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This High-Yield Dividend Portfolio Will Beat the Market

Five weeks ago, I invested my cold hard cash into 10 high-yield dividend stocks I believe will beat the market. Let's see the results so far:


Average Cost


Recent Price

Total Value


Altria (NYSE: MO  ) $24.86 40 $25.82 $1,032.80 3.86%
Philip Morris (NYSE: PM  ) $61.83 16 $65.12 $1,041.92 5.32%
National Grid (NYSE: NGG  ) $45.63 22 $47.54 $1,045.88 4.19%
Annaly Capital Management (NYSE: NLY  ) $17.55 57 $18.12 $1,032.84 3.25%
Frontier Communications (NYSE: FTR  ) $9.36 106 $8.09 $857.54 (13.57%)
Southern Co. $37.87 26 $37.58 $977.08 (0.77%)
France Telecom $22.23 45 $22.09 $994.05 (0.63%)
Vodafone Group (NYSE: VOD  ) $28.88 34 $28.53 $970.02 (1.21%)
Eli Lilly $34.48 29 $34.48 $999.92 0.00%
Bristol-Myers Squibb $25.37 39 $27.29 $1,064.31 7.57%
Cash   53.71   $53.71 0%
Dividends Receivable   45.31   $45.31 0%
Total Portfolio       $10,115.38 1.15%
Investment In S&P 500 ETF (SPY)         (0.40%)
Return vs. S&P 500 ETF         +1.56%

Source: Capital IQ, a division of Standards and Poor's. Data as of March 25.

Over the past two weeks, the S&P 500 rose a slight 0.35%. Our portfolio maintained its outperformance of the market, extending its lead to 1.56 percentage points! While outperformance is always good, it should be taken with a grain of salt. We're investing for the long term, and it's only been five weeks. But I firmly believe the results will bear us out.

Movers & shakers
Of our stocks, the biggest mover in the portfolio the past two weeks was Bristol-Myers Squibb, which rose 3.33%. The stock jumped on Friday when, as Fool pharma analyst Brian Orelli expected, the FDA approved the firm's melanoma drug Yervoy . The drug is a breakthrough in that it is the first time a drug has significantly extended survival for melanoma patients.

There are 5 upcoming dividends for the portfolio.

  1. Annaly Capital Management will pay a dividend of $0.62 per share on April 27. The ex-dividend date is March 29.
  2. Bristol-Myers Squibb will pay a dividend of $0.33 per share on May 2. The ex-dividend date is March 30.
  3. Philip Morris International will pay a dividend of $0.64 per share on April 11. The ex-dividend date was March 22.
  4. Altria will pay a dividend of $0.38 per share on April 11. The ex-dividend date was March 11.
  5. Frontier Communications will pay a dividend of $0.1875 per share on March 31. The ex-dividend date was March 7.

Instead of Sprint (NYSE: S  ) buying T-Mobile as was expected, AT&T announced it was acquiring T-Mobile to form the largest U.S. wireless carrier. The combination of the No. 2 and No. 4 carriers would make AT&T&T larger than Verizon. The deal announcement had some analysts wondering if Verizon's Verizon Wireless would respond by buying Sprint. Verizon Wireless CEO Daniel Mead quelled the rumors last Monday, saying, "We're not interested in Sprint. We don't need them." This matters for the portfolio as Verizon Wireless is a joint venture between Verizon (55%) and Vodafone (45%). The deal could be a boon for Verizon should AT&T experience integration issues and see customers defect en masse.

Many have asked how I plan to reinvest my dividends. I plan on holding cash and only reinvesting once every three months unless there is a spectacular opportunity. I plan on doing this for two reasons: (1) It doesn't let fees eat all your returns, and (2) it gives you flexibility on how you reinvest.

My Foolish bottom line
I'm highly confident in this portfolio's ability to crush the market over the next decade, and that's why I put $10,000 of my personal cash into these stocks. My strategy is simple. I'm buying strong companies with outsized dividends, reinvesting those dividends, and holding them for the long run. Over the coming year, I'll track my performance, update you on when I'm going to reinvest all my dividends, and keep you abreast of news affecting these companies.

