The Dividend Growth Index – A Dividend Stock Picking Contest

The Dividend Growth IndexEach year Mike at The Dividend Guy hosts a dividend stock-picking contest among the financial bloggers.

Rather than a stock-picking contest, Mike has gathered an exceptional group of eight dividend investors and financial bloggers to create a dividend project. By coincidence that includes me! Each of us has picked our favourite three dividend stocks, creating a portfolio (or index) of 24 dividend stocks. The Project is called the Dividend Growth Index (DGI) and includes both Canadian and U.S. stocks.

Mike will follow the entire index on his site, but each of us will provide quarterly updates on our stock picks, analyzing performance, dividend payouts, and other important news related to our companies. Each of us will update our results quarterly starting on December 31st.

On Monday, October 3rd, Dividend Growth Investor was officially added to the Dividend Growth Index, and his three picks are Chevron (CVX-N), McDonald’s (MCD-N), and Enterprise Product Partners (EPD-N). This now brings the Dividend Growth Index up to 24 companies, with 8 investors choosing three stocks each.

The Rules

The rules are pretty simple! There are seven eight bloggers picking three stocks each, for a total of 21 24 stocks to create the Dividend Growth Index (DGI). To be selected for the DGI a stock must pay a dividend. The Index then uses an equal weighting for each stock, and the starting price was initiated on the close of Friday, September 23rd, 2011.

All dividends will be reinvested into a cash account, instead of DRIPs (Dividend Reinvestment Plans). Once a year, each blogger will make the decision to reinvest those dividends into one of their 3 stocks.  A stock may be dropped from the index, and a new stock added. However, the emphasis is on a long-term buy and hold strategy, to foster the accumulation of dividends.

The Benchmarking

Although it hasn’t been confirmed, we will be benchmarking the Dividend Growth Index to a combination of the TSX Composite Index and the S&P 500 Composite Index.  That would be about 60% to the S&P 500, and 40% to the TSX. More information to follow on this!

PS – This is a secret dividend project, so no indexing investors allowed!  We are going to beat the index anyway, since we all know a carefully chosen portfolio of dividend stocks (even risky ones) will beat the index every time.  (Don’t tell Andrew Hallam or the Canadian Couch Potato I said that – OK).

The Dividend Growth Investors

Eight financial bloggers, who also invest in dividend stocks, will contribute to the DGI. You’ll recognize these names, and if you don’t you’re missing out on some great reading. For example, Dividend Monk writes some of the best stock analyses around. My Own Advisor is one of my favorite bloggers – combining both index and dividend investing strategies. Dividend Mantra is on his journey to accumulate wealth with a Buffett inspired strategy, and he wouldn’t buy a bond if I paid him. The Wealthy Canadian is the new blogger on the scene, but he’s a millionaire who’s been investing in dividend stocks for years. And the Passive Income Earner is also on his way to dividend wealth.

The Dividend Growth Index

There are 24 stocks that make up the Dividend Growth Index, selected from some of the large sectors on the U.S. and Canadian exchanges. We have some very astute and established dividend investors and financial bloggers contributing to the index, and for the most part, everyone has made some great selections. Certainly, there are some riskier stocks here that I would not add to my portfolio, and I’ll discuss that in another post. But each blogger will explain their picks in more detail next week.  There is no competition here; everyone is contributing to the performance of an overall index (but I’d still like to win). As I used to tell my grandmother when I was a kid playing cards with her, “…winning isn’t everything, but losing isn’t anything!”

There is about a 60% allocation to U.S. stocks which trade on the NYSE and Nasdaq and a 40% allocation to stocks which trade on the Canadian TSX (see table below). Since the Dividend Growth Index companies are personal stock picks, the index is not weighted by sector (see table below). For example, the DGI is over-weighted towards Consumer Products, and Oil and Gas companies, which comprise 53% of the index. Anytime you move away from an equal-weighting in a portfolio there are risks. Here are the seven eight bloggers and our three picks:

