This High-Yield Dividend Portfolio Will Beat The Market

Twenty-two 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:

Company

Average Cost

Shares

Recent Price

Total Value

Return

Altria (NYSE: MO  )

$24.86

40

$26.60

$1,064.00

7.00%

Philip Morris (NYSE: PM  )

$61.83

16

$66.83

$1,069.28

8.09%

National Grid (NYSE: NGG  )

$45.63

22

$48.33

$1,063.26

5.92%

Annaly Capital Management (NYSE: NLY  )

$17.55

57

$17.79

$1,014.03

1.37%

Frontier Communications (NYSE: FTR  )

$9.14

125

$7.58

$947.50

(17.09%)

Southern Co. (NYSE: SO  )

$37.87

26

$39.99

$1,039.74

5.60%

France Telecom (NYSE: FTE  )

$22.23

45

$19.35

$870.75

(12.96%)

Vodafone Group (NYSE: VOD  )

$28.88

34

$25.45

$865.30

(11.88%)

Eli Lilly (NYSE: LLY  )

$34.48

29

$38.05

$1,103.45

10.35%

Bristol-Myers Squibb (NYSE: BMY  )

$25.37

39

$28.66

$1,117.74

12.97%

Cash

 

110.49

 

110.49

0%

Dividends Receivable

 

125.05

 

125.05

0%

Total Portfolio

     

$10,390.59

3.91%

Investment In SPY

       

0.00%

Return vs SPY

       

3.91%

Source: Capital IQ, a division of Standard & Poor's. Data as of July 18.

Over the past week, the S&P fell 1%. As the market fell, our portfolio outperformance dropped from 4.46% to 3.91%. 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 twenty-two weeks. I firmly believe the results will bear us out.

Movers and shakers
Of our stocks, the biggest mover in the portfolio the past week was Frontier Communications, which fell 7.55%. All our telecom stocks were down, with France Telecom and Vodafone falling roughly 5% and National Grid falling 2.4%.

Money!
There are 5 upcoming dividends for the portfolio:

  1. Annaly Capital Management will pay a dividend of $0.65 on July 28. The ex-dividend date was June 28.
  2. Bristol-Meyers Squibb will pay a dividend of $0.33 on Aug. 1. The ex-dividend date was June 29.
  3. Vodafone will pay a dividend of GBP 0.605 on Aug. 5. The ex-dividend date was June 1.
  4. National Grid will pay a dividend of $1.9005 on Aug. 17. The ex-dividend date was June 3.
  5. Eli Lilly will pay a dividend of $0.49 on Sept. 9. The ex-dividend date is Aug. 11.

The extraordinary power of dividends
Fellow Fool Morgan Housel has been writing a series of articles trying to hammer home the importance and power of dividends. Two of his articles highlight stocks in the portfolio, and the results are truly amazing.

One article shows how Southern's shares have increased only 200% since the late 1960s. But if you had reinvested the dividends, the total return jumps to nearly 10,000%! More impressively, a second article shows how Altria's shares have increased 11,000% since the late 1960s. Including reinvested dividends, the total return jumps to 278,000%!

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

The Motley Fool owns shares of Altria Group, Chimera Investment, Philip Morris International, and Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Southern, France Telecom, Philip Morris International, Vodafone Group, and National Grid. 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 (2) | Recommend This Article (17)

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 July 19, 2011, at 4:43 PM, kd4ttc wrote:

    Overall, fine. How about the US debt limit issue and NLY? If the debt limit doesn't go up what happens to interest rates short and long term? The spread is basically why NLY is profitable.

  • Report this Comment On July 19, 2011, at 6:28 PM, thedubliner wrote:

    i like your thinking, i have been doing some research to do something similar for a portion of the portfolio i am building. 3 of your 10 stocks belong to my list too. look fw to see how you will be doing

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