The Timberline Dividend & Growth portfolio on the Covestor platform started 2014 on a positive note with a return of 2% for the first quarter. The portfolio finished slightly above the 1.8% performance of the S&P 500 Index (SPX).
In my opinion, equity investors were encouraged by reasonable valuations, corporate earnings power, and the Fed's sensitivity to data and its gradualist strategy in normalizing monetary conditions.
My portfolio performance was led by strength in financial, pharmaceutical and utility companies. Specific strength (returns greater than 10%) was derived from PNC Financial (PNC), Wells Fargo (WFC), Dominion Resources (DOM), Merck (MRK) and Microsoft (MSFT).
The weakest areas were in industrial General Electric (GE) and Waste Management (WM) and payroll processing companies Automatic Data Processing (ADP) and Paychex (PAYX) that experienced modest declines.
As many as five bank positions announced intentions to raise dividends after annual stress test results were released in late March. Such dividend developments will be detailed the next quarterly report.
In my opinion, stocks continue to have productive long-term return potential. Short-term predictions are always difficult, and I have no way of knowing for sure, but it will be interesting to see if warmer weather contributes a positive bounce in the stock market and leads to further improvement in economic expectations.
Though early, we are also nearing an important political season and mid-term politics that will gain greater attraction and speculation as it approaches. These and other crosscurrents are nothing new to the markets and may lead to some volatile conditions. In my mind, none appear to have the wherewithal to derail the long-term appeal of equities.
DISCLAIMER: The investments discussed are held in client accounts as of March 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
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