Table 1. The Dividend Growth Index

Company Ticker Dividend Yield Sector Investor
Abbott Labs ABT-N 3.80% Consumer Products My Own Advisor
Aflac AFL-N 3.80% Financial Services Passive Income
Bank of Nova Scotia BNS-T 4.20% Financial Services My Own Advisor
Canadian Nat. Railway CNR-T 2.00% Transportation and Environmental Passive Income
Canadian Nat. Resources CNQ-T 1.20% Oil and Gas Passive Income
Chevron Corp. CVX-N 3.40% Oil and Gas Dividend Growth Investor
CML Healthcare CLC-T 8.40% Other Services My Own Advisor
Coca-Cola KO-N 2.80% Consumer Products Dividend Guy
Conoco Phillips COP-N 4.20% Oil and Gas Dividend Mantra
Daylight Energy DAY-T 10.60% Oil and Gas Wealthy Canadian
Energy Transfer Equity ETE-N 6.30% Oil and Gas Dividend Monk
Enterprise Product Partners EPD-N 3.40% Oil and Gas Dividend Growth Investor
Husky Energy HSE-T 5.50% Oil and Gas Dividend Ninja
Intel INTC-Q 3.80% Industrial Products Dividend Guy
McDonald’s Corp. MCD-N 3.20% Merchandising & Lodging Dividend Growth Investor
National Bank NA-T 4.20% Financial Services Dividend Guy
Novartis AG NVS-N 4.00% Consumer Products Dividend Monk
PepsiCo PEP-N 3.40% Consumer Products Dividend Ninja
Phillip Morris PM-N 4.80% Consumer Products Dividend Mantra
Procter & Gamble PG-N 3.40% Consumer Products Dividend Mantra
Progressive Waste BIN-T 2.60% Transportation and Environmental Wealthy Canadian
Royal Bank RY-T 4.80% Financial Services Wealthy Canadian
Staples SPLS-Q 3.00% Merchandising & Lodging Dividend Ninja
Wal-Mart WMT-N 2.90% Merchandising & Lodging Dividend Monk
Average Dividend Yield 4.15%

Table 2. DGI Allocation by Stock Exchange

Exchange No. Companies Percentage
TSX – Toronto Stock Exchange 9 38%
NYSE – New York Stock Exchange 13 54%
Q – Nasdaq 2 8%
Totals 24 100%

Table 3. DGI Allocation by Sector

Sector No. Companies Percentage
Oil and Gas 7 29%
Consumer Products 6 25%
Financial Services 4 17%
Merchandising & Lodging 3 13%
Transportation and Environmental 2 8%
Industrial Products 1 4%
Other Services 1 4%
Total 24 100%

 

Rising stock marketThe Dividend Growth Index is a project created by Mike at the Dividend Guy Blog. With the Dividend Growth Index (DGI), we’ve received a lot of comments and feedback about the project. Readers are getting involved, selecting their picks, and finding value in following the project. My Own Advisor and The Wealthy Canadian have also created some controversy (dare I say) with their picks of Daylight Energy (DAY-T) and CML Healthcare (CML-T). These are both high-yield stocks that could be at risk of dividend cuts!

When you think about it, it is quite amazing to see seven (now eight) dividend investors contributing their expertise, following their selected companies, and collaborating together.  The long-term value from this project, in my opinion, is to see how the DGI performs in comparison to the benchmarks, and how the dividend income will compound over time. Andrew Hallam left an interesting comment on my previous post about the DGI. He states you really need to test the Dividend Growth Index for at least 15 years to see how these companies are doing. But it’s the unexpected tests and market changes that will provide to be most interesting, and how DGI will perform in those situations.

And Then There Were Eight

Last week Dividend Growth Investor joined into the Dividend Growth Index, and his three picks are Chevron (CVX-N), McDonald’s (MCD-N), and Enterprise Product Partners (EPD-N). This now brings the Dividend Growth Index up to 24 companies, with 8 investors choosing three stocks each.  You can view the revised holdings at my previous post, Introducing the Dividend Growth Index.

Sector Allocation and Weighting

Obviously adding three more stocks to this index has shifted the dividend yield and sector weightings. For example, the overall dividend yield has decreased from 4.27% to 4.15%. The sector weightings have also shifted. Consumer Stapes now comprise 25% of the index compared to the previous 29%. The Oil & Gas Sector has jumped from 24% to 29%, etc. This means that 55% of the entire portfolio is still spread across only 2 sectors, and 71% of the portfolio is spread in only three sectors.

As I mentioned in my previous post on the DGI, anytime you shift a portfolio away from an equal weighting you increase volatility and risk. If oil prices should continue to decline, or consumers pull back their spending, then that will drag the DGI below index performance.

