfully decorated houses in the county. So cheerful that the home owner’s electric bill goes up by $3,000 every December. Dominion Resources (D), an electric utility in the State of Virginia, just sits back and lets the cash flow into its coffers. The company has a ten-year streak of increasing its annual dividend. It has a one-year streak of -5% total return.

A newcomer to the list last year was ITC Holdings (ITC). Don’t let the boring name fool you, this company’s business model is exciting, focusing on energy transmission rather than generation. It’s hard to find a growth utility that pays and grows a sweet dividend. ITC does just that.

But 2015 wasn’t entirely happy for ITC as the stock dragged for most of the year. Then a cyber Monday miracle occurred. The company confirmed it is exploring “strategic alternatives” and the share price surged joyously. If this holds true, ITC shareholders may experience Christmas in July this coming year.

Holiday Foods

No one enjoys holiday indulgence as much as Santa Clause. He sets a new record for consuming milk and cookies every year. How he manages to deliver all those toys, AND, stop so frequently to use the bathroom… all in a single evening, is still a baffling Christmas mystery.

Christmas baking staple General Mills (GIS) is the top provider of flour and other cookie-making essentials. The stock was up nearly 14% in the trailing 365 days. According to their website:

General Mills and its predecessor firm have paid dividends, uninterrupted and without reduction, for 117 years.

That’s something to be proud of. The stock currently yields 3%, right around its five-year average. But the dividend payout ratio is getting a little bloated, now in the 80% range. Double-digit dividend growth may be unsustainable at this point. But for the long-term, it’s hard to argue against this pantry filler.

Santa’s second-biggest gainer this year was Tyson Foods (TSN). What holiday is complete without salted meats? The stock was up a beefy 29% in 2015.

Makers of sugar, spice, and everything nice, McCormick & Company (MKC) was a winner gaining 21% for the year. The company is a Dividend Aristocrat, having paid and increased its dividends for the past 30 years without interruption. The 10-year dividend growth rate is a steady 10%.

So grab a gingerbread man cookie, put a little nutmeg in your eggnog and raise your glass to McCormick & Company.

UPDATE: On request, I’m adding Hershey (HSY) to the portfolio. That makes 28.

Shipping

With lower fuel prices due to the stronger dollar, you’d think FedEx (FDX) and United Parcel Service (UPS) would be glittering from lower costs. Unfortunately, the stocks are down 13% and 4% respectively over the last year. On the bright side, FedEx is forecasting a 12% increase in holiday shipments during it’s busiest time of the year.

While Amazon may be building its own delivery network, third party shipping will always be a valid business. And as long as Christmas lasts just one day, Santa will always need to outsource some of his deliveries.

Payments

Last but not least, the holidays wouldn’t be complete without Mr. and Mrs. Plastic, Visa (V) and Mastercard (MA). The couple experienced a scare last year when Apple entered the payments arena. But instead of conquering, Apple joined the party. Now Apple gets a small slice of the Christmas salami every time a customer chooses to pay with Apple Pay, but Visa and Mastercard continue to dominate. The companies were up 24% and 12% respectively.

Left in the cold this year was American Express (AXP). The stock was down 21% for good reason. Who wants to pay an annual fee to use a card? On top of that, AMEX lost the coveted Costco exclusivity gig to Citigroup (C) and Visa because they simply couldn’t make the numbers work. Next year, we’ll finally be able to stop using our debit card at the warehouse in favor of a regular Visa card (or likely a branded Costco/Citi Visa card). I’m thankful for that.

For that blunder, AMEX, you’re being awarded the annual Christmas booby prize, a lump of coal.

Santa vs. The S&P 500

Like most portfolio managers, Santa lagged the S&P 500 for the second year in a row. His portfolio of 25 stocks gained 2.66%, trailing the index which returned 2.98%, a difference of -.32%. Since inception, Kris Kringle is up 19.72%, also trailing the S&P 500 index by 1.58% (adjusted for changes in the portfolio). While not far behind the index, total returns were elf-sized this year compared to last.

