Imagine if there was an easy way to invest in dividend stocks by simply reading expert opinions to predict their performance for the next year. That’s the idea I played with about six months ago when I bought my latest batch of dividend stocks. Now, I didn’t actually choose my stocks this way, and I definitely wouldn’t recommend you do either. There are many other ways to evaluate a company’s assets. Still, I thought it would be fun to track the expert opinions on the stocks I bought and see how accurate they were every three months or so. Who knows, maybe some experts will get it right within a year.
One of the perks of being a personal finance blogger is connecting with others who excel in dividend stock investing. Dividend stocks offer a truly passive income—you just need to own them to get paid. The great thing about them is that even if the share price drops, you’ll still receive dividend payments, which acts like a safety net. And if the share price rises, you benefit even more. Plus, dividend stocks can be a powerful tool for early retirement. With enough of them, you could generate a passive income stream to sustain yourself every month for the rest of your life.
Previously, I kept things simple by investing in a group of dividend stocks known as The Dogs of the Dow. But this year, I did extra research and chose 10 reputable stocks that I felt would perform well. When I made my last stock purchase, I noticed that all major financial sites had sections with “expert opinions” or “forecasts.” This got me curious: Analysts are supposed to be experts, so they should have a better idea of how stocks will perform over the next year compared to an average investor like me. However, it’s known that analysts can often be wrong.
So, for fun, I decided to note the expert opinions from four major sources—CNN Money, MSN Money, Yahoo Finance, and Fidelity—on my stock picks and track their performance. To compare the different rating scales, I created a four-color rating system. Not all sources agreed on each stock.
Looking at my stock portfolio, it is currently trailing the S&P 500 index by about 4 percentage points (5% vs. 9%). That’s a bit disappointing, but remember, stock values change daily. For instance, during my last portfolio update, my stocks were outperforming the index (3% vs. 2%). Also, I haven’t factored in my dividend earnings, which could tip the scales in my favor.
Some notable stock performances include Cisco Systems and Johnson & Johnson, both identified as winners by Fidelity and supported by MSN on Cisco. Aflac, unfortunately, has had a rough year despite positive forecasts from MSN and Fidelity. CNN was optimistic about General Electric and Grainger, but both have been flat in capital gains. AT&T was predicted to perform poorly by three of the four media sites but ended up with shares increasing by over 6%, proving CNN’s forecast right.
Can you trust big media sites to pick your stocks for you? Here’s how the score looks for who was right and who was wrong: Each site gets a point for every correct stock prediction. While no one has a perfect score, these analyst opinions could be useful as additional data for your stock-picking decisions. Hopefully, my portfolio won’t continue to lag behind the S&P 500 index. After all, investing in dividend stocks should be fun and rewarding.
