The World’s Best Dividend Portfolio

In June, 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.  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 $42.07 $1,055.19 5.9%
Exelon (NYSE: EXC  ) $41.82 23.818 $42.91 $1,022.03 2.6%
National Grid (NYSE: NGG  ) $48.90 20.3693 $49.32 $1,004.61 0.9%
Philip Morris International (NYSE: PM  ) $68.49 14.5429 $68.29 $993.13 (0.3%)
Annaly Capital (NYSE: NLY  ) $18.24 55 $17.92 $985.60 (1.8%)
Frontier Communications (NYSE: FTR  ) $7.88 126.4243 $7.03 $888.76 (10.8%)
Plum Creek Timber (NYSE: PCL  ) $38.42 26 $36.94 $960.44 (3.9%)
Brookfield Infrastructure Partners (NYSE: BIP  ) $26.12 38.2825 $27.06 $1,035.92 3.6%
Vodafone (Nasdaq: VOD  ) $26.52 37.5566 $26.11 $980.60 (1.5%)
Seaspan (NYSE: SSW  ) $14.61 69 $13.59 $937.71 (7.0%)
   

 

 

 

 
Cash  

$93.27

 

$93.27

 
Dividends Receivable  

$37.10

 

$37.10

 
Total Portfolio       $9,994.38 0.1%
Investment in SPY         (6.1%)
Relative Performance (percentage points)         +6.2

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

The portfolio has now broken into positive territory, against the S&P's decline of 6.1% over the same time period, for outperformance of 6.2 percentage points. Eight of our 10 picks are beating the S&P. Despite the gains for the week, we actually lost ground on the S&P, which we were beating by 7.1 percentage points last week. But that performance is also a reminder of the stability of dividend payers over time -- good downside protection and continued income but also less upside volatility. 

I'm not particularly concerned about short-term fluctuations, though. In the meantime, we'll cash our dividend checks and wait for an opportunity to reinvest those proceeds. In particular, Frontier is bringing the average return down, meaning the stock could be an attractive place to add reinvested dividends. Which stock do you think looks the most attractive now?

Dividends and earnings announcements
We're moving out of dividend season, and we have a few bits of news:

  • Brookfield Infrastructure went ex-dividend on Aug. 29, with a payday on Sept. 29.
  • Frontier went ex-dividend on Sept. 7 and pays out $0.1875 per share on Sept. 29.

Vodafone news
Some unfortunate news for income investors in Vodafone. Its joint venture, Verizon Wireless, will not pay a recurring dividend to Vodafone and instead will use the funds to acquire spectrum and make acquisitions. Vodafone will still receive a $4.5 billion dividend check in January, most of which will be passed on to investors in the form of a special dividend. But the lack of a recurring dividend dents the thesis for income investors, even as the company continues to accrue value in its joint venture. I'm less than enthused about this development.

Philip Morris news
The big news for Philip Morris was positive, as the company bumped up its quarterly dividend by 20%. That's a great performance and testament to the strength of the company's global business. And it certainly exceeded my expectations. So that's some positive news to counter the bad from Vodafone.

It's fun to sit back and get paid, and with the market volatility, we might have a good chance to reinvest those dividends at good prices. Europe continues to be an absolute mess, and continued bad news will probably have stocks plunging again, and if they do, I'll be inclined to pick more shares up.

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 I've mentioned here along with the 13 names from a free report from The 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. Get instant access to the names of these 13 high yielders -- it's free.

Jim Royal, Ph.D., owns shares of every company mentioned here. The Motley Fool owns shares of Annaly, Seaspan, Philip Morris, and Brookfield Infrastructure. The Fool owns shares of and has written puts on Plum Creek. Motley Fool newsletter services have recommended buying shares of Vodafone, National Grid, Brookfield Infrastructure, Philip Morris, Exelon, and Southern, as well as writing covered strangle positions in Exelon and Seaspan. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 (4) | Recommend This Article (6)

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 September 16, 2011, at 6:55 PM, CNQFool wrote:

    FTR's dividend does not look very sustainable since they are paying out over 460% earning as dividend. Personally I would be looking to ditch FTR after the dividend as I can't see it affording another one. I would put the money somewhere else.

  • Report this Comment On September 16, 2011, at 7:27 PM, pryan37bb wrote:

    ^Bear in mind, though, that ultimate sustainability of a dividend is not borne out in earnings, but in free cash flow. And FTR's FCF can cover its payout well enough, last I checked.

  • Report this Comment On September 17, 2011, at 12:04 AM, mm5525 wrote:

    The PM dividend raise also exceeded my expectations. Last Fall they raised by $0.06. Given the higher EPS and guidance in 2011, I certainly expected a minimum of a 6-cent raise this time, but to get more than double that (13-cent raise) was super news!

  • Report this Comment On September 17, 2011, at 1:02 AM, investmentyour wrote:

    COP is a strong company.. I have been looking into that company for awhile and i see a pontential growth for it.. Companies start using energing as never before, so I think there will be a boom in the energy sector as year to come..

    CHK is also another great company with 12% payout ratio and a outstanding dividend payment.. Check it out and tell me what you think on my website:

    http://investmentyour.com

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