The World's Best Dividend Portfolio

Two months ago, I invested my money equally in a selection of 10 high-yield dividend stocks. Those names offer triple the yield of the average S&P 500 stock. You can read all the details here. Now let's check out the results so far.

Company

Cost Basis

Shares

Recent Price

Total Value

Return

Southern (NYSE: SO  ) $39.71 25.0818 $39.28 $985.21 (1.1%)
Exelon (NYSE: EXC  ) $41.82 23.818 $41.93 $998.69 0.3%
National Grid (NYSE: NGG  ) $48.90 20.3693 $48.30 $983.84 (1.2%)
Philip Morris International (NYSE: PM  ) $68.49 14.5429 $67.40 $980.19 (1.6%)
Annaly Capital (NYSE: NLY  ) $18.24 55 $17.45 $959.75 (4.3%)
Frontier Communications (NYSE: FTR  ) $7.88 126.4243 $6.66 $841.99 (15.5%)
Plum Creek Timber (NYSE: PCL  ) $38.42 26 $36.19 $940.94 (5.8%)
Brookfield Infrastructure Partners (NYSE: BIP  ) $26.12 38.2825 $25.44 $973.91 (2.6%)
Vodafone (Nasdaq: VOD  ) $26.52 37.5566 $27.21 $1,021.92 2.6%
Seaspan (NYSE: SSW  ) $14.61 69 $11.40 $786.60 (22.0%)
Cash   $45.06   $45.06  
Dividends Receivable   $11.85   $11.85  
Total Portfolio       $9,529.94 (4.6%)
Investment in SPY         (7.0%)
Relative Performance (percentage points)         +2.4

Source: Capital IQ, a division of Standard & Poor's.

The portfolio is now outperforming the S&P 500 in its first few weeks, but it's not the way I'd rather see it -- with the portfolio's -4.6% return beating the market's even worse performance. I'm not particularly concerned about short-term fluctuations, though. This dividend portfolio is designed to do better when the market is performing poorly, and we're already seeing a taste of this in the last couple weeks. In the meantime, we'll cash our dividend checks and wait for an opportunity to reinvest those proceeds. Both Seaspan and Frontier have taken the market downturn hard and could be attractive places to add reinvested dividends.

Dividends and earnings announcements
Although we bought into many of these stocks (Southern, Exelon, Frontier, Brookfield) a bit late to get the June dividends, often it's better to purchase dividend stocks when they're not approaching the ex-dividend date. Nevertheless, we have a couple bits of dividend and earnings news:

  • Southern Co. went ex-dividend on July 28 and pays out its dividend of $0.4725 per share on Sept. 5.
  • Frontier reported earnings that underwhelmed the market, sending shares lower. Its lower-than-expected earnings were also below year-ago levels.
  • Seaspan reported its latest quarterly figures, showing distributable cash that climbed 16% in the latest quarter. Since Seaspan is a play on rising dividends, we'll want to keep an eye on that figure in coming quarters.
  • Annaly reported strong core earnings and paid out a $0.65 per-share dividend for the second quarter. You can read more the company's quarter here, but conditions still remain favorable.
  • Brookfield Infrastructure saw funds from operations soar 96% in the latest quarter but just 33% on a per-unit basis. Such strong growth will help keep its distribution growing.

We're coming to the end of earnings season, so we'll be watching out for dividends and other news items in the next weeks. Already we've seen one very good piece of dividend news from Vodafone.

Vodafone's big news
The U.K. telecom giant said it will receive a $4.5 billion dividend from its 45% stake in Verizon Wireless. The latter company decided to make a dividend payment to its key shareholders, and the money will arrive in Vodafone's coffers on Jan. 31. The telco will use $1 billion to pay down debt, with the remainder going back to shareholders in the form of a special dividend early next year. Shares popped on the news, and I expect more of this dividend largesse from the company's investment in Verizon Wireless.

Foolish bottom line
I've been a fan of big dividends for a while, and I think this portfolio will outperform the market over time through the power of dividends. As I promised in the original article, I'll be holding these stocks for at least a year and will continue to track the portfolio over the course of the year, including news on these companies.

If you like dividends, 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." Hundreds 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.

Jim Royal, Ph.D., owns shares of every company mentioned here. The Motley Fool owns shares of Seaspan, Philip Morris, Annaly, and Brookfield Infrastructure. The Fool owns shares of and has written puts on Plum Creek. Motley Fool newsletter services have recommended buying shares of Southern, Philip Morris, National Grid, Exelon, Vodafone, and Brookfield Infrastructure; writing a covered straddle position on Seaspan; and creating a covered strangle position on Exelon. 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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  • Report this Comment On August 05, 2011, at 12:42 PM, troym72 wrote:

    I'm a customer of Frontier Communications. Let me tell you that I'm 100% certain that this company is going NOWHERE! They overcharge for services that are much lower quality than their competitors. As competitors enter the markets where they are the only choice (my case), their customers bale out by the thousands to the nearest alternative. Look at their revenue history. It goes down steadily every year. The only reason there was a big jump is due to an acquisition. After that acquisition, the revenue continued its steady downward trend. Maybe at some point Frontier could be a takeover candidate, but this company is a poor example of a telecommunications provider. I and many many many of my friends and neighbors can't wait for AT&T or Comcast to offer services in our rural town so we can drop Frontier like a bad habit. In the words of Jim Cramer "SELL SEL SELL!"

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