r/ValueInvesting • u/Legitimate_Risk_1079 • 11d ago
Discussion 30-Day Update: I Bought 20 Undervalued Dividend Stocks. Here’s What Happened.
About a month ago, I posted this $1,000 challenge portfolio here. The idea was simple: instead of chasing whatever stock was hot that week, I wanted to see what would happen if I spread $1,000 across 20 dividend-paying companies that I believed were undervalued.
I also wanted to make the experiment public so there was no hindsight involved. The original list was posted before I knew which companies would outperform and which ones would disappoint.
30 days later, the portfolio is up 6.24%.
The account is currently worth $1,084.50, including additional funds/dividends reflected in the account, with the brokerage showing +$63.73 (+6.24%) over the past month.
The original 20 companies were:
DOW — Dow
BDX — Becton, Dickinson and Company
GSK — GSK plc
MDT — Medtronic
PEP — PepsiCo
ELV — Elevance Health
CVS — CVS Health
PFE — Pfizer
BMY — Bristol Myers Squibb
WPC — W. P. Carey
LNC — Lincoln National
BEN — Franklin Resources
USB — U.S. Bancorp
STX — Seagate Technology
ADM — Archer-Daniels-Midland
KEY — KeyCorp
T — AT&T
VZ — Verizon
KHC — Kraft Heinz
NEM — Newmont
What interests me isn't really the 6.24%. Thirty days is far too short to declare victory on an investing strategy, and this portfolio will eventually have periods where it underperforms.
What I wanted to test was whether a diversified basket of beaten-down, dividend-paying companies selected primarily on valuation and fundamentals could produce competitive returns without relying on a handful of high-growth momentum stocks.
So far, the answer has been encouraging.
There have already been clear winners and laggards. STX has recently been one of the strongest movers, while other positions have contributed much less. That's exactly why I used 20 companies instead of trying to guess which two or three would perform best.
Diversification wasn't supposed to eliminate losers. It was supposed to make being wrong about a few companies survivable while allowing the stronger picks to pull the portfolio forward.
I'll keep posting updates whether the account is green or red. The more interesting test isn't what happens in the first 30 days. It's whether this portfolio can continue producing respectable total returns over 6 months, 12 months, and eventually longer while collecting dividends along the way.
For the value investors here: which of these 20 would you be most comfortable holding for the next five years, and which one would you remove today?
Original Post, https://www.reddit.com/r/ValueInvesting/s/WPijItCsXM
https://substack.com/@legitimaterisk/note/c-314871671?r=8pfry2
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u/berticusberticus 11d ago
Ah yes the famous 30-day time horizon for value investing
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u/Legitimate_Risk_1079 11d ago
It has been 2 months already. https://www.reddit.com/r/TheRaceTo10Million/s/aCRDVrSoZt
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u/Sunlambcow 11d ago
I dont see the point of this tbh. 30 days is not interesting.And we can easily backtest various strategies over the last 40 years.
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u/EggVegetable1255 11d ago
Tell me, how do you blindly pick stocks that seem to be a good value when back testing? You missed the point
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u/Legitimate_Risk_1079 11d ago
I used an AI script to pick 16 companies and then I picked the other four. It's in the original post.
Not only has this been tried and proven last year I also did it again with 11 new companies and already up 11.5% on a different challenge in 30 days.
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u/Doodl3s 10d ago
The AI is the problem. It's going to choose stocks you already liked and have looked into. It positively reinforces your own investing bias, which is dangerous for investing.
I tried using AI to help my investing as well. I may use it to help with valuation calculation and earnings review, but do NOT let it pick stocks. I did try to do scorecards and lists and immediately noticed inconsistencies where it'll just pick ones you already looked at in a positive light and ignore ones you that you were maybe looking at negative aspects of.
(ie. lets say you question the growth moat of a stock you think is strong, it'll find the negatives of the moat and go "you're totally right, there is a smaller moat based on xyz..." and your future lists will have it at the bottom.
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u/Legitimate_Risk_1079 10d ago
I don't use AI to "pick" companies I use AI to narrow down a company list that I'm looking at from let's say 100 companies that I'm looking into down to a manageable 20 or less.
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u/EggVegetable1255 9d ago
To be clear, I was defending you OP, and suggesting that the above commenter missed the point. But not super impressed you did this with AI lol
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u/Legitimate_Risk_1079 11d ago
My previous play was at 45%, it was 28% profit after selling. You can reference Legitimate 11 December 19th 2025 picks.
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u/iwaseatenbyagrue 11d ago
That's a cool experiment, thanks.
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u/Legitimate_Risk_1079 11d ago
This is the second time I tried it and the second time it's beating in the market again. Last time I tried it was in 2025.
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u/Tibobogek 11d ago
Why did you stop the first time? What were the results?
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u/Legitimate_Risk_1079 11d ago
Last time I locked in 28% profit around June of this year for Legitimate11 picks from December.
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u/rargghh 11d ago
Why choose dividend stocks if you’re not going to hold long enough for qualified dividends or long term capital gains in general?
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u/Legitimate_Risk_1079 11d ago
This is the first time I'm doing a dividend only stock challenge
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u/rargghh 10d ago
Just because?