Time will tell if Santa’s overweight position in retail stocks will generate outperforming returns. Until then, he can sit back and collect a 2.5% yield on his portfolio. As for beating the index, maybe Santa should just say ho ho ho and switch all of his assets over to Vanguard.

Oh what fun would that be?

Santa’s Stock Portfolio

Update: Added Hershey for next year making 28. December 4th closing price, $86.50.

What if Santa Claus & Warren Buffett battled it out in a jolly investor showdown? It's time to find out what's inside Santa's stock portfolio.

Happy Holidays! Thanks for reading, commenting and sharing. -RBD

Has the holiday season inspired any stock purchases for you?


December 2014 – Santa’s Dividend Stock Portfolio Revisited

Last year, I published a post called Santa’s Dividend Stock Portfolio.

The jolly old man is semi-retired for 11 months of the year and has plenty of time to tend to his dividend stock portfolio. Despite being a very public and influential figure, he is not required to report his holdings to the SEC because he is a resident of the North Pole. So we can only speculate on what his 25-stock portfolio looks like based on his unique perspective and knowledge of the industry behind Christmas.

Now that one year has passed, it’s time to see how his portfolio has done compared to the market. For simplicity’s sake, I’ll compare his portfolio’s performance to the S&P 500 using the SPY ETF. I’ll use the adjusted close numbers (adjusting for dividends and splits) sourced from Yahoo Finance historic prices for the period December 4th, 2013 through December 4th, 2014. This is an equally weighted portfolio.

For the one-year period named above, the S&P 500 had a total return of 17.80% as measured using the SPY. Let’s see how Santa’s portfolio performed against the market. But first… let’s take a look at the industries he is invested in.

Toys

Mattel (MAT) took a beating from investors in 2014 due to a slowdown in sales, particularly in their core brand Barbie. Consumers distaste for Barbie’s disproportionate curves helped lead to a significant downward curve in Mattel’s stock price. Down by more than 29%, it was, ironically, Santa’s worst-performing stock this past year. Hasbro (HAS), on the other hand, was up more than 12%.

This year’s hottest selling toys are based on Disney’s (DIS) Frozen movie. Disney has been a hot stock too, up 35%. Even more exciting, the company raised its dividend a whopping 34% last week. This is one “frozen” dividend I’m happy to hear about.

Mattel is poised to profit from the Frozen movie this year and next as they maintain the manufacturing rights to the majority of Frozen dolls. However, Mattel was left in the cold as Hasbro was awarded the rights to make the Frozen dolls starting in 2016. When I do a quick search on Amazon, it seems Hasbro’s only piece of the franchise, for now, is a few Frozen board games.  It remains to be seen if Mattel’s Frozen dolls can reinvigorate the company’s earnings enough to keep its dividend growth streak alive. In the meantime, Hasbro is Wall Street’s Princess and Jedi after securing the manufacturing deal for the Frozen doll franchise, and due to the excitement of the new Star Wars movie arriving this time next year. Did you see the trailer? Looks awesome.

Retail

Last year, Target (TGT) made the naughty list when up to 70 million credit card accounts may have been compromised by criminals through a data breach. Target went into extreme public relations mode and has surprisingly recovered quite nicely. Dividend growth investors rejoiced when the breach caused shares to fall, creating a buying opportunity. Then in June, the company raised its dividend by 21%, continuing its impressive dividend increase streak of 46 years. Santa’s investment in Target is up 19.47%. That return, plus what should be easy comparative numbers this year due to the breach, puts Target back on the nice list this holiday season.

The media again criticized retailers over the Thanksgiving weekend. They repeated the tired story that holiday shopping at brick and mortar stores will end as we know it, the same prediction they’ve been making since 1998.

If you watch financial news television, you’d think Simon Property Group (SPG) would be getting reindeer poop in its stocking this year, but the stock of the shopping mall real estate investment trust (REIT) is up 33.57% since last year. Its yield is now down to 2.90%, a bit low for a REIT. Other retailers like Walmart (WMT), Best Buy (BBY), Home Depot (HD), Macy’s (M), Tiffany’s (TIF) and my favorite place to shop, Costco (COST), have all seen respectable gains this year.

