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yield hog

John Heinzl is the dividend investor for Globe Investor's Strategy Lab. Follow his contributions here. You can see his model portfolio here.

My Strategy Lab model dividend portfolio is coming off another good year in 2014.

Today, I'll take a final look back at the past 12 months, first for my model portfolio (view it online at tgam.ca/DxSc) and then for other dividend stocks that I wrote about in this space.

The model portfolio, which holds a basket of Canadian and U.S. blue-chip stocks, posted a total return – including dividends – of 19.5 per cent for the year ended Dec. 31. That compares with a total return of 10.5 per cent for the S&P/TSX composite index.

I'm pleased with the 2014 performance, and also with the portfolio's longer-term results. From inception on Sept. 13, 2012, through Dec. 31, 2014, it returned 40.5 per cent, handily outperforming the 25-per-cent total return of the S&P/TSX composite index.

Three factors, in particular, helped the model portfolio in the past year. The first was the absence of oil and gas stocks, which were hammered by the dramatic drop in crude prices. (Humble admission: I did own a couple of energy stocks personally – purchases which did not conform to my dividend growth philosophy and for which I was harshly and deservedly punished. I have since sold them.)

The second factor benefiting my model portfolio was the plunging loonie, which provided a strong tailwind to my U.S. stocks when valued in Canadian currency. Finally, a generally solid showing from banks, utilities, telecoms and pipelines (which are largely insulated from swings in energy prices) contributed to the model portfolio's market-beating results.

I can't stress enough that the model dividend portfolio isn't meant to be copied exactly; rather, it's a tool to illustrate how dividend growth investing works.

With a limit of 12 securities (as per Strategy Lab's rules), the portfolio doesn't provide adequate diversification, in my opinion. Also keep in mind that a stock's inclusion in the model portfolio doesn't constitute a "buy" recommendation. Investors need to do their own due diligence before investing in any security to make sure it matches their risk tolerance and is trading at a reasonable valuation.

With those caveats out of the way, let's see how some of the other stocks I wrote about performed in 2014. This is not an exhaustive list but a representative sample of the companies featured in Yield Hog in the past 12 months (or slightly longer in one case).

General Electric Co. (GE - NYSE)

Profiled Feb. 5, 2014

Total return: 6.7 per cent

S&P 500 return: 19.8 per cent

I wrote that GE is back on solid financial footing and has more than doubled its dividend, which it slashed during the financial crisis. However, a slowing global economy has recently hurt the industrial giant's stock. Falling crude prices also pose a threat to GE's energy business, which provides equipment and services to the oil and gas industry.

Algonquin Power & Utilities Corp. (AQN - TSX)

Profiled Nov. 6, 2013

*Total return: 49.9 per cent

*S&P/TSX return: 13.1 per cent

Algonquin's stock had been clobbered by fears of rising interest rates and by a negative research report on the company. I vowed to hold on to my shares (which I own personally) because "nothing has fundamentally changed in the company's outlook." The stock has since rebounded and in August the company hiked its dividend – continuing a pattern of roughly annual increases.

Brookfield Infrastructure Partners LP (BIP.UN - TSX)

Profiled Feb. 12, 2014

Total return: 22.6 per cent

S&P/TSX return: 8 per cent

Citing Brookfield Infrastructure's diversified portfolio of long-life assets – including railways, ports, utilities, toll roads and pipelines – I wrote that the company "will likely be rewarding investors with growing distributions for many years to come." The shares (which I own) have been on a roll and I'm expecting another distribution hike soon.

Johnson & Johnson (JNJ - NYSE)

Profiled Jan. 29, 2014

Total return: 20.9 per cent

S&P 500 return: 18.3 per cent

Citing J&J's triple-A credit rating, long history of dividend growth and steadily rising revenue and earnings, I wrote that the health-care giant is an attractive pick for buy-and-hold investors, particularly given its attractive valuation at the time.

Since the column appeared, the stock (which I own) has surged, and in April J&J raised its dividend for the 52nd consecutive year.

TransForce Inc. (TFI - TSX)

Profiled May 7, 2014

Total return: 28.3 per cent

S&P/TSX return: 1.7 per cent

When I wrote about TransForce, which operates trucking, courier, logistics and waste management businesses, the stock had been spinning its wheels because of severe winter weather and other factors. But it was trading at an "attractive" valuation, I said. The stock has since regained traction, helped by a string of acquisitions and a 17-per-cent dividend increase in December.

*Returns in all cases are in local currency, include dividends and are for the period from the article publication date through Dec. 31, 2014. Benchmark index returns also include dividends.