On the other hand, if oil prices rise again, or consumer and staple stocks do well in the months to follow, then the DGI Index will also do very well. Weighting a portfolio like the DGI can really become a double-edged sword that can leave your returns on either side of the scale. But what it goes to show you, is eight dividend investors have enough confidence in these two sectors alone to hedge their bets.

My Three Stock Picks

The three companies I selected for the Dividend Growth Index are companies I have been following for months or have purchased. I think PepsiCo Inc. (PEP-N) is a no-brainer in terms of its solidity and value. But many people are surprised with my selection of Staples Inc. (SPLS-Q), a potentially solid value play. Here are my three stock picks, and why I have selected these companies for the Dividend Growth Index (DGI):

Husky Energy (HSE-T)

Husky Energy (HSE-T) is one of Canada’s leading oil and gas producers. It also has a very generous dividend yield of 5.30%, which is one reason dividend investor’s flock to this company. I covered Husky Energy back in December 2010 – My Stock Picks for 2011. I outlined the reasons why I felt Husky was an excellent long-term investment opportunity, even with its declining share price. The same fundamentals are still in place.

To summarize, Husky Energy is currently trading at $21.49 CAN per share, that’s off some 59% from its high of $52.32 in May 2008. Husky also has a P/E Ratio of 12.79, a dividend payout ratio of 72%, and a low debt-to-equity ratio of 27.90. The balance sheet fundamentals are remaining solid, under the new CEO Asim Ghosh. What I like about Husky the most is that it is a diversified oil and gas producer, unlike a dedicated Natural Gas producer such as Encana. It has interests in oil drilling, oil refineries, natural gas, the tar-sands, and even has interests in Asia.

PepsiCo Inc. (PEP-N)

In a recent post I did for Dividend Stocks Online, U.S. Stocks on Sale, PepsiCo Inc. was one of my top picks. Brand recognition is one of the most important factors among consumer staples, and Pepsi has it! PepsiCo Inc. is generally considered a bell-weather consumer staple that will do well in both good and bad economic times.

However, with the recent run-up in commodity prices this year, PepsiCo found it difficult to raise its prices to offset these costs, and this eventually affected its bottom line. A less than stellar earnings report on July 21st, 2001, sent PepsiCo shares down -6.7% in a few days. PepsiCo has a market capitalization of 95 billion dollars, a P/E ratio of 15.34, a dividend payout ratio of 52.4%, and a debt-equity ratio of 0.99. The current dividend yield is 3.30%. PEP is currently trading at $60.00 USD per share.

Staples Inc. (SPLS-Q)

Some readers and fellow bloggers have been surprised by my selection and the recent purchase of Staples Inc. I reviewed Staples back in May – Staples Inc. Value in Office Supplies?. I then reviewed this office retail giant again in August – Why I Bought Staples Inc.

I found that Staples was the dominant player in the office sector, dwarfed its competitors, and had low debt. It appeared to be a well-managed company stuck in the retail sales doldrums. In addition, its main competitor Office Depot (ODP-N) had already started closing its Canadian retail locations. In a sense, all these factors give Staples an economic moat in the office supplies sector.

Many retail stocks back in May were out of favor, due to a lack of consumer confidence and spending. So I kept Staples on my watch list, even with its low dividend yield, with the intention to purchase before September back to schools sales. According to the Dynamic Dividend, Staples is also a company which regularly increases its dividend:

“Staples began returning cash to shareholders in 2004 and has raised its annual dividend total in six of the ensuing seven years, with 2009 (the year it transitioned from annual to quarterly payouts) being the only exception. With its 11% dividend hike earlier this year, the company has now tripled its payout during its short stint as a dividend-payer.”

Staples Inc. is my long-term value play, as it is trading at a low price level of $12.79 per share, has a solid balance sheet, and is not a popular stock. Staples has a market capitalization of 9.07 billion dollars, a P/E ratio of 9.81, a dividend payout ratio of 30.7%, and a debt-equity ratio of 32.18. The current dividend yield is 3.00%.

Readers, what are your thoughts about the Dividend Growth Index? What three stocks would you pick? Do you like my picks.

Q1 2011 Update

Benchmarking: How Are We Doing?

The Dividend Growth Index is an approximate split between U.S. Stocks on the NYSE and NASDAQ (60%) and the TSE (40%). Since the Canadian Dollar and U.S. Dollar are trading virtually at par this week, let’s just assume a currency neutral or zero dollar conversion rate – for simplicity sake.  (In reality there would probably be a 2% to 3% variation (or more), factoring in various brokerage exchange spreads.)