Electronic payment companies, Visa (V), Mastercard (MA), and American Express (AXP), all breathed a sigh of relief when the largest company in the world decided it wouldn’t gobble them up like milk and cookies. Apple (AAPL) will work with the electronic payment companies through its new Apple Pay product, instead of leapfrogging them.

Apple, a formidable retailer now too, revealed to the world their next iteration of iPhones, as well as its next big thing… the Apple Watch. Tech nerds and first adapters will have to wait until next year for that one. Shares of Apple gave Santa his biggest gain this year, up 46%.

Lost-cost retailer Family Dollar (FDO) is being courted by two similar rivals, both dividend scrooges. With offers in hand, shareholders will vote on the $80 per share bid on December 23rd, and the company will likely be acquired by one of the scrooges sometime early next year. Hopefully, Santa can get his proxy vote in before the big day.

Electronics

Poor little Microsoft (MSFT), forever stuck in the land of misfit devices. First the Zune, then the Windows phones, and now the Surface. “What is a Surface?” wonders Santa as he’s never had a little boy or girl sit on his lap and ask for one. Well Santa, it’s that square-looking thing you see on TV commercials next to the laptop everyone wants. You may have also seen it on the sidelines of an NFL football game, the thing that looks like an iPad from a very long distance away.

I officially said goodbye to Windows this year with the purchase of an elegant and speedy iMac, but Microsoft Office is still on my wish list. Software for home and enterprise is still the golden egg. Sorry Softy, we didn’t want to learn yet another Windows version worse than the previous. Investors haven’t complained much as the stock is up almost 29% in 365 days.

Television glass maker Corning (GLW) continues to churn out product for the ever-growing flat screens. 42 inches not enough? Buy a 60 inch. Every time I walk into Costco I marvel at these beautiful glowing rectangles. One of these days I’ll probably be compelled to replace my 37 incher. For now, it’s fine for streaming and Bluray DVDs, now that we’ve kissed cable goodbye.

Sadly, Santa was forced to sell one stock this year as the company canceled its dividend. Sorry, Sony (SNE), all you’ll get this year is a lump of coal.

Lighting the Way

Rudolph’s nose only gives off so much light to lead Santa’s sleigh. Folks who are truly in the Christmas spirit, happily decorate their homes with bright lights to help Santa navigate his way around all the roofs in all the world. Christmas lights have even hit the mainstream. Have you seen the commercial for that ridiculous TV show called The Great Christmas Light Fight? If you thought Christmas wasn’t commercialized enough, now the electric companies are even poised to rake in the dough during the month of December. One such lighted house in my neighborhood proudly boasts their music and light show adds $3,000 per month to their electric bill.

Dominion Resources (D), an electric utility in the State of Virginia, just sits back and lets the cash flow into its coffers. The company has a ten-year streak of increasing its annual dividend.

Santa’s first newcomer to the list this year is ITC Holdings (ITC). Don’t let the boring name fool you, this company’s business model focuses on energy transmission rather than generation. It’s hard to find a growth utility that pays and grows a sweet dividend, but ITC does just that. With revenue just over one billion and the mid-west electric grid in their sights, keep an eye on this one. ITC replaces Sony which landed itself on the permanent naughty list.

Holiday Foods

Santa’s belly is an indication of one of his favorite holiday pastimes… eating. Tyson Foods (TSN) provides Honeybaked with most of their hams for the holiday season. The store near my home is always wrapped around the block Christmas Eve. The stock is up 23% since this time last year, but the dividend yield, at just 0.7%, could have a lot more meat on its bones.

Also in Santa’s portfolio, General Mills (GIS) has been quite a market laggard, up only about 8%. GIS’s baking products, such as Gold Medal Flour, are surely in every Grandma’s Christmas cookies. I stocked up on some shares this year when the company dipped below $50. General Mills and its predecessor firm, the Washburn Crosby Company, have paid dividends without interruption or reduction for 115 years.

