NEW YORK (TheStreet) -- Last August, I devoted a column to the potential benefits of owning companies that are simultaneously paying dividends and buying back stock. My theory was that despite the fact that arguments can be made against the virtues of either of these actions taken by companies, (see the original column) the combination of dividends and buybacks might actually be very powerful, with the potential to provide investors with solid returns. While it's only been about a year since the original column ran, and that is too short of a timeframe from which to draw a final conclusion about the efficacy of the dividend/buyback combination, it's time to review the early progress.

In developing the list of qualifying companies, I utilized the following criteria:
  • Minimum Market Cap: $2.5 billion
  • Increasing dividends for each of the past seven years
  • Minimum dividend yield of 2%
  • Decrease in shares outstanding of at least 5% in the past year.

Despite the rather stringent criteria, 19 names made the cut, which was more than I'd originally expected. Overall, the companies were fairly large in size, with an average market cap of about $47 billion. The average dividend yield at the time was just over 3%.

The early results are very encouraging. While the S&P 500 is up about 20.4% since my original column, the group of 19 has returned an average of 31.4%, beating the index by 11%. Just three of the 19 names; Intel ( INTC) down 9%, Darden Restaurants ( DRI) down 3.3% and Exxon Mobil ( XOM) down 1.2%, are in negative return territory.

The big winners of the group include Lowe's ( LOW) up 76%, Ameriprise Financial ( AMP) above 70%, Safeway ( SWY) up 62% and Assurant ( AIZ) up 61%. LOW Chart LOW data by YCharts

Other names that made the cut include Walgreen ( WAG) up 44%, Northrop Grumman ( NOC) 41%, Raytheon ( RTN) up 40%, Lockheed Martin ( LMT) up 39%, L-3 Communications ( LLL) up 38%, Becton Dickinson ( BDX) up 35%, Travelers ( TRV) up 30%, Conoco Phillips ( COP) up 23%, Chubb ( CB) up 19%, McGraw-Hill ( MHP) up 15%, CSX ( CSX) up 13%, and Norfolk Southern ( NSC) up 3%.

Obviously, outperformance by this group over the past year has been achieved in very positive market conditions, and it would be interesting to see how companies with similar attributes would perform in down markets. The hope would be that such a group would deliver better than benchmark results in both up and down markets, but only time will tell. Sooner, or later, we'll be able to put it to the test.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.