Stock markets have done well over the last 6 months, and dividend stocks have done very well indeed!  The Dividend Growth Index of 24 stocks returned 20.74% for the previous 6 months (returns are currency neutral and include dividends reinvested, as of March 30th, 2012).  That’s definitely and impressive return, but how did the DGI do in comparison to the benchmarks?

For approximate comparative purposes let’s look at four main ETFs: XIU and XDV in Canada, and VIG and SPY in the U.S.  For the same 6 month period:

  •  XIU returned  7.37%
  • XDV returned  9.66%
  • SPY returned 25.66%
  • VIG returned 21.50%
  • 60% SPY and 40% XIU returned 18.34%
  • 60% VIG and 40% XDV returned 16.76%

Holding SPY on its own would have been the clear winner here. However the Dividend Growth Index did very well compared to a blended ETF 60/40 approach.  As mentioned for simplicity, I’m using no currency conversion in the comparisons.

My Three Stock Picks

I’m pleased to be an owner for two of the stocks I picked for the Dividend Growth Index, Husky Energy (HSE-T) and Staples Inc. (SPLS-Q). These are two companies I have been watching for a long time, and which have solid fundamentals and balance sheets.  My third pick for the index was PepsiCo Inc. (PEP-N). For the 6 months ending March 31st, 2012, Husky returned 14.58%, Staples returned 24.75%, and PepsiCo returned 10.12% (all returns are in $CAN and include dividends reinvested, as of March 30th, 2012).  The combined return for my three companies in the DGI was 16.48% $CAN.  Markets have been doing very well during this 6 month period, albeit a blip in financial history, nonetheless these are impressive returns!

Husky Energy (HSE-T)

husky-night_station

courtesy of www.myhusky.ca

Husky is a $25 billion dollar company, with over $23 billion in annual revenue, and a profit margin of 9.52%. It has its debt well under control with a reasonable debt-to-equity ratio of 22.19. Husky has a generous dividend yield of 4.60% though there has not been much dividend growth. The annual dividend is $1.20 per share, with earnings per share of $2.40, which gives Husky a 50% dividend-payout-ratio. For more detailed information, view my recent post on the company and why I purchased shares, in Recent Buy: Husky Energy (HSE).

PepsiCo Inc. (PEP-N)

Pepsi has been the lowest return of my three picks, but a 10.12% return for one company in 6 months, is still a decent return. This company needs no introduction, it’s as well known as its main competitor Coca-Cola. The main difference between Coke and Pepsi of course, is that PepsiCo is a diversified consumer products company. Pepsi not only offers soft-drinks, but also a range of snack food under the Frito-Lay label and juice drinks under the Tropicana label. This diversity has led to rumours of a possible split back in November 2011. However the rumours were laid to rest, when CEO Indra Nooyi told CNBC this February there are no plans to split PepsiCo into separate soda and snacks businesses – although there was much internal discussion to that end. Also of interest is PepsiCo’s recent alliance with Tingyi Holding Co. in China. The alliance was approved by the shareholders of Tingyi in February and received regulatory approval on March 29th, 2012. This is an interesting move, which could definitely lead to a much needed increase in both earnings and growth for Pepsi throughout 2012.

Staples Inc. (SPLS-Q)PepsiCo is a $103 billion dollar company, with over $66.5 billion in annual revenue, and a profit margin of 9.69%. Pepsi’s dividend yield is 3.10%. The annual dividend is $2.06 per share, with earnings per share of $4.02, which gives PepsiCo a dividend payout ratio of 51.2%. However PepsiCo’s debt load has been increasing. In the previous Q4 update, PepsiCo had a debt-to-equity ratio of 118, and only three months later that ratio has increased to 128, an 8.4% quarterly increase. For this reason alone, I will not buy PepsiCo for my RRSP. Compare this to its main competitor Coca-Cola (KO-N), which has a lower debt-to-equity ratio of 89.5 (which isn’t low either). However Coca-Cola has twice the profit margin at 18.4%, compared to Pepsi’s profit margin of 9.69%.  While a company like PepsiCo can maintain its debt obligations, its increasing debt load is nonetheless a red flag.

