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Best—and Worst—Stock Strategies So Far in 2012

Investors who threw money at the biggest dividend paying stocks at the start of the year may be seeing that part of their portfolio showing the smallest gains, while those who bought last year’s losers are the biggest winners.


Birinyi Associates studied the first quarter performance of the stocks within the S&P 500 , using nine criteria to evaluate different possible investment strategies. It focused on groups of 50 and found that the smallest gains were made by the top 50 dividend paying companies, which rose just 3.2 percent.

Those stocks included utilities, a sector that is down 2.5 percent year-to-date.

It also included Verizon , down 4 percent on the year, but also Altria , up nearly 5 percent.

The best gains were made by investors buying the biggest losers of 2011. The 50 worst performers of last year gained 22.8 percent in the first quarter, well ahead of the S&P 500’s 12 percent increase.

The next strongest gain—22.1 percent—was made by the 50 S&P stocks with the lowest price-to-book.

“Those stocks were populated for the most part by financial stocks, which were selling below book at the beginning of the year, and also Sears Holdings,” said Birinyi analyst Jeffrey Rubin.

The other end of the spectrum, the 50 stocks paying the lowest dividends, also did well. “The ones with the lowest yield were up 19 percent. They were the typical growth companies,” said Rubin.

The 50 stocks expected by Wall Street analysts to have the best growth rates over the next five years, were up 16.8 percent, and those with the lowest forecast growth rates were also higher, but up just about 4 percent.

Follow Patti Domm on Twitter: @pattidomm

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