This year Santa added a new foods company to his portfolio, McCormick & Company (MKC), producers of sugar and spice and everything nice. This holding replaces Family Dollar. An obvious choice for St. Nick, McCormick & Company has raised it’s dividend each of the last 28 years, averaging an 11% increase for the last ten years. With Family Dollar up for sale, Santa will sell whichever dividend scrooge buys them, making room for this ginger seller.

Shipping

Finally, we all know the daunting task Santa faces every year delivering toys to children all around the world in just one night. Striving for optimum efficiency, he outsources some of his delivery needs.

Fuel prices have been falling for the past few months, and transportation specialists FedEx (FDX) and United Parcel Service (UPS) stand to gain with lower costs. FedEx was Santa’s fourth-best holding this year gaining 30% this year. Rival UPS gained a respectable 11% this year, though well below the S&P 500.

Santa’s Vs. The S&P 500

It’s time to talk final numbers. Does Santa’s portfolio stand up to the market average?

Not quite. Santa’s portfolio of 25 stocks had a total return of 17.40% compared to the S&P 500 index’s 17.80%. Not too shabby Santa, you still beat plenty of hedge funds.

Looking for investment inspiration this holiday season? Perhaps Santa’s portfolio will give you a few ideas. Have a look at the table below for this year’s numbers.

Has the holiday season inspired any stock purchases for you? Happy Holidays! Thanks for reading, commenting and sharing. -RBD
What if Santa Claus & Warren Buffett battled it out in a jolly investor showdown? It's time to find out what's inside Santa's stock portfolio.


December 2013 – Santa’s Dividend Stock Portfolio

Santa has a busy day coming up. But during the rest of the year, he is semi-retired other than the time he spends keeping up his list of naughty and nice children.  I hear that’s a much easier task now with his new iPad app. Like all great managers, he has hired a team of diligent employees to make the toys that he delivers to the well-behaved girls and boys, undoubtedly leaving him more free time to maintain his dividend stock portfolio.  As a North Pole resident, Santa is not required to report his holdings to the SEC, so we can only speculate on what they are. Knowing what I know about Santa, here is the list of companies that are most likely in his Christmas dividend stock portfolio.

Toys

Toy companies are an obvious core holding in Santa’s portfolio. Due to manufacturing complexities, toy volume, and licensing issues, Santa’s elves frequently outsource their toy making to the big toy companies. Mattel (MAT) is the largest US-based toy company. Its brands include Barbie, Monster High, Hot Wheels, American Girl, Fischer Price, and numerous Disney (DIS) licensed toys. Hasbro (HAS) on the other hand is the company behind Nerf, Sesame Street toys, Transformers, GI Joe, Playskool, and the Star Wars branded toys. So many products from both of these companies have entered my house in the past two years as gifts that I could not resist the 3.6% dividend yield when I bought Mattel back in August.  Today the yields are closer to 3.2% for MAT and 3.0% for HAS, so I am looking for a pullback before buying more.

Retail

Mom, Dad, Grandma, and Grandpa all enjoy buying more toys for the girls and boys in their lives, beyond what Santa delivers. If they are not shopping online at dividend scrooge Amazon (AMZN), they turn to some great dividend-paying retailers like Wal-mart (WMT), Target (TGT), Gamestop (GME), and Macy’s (M). The malls are buzzing this time of the year too, and a popular mall REIT is Simon Property Group (SPG). SPG is a blue chip REIT meaning it is a reliable and relatively safe company to own, but the yield is not as high as you get with other REITs.

For the big spenders wanting to make a big impact this Christmas, Tiffany’s (TIF) is always there to sell you that romantic ring buying experience with the classic setting and Tiffany blue box, not to mention a high-quality diamond at a healthy markup. Or just head over to Costo (COST) to buy a similar stone but with a bit less romance.  For those shopping at the opposite spectrum, there are plenty of great bargains to be had at Family Dollar Stores (FDO) this Christmas.

Understanding the convenience of using a credit card during the holiday season, Santa would get some broader retail exposure by investing in financial transaction companies like Visa (V), Mastercard (MA), and American Express (AXP), all winners whether shoppers are buying in stores or online.