Staples Inc.Many readers were surprised with my choice of Staples Inc. Here is an $11.5 billion dollar company, with low debt dwarfing its competition in the office retail sector. It also has its debt well under control with a debt-to-equity ratio of 29.03.  However profit margins are razor-thin in this sector. Staples profit-margin of 3.94% is definitely profitable but slim. After missing earnings expectations back in May 2011 with a plummeting share price, I felt Staples had excellent fundamentals, even with thin margins, and was a turnaround stock.  So far that assessment appears to be on track.

Of note this quarter, is that Staples has raised its dividend by 10% from 0.10 cents per share to 0.11 cents per share. Granted a penny isn’t worth much these days, but it is nonetheless still an increase. The dividend yield for Staples is currently 2.70%. The annual dividend is 0.44 cents, with earnings per share (EPS) of $1.38, giving Staples a dividend-payout-ratio of 31.88%. Last August, Staples (SPLS-Q) was trading as low as $11.94 USD per share, and is now trading at $16.12 USD per share.  I discussed Staples in depth, in Staples Inc. Value in Office Supplies? , and last August in Why I Bought Staples Inc.

Disclaimer:  I am long on Staples (SPLS-Q), and intend to buy both Pepsi (PEP-N) and Husky (HSE-T). The Dividend Ninja is not a professional financial advisor or an investment dealer. This article is not intended as a buy recommendation and is not intended to provide financial advice. The Dividend Ninja is not responsible for the investment decisions you make.

29 Responses to “The Dividend Growth Index – A Dividend Stock Picking Contest”

  1. MoneyCone

    Sep 28. 2011

    Looking forward to more on this project!

  2. Mauricio

    Sep 28. 2011

    This is just great! Thank you guys!

    My 3 picks would have been:

    EIT.UN
    REI.UN
    ECI

    I opened a play account and choose some of yours picks to see how they are going…

    Thanks again!

  3. My Own Advisor

    Sep 28. 2011

    Killer post. Wow.

    I can’t wait to get this index rollin’! Will tweet!

    Thanks again to you and other bloggers for allowing me to play again. A big thanks to The Dividend Guy for this initiative. Fun stuff!

  4. Dividend Mantra

    Sep 28. 2011

    Ninja,

    Great job here. You did an excellent job explaining the ins and outs of the project.

    And you’re right…I wouldn’t buy a bond if you paid me. 🙂

    Great stuff. Thanks for letting me play!

  5. The Dividend Ninja

    Sep 28. 2011

    @MoneyCone Thanks!

    @Mauricio thanks for posting! I see you are going for the higher yield, but lower growth stocks (income trust style) 🙂

    @MOA Thanks man! Uncle Mike invited you LOL 🙂

    @Mantra Thanks Mantra! It will be fun to forget about indexing for a while and go all out on dividends! As I said to MOA Uncle Mike let you play, but I would have allowed you in too 😉

    Cheers! let the games begin…

  6. The Wealthy Canadian

    Sep 28. 2011

    Hi Ninja!

    A superb job outlining the DGI and our plan with this initiative. It could not have been better.

    It’s going to be interesting to see how this basket of stocks collectively performs; you’re right -index investors will cringe when comparisons are made 😉

  7. Great introduction! I am looking forward to look into the details of the index too. The sector and exchange ratio is pretty interesting.

  8. Vangrl

    Sep 29. 2011

    my 3 picks would have been:

    Alta
    Brookfield renewable Power
    Enbridge

    for what it’s worth:)

  9. spbrunner

    Sep 29. 2011

    Since I am not working on living on dividends, I would go for TD Bank (TSX-TD); Fortis (TXS-FTS) and Enbridge (TSX-ENB).

    Great idea.

    Susan

  10. The Dividend Ninja

    Sep 30. 2011

    @spbrunner Hi Susan thanks for dropping by! Your three picks are excellent, and anyone here would agree with those solid Canadian companies.

    @vangrl For what it’s worth those are good picks too! – assume you mean AltaGas and not TransAlta? either of those are fine 🙂

    @PIE Thanx for posting!

    @TWC Thanx for the comments, I wanted to write the article so people who had no idea what DGI is – would be able to understand it.

    Well lets see how it goes, I’m never one to boast we could beat the index – but I think we should stand a pretty good chance at it with these picks.