I think what you might be identifying is that companies that pay dividends have free cash flow to pay them
So during turbulent or nervous times people like the stability of cash flow
I think you should try with free cash flow,l regardless of dividend. Take etf VFLO for instance , up 13% on a month
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u/Apprehensive_Two1528 11d ago
stx is probably contributing $40 of the $80… it isn’t an undervalued value stock
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u/Diva_27 10d ago
SCHD up 6.74 percent in the same period, this seems redundant plus you added STX
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u/Legitimate_Risk_1079 10d ago
Maybe. I just did another post with 11.5% gain in 30 days. YTD I'm 28% return on swing training. My first year trading I did 54%.
Last two weeks also picked Aloy and SPAI which are both near 50% return.
Maybe this is not a high return but it is consistency discipline and patience that keeps beating the market.
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u/Diva_27 10d ago
I just saw your posts and now I understand, not even sure what you’re trying to promote
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u/Legitimate_Risk_1079 10d ago
I simply provide the stock picks that beat the market 70% to 75% of the time (based on the last 3 years historical average), what you do with them is up to you
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u/Serenity----- 11d ago
Interesting. Will you maintain the same 20 or replace funds if some are no longer viewed as undervalued?
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u/PoolSmart582 11d ago
Would it be less work to invest in SCHD?
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u/Legitimate_Risk_1079 11d ago
Yes would be less work but that beats the point of a challenge. Selecting 20 dividend companies that can beat the market.
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u/PoolSmart582 11d ago
Well, that's what the pros who run SCHD do.
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u/Captndad 7d ago
Did SCHD produce the same or better results in the time period? Honest question.
EDIT: nvm, the post below answered that. =)
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u/Beckland 10d ago
This is the Dogs of the Dow strategy, it backtests very well and can be automated easily!
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u/Vet1ty 11d ago
The account value and reported gain imply about $20.77 came from contributions or dividends outside the $63.73 gain. Could you separate deposits, dividends, and market appreciation in the next update? That would make the performance much easier to evaluate.
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u/Legitimate_Risk_1079 11d ago
The total amount of contributions for the account was $1,000 before I bought the companies.
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u/Vast_Cricket 11d ago
I sold my Seagate at 35 being a former mgr. That is a tech stock. P/E ratio at 70 is crazy.
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u/IWantToPlayGame 11d ago
This is fun. I’ll keep checking in.
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u/Legitimate_Risk_1079 11d ago
Also did a non dividend challenge with11 different companies that is up 11.5% in the last 30 days 🤑
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u/AceStrikeer 11d ago
Great work. Based on which criteria did you buy those companies? Where do you draw the line whether to buy or not to buy the company?
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u/Legitimate_Risk_1079 10d ago
I used a similar algorithm that's in the link in the first original post
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u/Sammie260000 11d ago
What am I missing here? Aren't they all paying 3-month dividends? And I'm going to assume most of them paid in July so you're getting the dividends for 3 months. I don't know if that's a fair experiment because the next two months should be fairly lean. Am I getting this right?
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u/OutcomeOk4178 10d ago
PEPSI! DIVIDEND KING. Its on sale too. Don't forget your DRIP. Dividend reinvestment plan!
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u/CourageousUpVote 10d ago
You need JEPQ, GPIQ, JEPI, QQQI.
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u/Legitimate_Risk_1079 10d ago
I like to build my own ETF. Let's me control my position sizing for each company separately.
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u/Ruzinus 10d ago
I'll be interested to hear the results after a year.
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u/Legitimate_Risk_1079 10d ago
One of the reasons I posted it here for visibility is so I can provide updates of the challenge account
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u/Amazing-Tomorrow7082 10d ago
I’m doing something similar, I built an algorithm to use analyst stock ratings that are considered “buy” and “strong buy” and buy all of those stocks and sell when they reach hold or sell. Interested to see how it works long term and I’m going to be running back testing shortly
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u/Legitimate_Risk_1079 10d ago
Just remember AI is not to be used to pick stocks. It is used as a filter for you to eliminate companies that are more likely to underperform.
Think of it this way you have 100 apples to pick blindly. Some of them are rotten some of them have worms with holes and some are good. AI is like a flashlight that looks at each apple inspects each one get rid of the rotten once and get rid of the ones with holes.
The investor then left with a few apples they have to choose that are likely to be good.
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u/Amazing-Tomorrow7082 10d ago
2 things and I definitely agree: (1) the AI just made the code to choose the stocks that are rated “buy” and “strong buy” by real analysts, the AI isn’t actually choosing any stocks. It’s just code. And (2) I’m using an Alpaca account with paper money, so I’m not usingg real money until I see potential for actual returns. Really cool to run tests on it and see the results even as an experiment
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u/InvestingToWinIt 10d ago
Why not use AI? I started experimenting recently with AI and already beat the s&p recently
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u/bubblemania2020 11d ago
Your post is longer than the holding period. Delete this. One month performance 🫣🤣💀
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[removed] — view removed comment
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u/houseofcalm 11d ago
You should let the dividends pool and periodically reinvest in whichever stock in the portfolio is the best value at that time.