This High-Yield Dividend Portfolio Will Beat the Market

Nine 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 $26.06 $1,042.40 4.83%
Philip Morris (NYSE: PM  ) $61.83 16 $67.61 $1,081.76 9.35%
National Grid (NYSE: NGG  ) $45.63 22 $49.69 $1,093.18 8.90%
Annaly Capital Management (NYSE: NLY  ) $17.55 57 $17.58 $1,002.06 0.17%
Frontier Communications (NYSE: FTR  ) $9.36 106 $8.04 $852.24 (14.10%)
Southern Co. (NYSE: SO  ) $37.87 26 $38.56 $1,002.56 1.82%
France Telecom $22.23 45 $22.44 $1,009.80 0.94%
Vodafone Group $28.88 34 $28.32 $962.88 (1.94%)
Eli Lilly $34.48 29 $36.26 $1,051.54 5.16%
Bristol-Myers Squibb $25.37 39 $27.82 $1,084.98 9.66%
Cash   99.03   99.03 0%
Dividends Receivable   48.21   48.21 0%
Total Portfolio       $10,330.64 3.31%
Investment In SPY         1.92%
Return vs SPY (percentage points)         +1.39

Source: Capital IQ, a division of Standards and Poor's. Data as of April 24.

Over the past two weeks, the S&P rose a slight 0.69%. Our portfolio maintained its outperformance of the market, moving from outperforming the market by 2 percentage points to only beating it by about 1.4. 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 nine weeks. 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 Philip Morris, which rose 2.7%. The company released its first-quarter earnings last week, in which it beat analyst expectations and also increased earnings guidance by $0.20 for 2011.

There are 4 upcoming dividends for the portfolio:

  1. Southern Co. will pay a dividend of $0.4725, a 3.9% increase, on June 6. The ex-dividend date is April 28.
  2. Eli Lilly will pay a dividend of $0.49 on June 10. The ex-dividend date is May 11.
  3. Annaly Capital will pay a dividend of $0.62 per share on April 27. The ex-dividend date was March 29.
  4. Bristol-Myers Squibb will pay a dividend of $0.33 per share on May 2. The ex-dividend date was March 30.

Altria reported first-quarter earnings in line with analyst expectations; click here to learn more.

Eli Lilly reported first-quarter earnings of $1.24, above the $1.17 analysts were expecting.

Around the Fool universe, there have some interesting dividend stock ideas:

  • Fool analyst Jim Royal explained why Vodafone is a special dividend opportunity.
  • I explored how master limited partnerships such as Cheniere Energy Partners LP (AMEX: CQP  ) pay you large amounts of income and allow you to shortchange Uncle Sam. While I have not included any MLPs in my high-yield portfolio as they are not meant to be held in an IRA (and the tax treatment would be different for each investor), serious income investors should have an understanding of them.
  • Jim Royal also wrote an article showing why he believes a recently IPO'ed MLP will pay out a yield of nearly 10%.

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 ten 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, Frontier, Southern Co, France Telecom, Vodafone, Eli Lilly, and Bristol-Myers Squibb.

Vodafone is a Motley Fool Inside Value recommendation. Philip Morris is a Motley Fool Global Gains pick. France Telecom, National Grid, and Southern Company are Motley Fool Income Investor picks. The Fool owns shares of Altria Group, Annaly Capital, and Philip Morris. 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.

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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 April 26, 2011, at 9:54 AM, pryan37bb wrote:

    How has the other guy's portfolio fared, the author who went with dividend growers instead of high yielders?

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