    Cheers! Now to go explore Chicago.. Art Museum on the agenda for Monday 🙂

  11. Rock the Casbah

    Sep 30. 2011

    This sounds like a great project and I look forward to following the results. As I read about it and the participants, I couldn’t help thinking about some of the alliances of comic book superheroes (Marvel Avengers, D.C. Justice League, etc.) I followed as a kid. And, well OK, still occasionally enjoy as adult. Almost like a collection here of dividend investor superheroes. Hmmm, maybe this is a comic book concept in the making. In the meantime, don’t let the analogy go to your heads. 🙂

    But seriously, it sounds like collection of solid choices from a group of dedicated dividend investors. I try to follow three of the blogs (D. Mantra, Ninja and Monk) as often as possible and I’ll definitely have to check out the others. I also feel good that at least one pick out of each set of three is either a stock in my portfolio (ABT, PG, PEP), or a stock I came close to picking and still might at some point in the future (INTC, CNI, RY and NVS).

    I know some posters have been offering their three picks as food for thought. So, here’s my very modest two cents worth.

    Johnson and Johnson (JNJ)
    Exelon (EXC)
    TD Bank (TD – NYSE)

  12. Dividend Ninja

    Oct 01. 2011

    @Rock the Casbah Sorry man this analogy has already gone to my head LOL! 🙂 But really good picks on your part as well.

    Good for you buying TD Bank, which is Canada’s top bank IMO, and for recognizing it’s available on the NYSE. I would just like to reiterate that point, that many great Canadian companies also trade on the NYSE for U.S. investors. Great comment man, thanx for posting!

  13. DIY Investor

    Oct 02. 2011

    Great project.
    I like

    SDRL
    INTC
    VZ

  14. Andrew Hallam

    Oct 02. 2011

    This looks like a great, comprehensive project Ninja! I like the solid feel to it: rather than a one year stock contest (which is fun, but meaningless) this is something people can learn a lot from. So you and the other bloggers are adding great value for your readers, and I hope you keep track of this for years to come. I don’t have a stock to add…but you guys don’t need me to. Great list so far!!

    Sorry for my absence on your blog lately. Life has been a whirlwind!

  15. The Dividend Ninja

    Oct 03. 2011

    Andrew Hallam delighted to have you drop by! And apologies on my part for not dropping by your blog more often – also been busy 🙂 Agreed, much more for readers to learn by following a dividend index of stocks, than a stock picking contest.

    I’ll make you a deal Andrew. I’ll manage the DGI ETF for you (since you don’t know anything about investing) and only charge you a 1% wrap fee, plus annual admin fees. You in? 😉

    DIY Investor Robert thanks for dropping by! Yes it is a great project isn’t it? I especially like your selction of Intel, and Verizon is a good pick. Seadrill is an intersting choice, care to share your thoughts on that one?

    Cheers!

  16. youngandthrifty

    Oct 03. 2011

    Cool project! I’m excited to follow along and see how each of your picks do.

    I’ll try and make sure I buy more Staples and Pepsico products this year 😉

    So are you all actually investing in these picks or is this just hypothetically? 🙂

    • Andrew Hallam

      Oct 03. 2011

      Fifteen years would give you a nice idea how they are doing. Anything shorter than that wouldn’t make much sense to me. Yeah, it seems like a long time. But even a decade is a blip in the world of the stock market.

      Keep it going Ninja!

  17. The Dividend Ninja

    Oct 03. 2011

    Y&T Pepsi no problem, but remember Staples is a value play – it could be a long term ride for that one.

    Andrew Hallam Great point Andrew!

  18. Jack

    Oct 04. 2011

    I think this is a very interesting idea – Making a ‘pseudo fund’ from the top picks of some of the best investment bloggers online.

    I’m just hesitant of investing in US stocks due to currency conversion.

    I’ll definitely keep up with the Canadian portion of this group though!

    Good luck with the project, and here’s hoping it makes a mint :D.

  19. Potato

    Oct 13. 2011

    If you want to add my picks (or just read them in the comments for amusement) I’d lean towards a few of the higher yeilders in other sectors for a bit of balance: CUS or CHE.UN for non-energy chemicals, IPL.UN or VSN for pipelines. Not quite as sure for the third pick, maybe IDG for more retail (but *far* too illiquid for a realistic index), PZA.UN (or another restaurant trust), or CHL.A (though with a large amount of energy services, that’s a bit too close to the already large energy weighting).

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