Electronics

One of the most requested gifts this year, like every year, is the Apple (AAPL) iPad. And like every year, Apple is going to crush the competition this Christmas. I once sold Apple before the Christmas season and it was a big mistake.  You could spend less money and buy a Kindle Fire from Amazon, like when your Aunt Edna bought you that Zune, or just stick with the best tablet out there.  Microsoft (MSFT) sold a million Xbox Ones on the first day of its release. They will sell hundreds of millions of dollars of online gaming credits (which cost them nothing to produce), while Gamestop, Target, Best Buy (BBY) and Wal-Mart will all benefit selling games. Sony (SNE) also released its new Play Station and maintains a dedicated core of gamers. The long-term winner is yet to be determined between these two, but the last generation of consoles tells us there is room for two or three.

TV’s are another popular item this year, and Corning (GLW) is the leading glass manufacture for them and the many handheld devices. After opening all of the toys on Christmas day, parents will surely need to stock up on batteries. For my battery needs I head over to my local Home Depot (HD) for the best selection, and while I’m there in December I usually buy a few more outdoor Christmas light strings to brighten the holiday spirit in my neighborhood. This certainly brightens the Christmas holiday for Dominion Resources (D), a Virginia electricity provider. With a dividend yield of 3.40%, this company helps to light Santa’s way Christmas night, but Dominion is not selling at a great value today.

Holiday Foods

Christmas would not be Christmas if it did not involve cooking way too much food and spending time with family consuming it. The Honeybaked Ham store near me has a line around the block nearing Christmas Day. A large portion of their hams are sourced from Tyson’s Foods (TSN). For the overabundance of her Christmas cookie selection, Grandma turns to Gold Medal Flour and Betty Crocker for all her baking needs, both classic brands of the food company General Mills (GIS). Like toys, cookies are another subject Santa understands better than most of us.

Shipping

Santa knows logistics too.  But let’s face it, delivering all those gifts to all those children around the world in just 24 hours is a tough order to fill. When he cannot handle all the volume, he has been known to turn to shipping companies FedEx (FDX) and United Parcel Service (UPS) for help. With the long-term trend of shoppers turning to online sales, these companies are annual holiday season winners.

Lacking investing ideas this holiday season? Turn to Santa for some inspiration.

Symbol Name

Price

Yield

P/E

P/E Next Yr

MAT Mattel

45.57

3.20

19.1

15.3

HAS Hasbro

52.07

3.00

23.9

15.9

DIS Disney

70.36

1.10

20.8

15.5

WMT Wal-Mart Stores

80.22

2.30

15.4

14.3

TGT Target Corp

63.31

2.70

17.0

13.5

GME GameStop Corp

45.77

2.20

13.8

11.5

M Macy’s

52.04

2.00

14.5

12.0

SPG Simon Property Group

149.36

3.20

37.1

15.7

TIF Tiffany & Co.

88.58

1.70

26.3

20.9

COST Costco Wholesale

122.97

1.00

26.6

22.4

FDO Family Dollar Stores

69.14

1.50

18.1

15.7

V Visa

202.74

0.80

26.7

19.5

AXP American Express

84.50

1.10

20.0

15.6

AAPL Apple

565.00

2.30

14.2

11.9

MSFT Microsoft

38.94

3.00

14.6

13.2

BBY Best Buy

42.80

1.70

15.2

SNE Sony

17.89

1.40

22.5

16.6

GLW Corning

16.78

2.30

13.9

11.0

HD The Home Depot

78.40

2.00

21.2

17.7

D Dominion Resources

64.13

3.40

61.0

18.1

TSN Tyson Foods

33.36

0.90

15.7

11.5

GIS General Mills

50.71

3.00

19.0

16.2

FDX FedEx

138.71

0.40

27.8

15.7

UPS United Parcel Service

101.72

2.40

66.6

18.6

* Prices as of close 12/04/2013. Data sourced from Yahoo Finance

Disclosures: Long AAPL, MAT

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