This High-Yield Dividend Portfolio Will Beat the Market

Six months 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

$25.86

$1,034.40

4.02%

Philip Morris (NYSE: PM  )

$61.83

16

$68.72

$1,099.52

11.14%

National Grid (NYSE: NGG  )

$45.63

22

$49.42

$1,087.24

8.31%

Annaly Capital Management (NYSE: NLY  )

$17.55

57

$18.05

$1,028.85

2.85%

Frontier Communications (NYSE: FTR  )

$8.95

137

$7.00

$959.00

(21.79%)

Southern Co.

$37.87

26

$40.02

$1,040.52

5.68%

France Telecom (NYSE: FTE  )

$22.23

45

$18.22

$819.90

(18.04%)

Vodafone Group (NYSE: VOD  )

$28.69

38

$26.73

$1,015.74

(6.83%)

Eli Lilly

$34.48

29

$35.42

$1,027.18

2.73%

Bristol-Myers Squibb

$25.37

39

$28.05

$1,093.95

10.56%

Cash

 

49.31

 

49.31

0%

Dividends Receivable

 

26.5

 

26.5

0%

Total Portfolio

     

$10,282.11

2.82%

Investment In SPY

       

(13.69%)

Return vs SPY (percentage points)

       

+16.51

Source: Capital IQ, a division of Standard and Poor's, as of Aug. 22, 2011.

Over the past week, the S&P 500 fell 6.54%. As the market fell, our portfolio outperformance rose, moving from beating the market by 11.89% to beating the market by 16.51%. 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 six months. 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 France Telecom, which fell 5%. Our other big telecom giant Vodafone also fell 3.43%.

Money!
There are four upcoming dividends for the portfolio:

  1. Southern Co. will pay a dividend of $0.4725 on Sept. 6. The ex-dividend date was July 28.
  2. Eli Lilly will pay a dividend of $0.49 on Sept. 9. The ex-dividend date was Aug. 11.
  3. Frontier Communications will pay a dividend of $0.1875 on Sept. 30. The ex-dividend date is Sept. 7.
  4. France Telecom will pay a dividend of $0.85 on Sept. 8. The ex-dividend date is Sept. 5.

Commentary
On Monday, dividend academic Jeremy Siegel co-wrote an op-ed in The Wall Street Journal on why he believes the bond market is in a bubble, and why stocks, especially dividend-paying ones, are undervalued. My favorite part: "The dividend yield on the S&P 500 index exceeds 2%, and these dividends represent less than 30% of profits these firms earn. This gives management a huge cushion to maintain dividends if indeed the U.S. economy experiences a double dip recession."

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, 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.


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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 August 24, 2011, at 2:34 PM, srbossjock wrote:

    I'd like to see the difference between gains/losses after you reinvest your dividends, when you do, vs. an automatic dividend reinvestment program. That's what I do with my dividends-have them automatically reinvested at no cost to me as soon as I receive them regardless of whether the stock is up or down. I'm just wondering if I would be ahead by hanging on to the cash and waiting for a drop in the stock price before reinvesting.

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