Consider the 10 tickers above along with the 13 names from a free report from Motley Fool's expert analysts called "13 High-Yielding Stocks to Buy Today," including one named by a senior retail analyst as "the dividend play of a lifetime." Tens of thousands have requested access to this report and today I invite you to download it at no cost to you. To get instant access to the names of these 13 high-yielders, simply click here -- it's free.

Dan Dzombak can be found on his Twitter account: @DanDzombak. He owns shares of Altria, Philip Morris, National Grid, Annaly Capital Management, Frontier Communications, Southern Co, France Telecom, Vodafone Group, Eli Lilly, and Bristol-Myers Squibb.

Vodafone Group is a Motley Fool Inside Value recommendation. Philip Morris International is a Motley Fool Global Gains pick. France Telecom, National Grid, and Southern are Motley Fool Income Investor picks. The Fool owns shares of Altria Group, Annaly Capital Management, and Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (8) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 28, 2011, at 1:13 PM, bennett1209 wrote:

    i am just wondering why your going to hold the cash and reinvest when you have an opportunty, many of those stocks you can set up with DRIP programs (dividend reinvesment programs) through your broker and there is no fee, they just purchase the shares at the current price of the stock. why wouldnt you just do that and let the compounding of those dividends over the next 10 years take its course?

  • Report this Comment On March 28, 2011, at 1:43 PM, woo131 wrote:

    You have chosen NOT a set of high yield dividend stocks, but rather a set of very modest yield stocks. Your highest yield stock NLY is far from the best of the Agency REITS. Furthermore, you picked stocks in dying businesses, like Frontier. Why do you brag or show us this portfolio?

  • Report this Comment On March 28, 2011, at 2:03 PM, JohnnyJay wrote:

    Your choice of companies are very weak & not chosing to reinvest the dividends will be your down fall in the coming years.

    I have done something similar to what you did BUT used $12,000.($6k/year for 2 yrs. in a Roth IRA, within a 3week time frame. $6k just before the cut off of April 15 then the other $6k just after the 15th) I chosed better stocks than you & did reinvest the dividends. I only have 6 stocks with 2 in each cycle quarter. This way I keep getting a dividend every month. Coming on May 16 it will be 3 years in progress & the original $12k is now worth over $25,400. Not bad for a novice investor.

  • Report this Comment On March 28, 2011, at 5:08 PM, pryan37bb wrote:

    @JohnnyJay, that's certainly commendable, well done, but the comparison isn't apt, I don't think. It's two different time periods we're talking about here. If you bought at the bottom vs. buying near the levels we were at before the crisis, of course the returns will be different. That said, I agree with your assessment of reinvesting dividends. Compounding is basically the only free lunch on Wall Street. And it seems like the author picked all the wrong telecoms, since both AT&T and Verizon have been doing pretty well as of late.

  • Report this Comment On March 28, 2011, at 8:42 PM, PeyDaFool wrote:



  • Report this Comment On March 29, 2011, at 12:04 AM, pryan37bb wrote:

    Or they could just drop the "A" altogether and call themselves 3T, sorta like 3M, but with phones.

    Anyway, I think the two least favorite carriers merging is not as big a deal as some people make it out to be. I'm sure there are quite a few T-Mobile subscribers who don't plan on staying with AT&T for too long. At any rate, I still think Verizon will be the eventual victor.

  • Report this Comment On March 29, 2011, at 4:23 PM, pryan37bb wrote:

    I hope you went with the DRIP for FTR this quarter, it closed at 7.88 today, which is a 9.5% yield.

  • Report this Comment On April 04, 2011, at 8:06 PM, bennett1209 wrote:

    yea i dont know if anyone can write on because i feel like the guy who wrote this doesnt know what hes talking about because whats the point of compounding if your going to pay for it when he decides he wants to re invest, seems like this kid doesnt know what hes talking about other than looking at a companies div yield

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