This High-Yield Portfolio Will Beat the Market

Thirty-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

$26.00

$1,040.00

4.59%

Philip Morris (NYSE: PM  )

$61.83

16

$64.58

$1,033.28

4.45%

National Grid (NYSE: NGG  )

$45.63

22

$48.99

$1,077.78

7.36%

Annaly Capital Management (NYSE: NLY  )

$17.55

57

$17.43

$993.51

(0.68%)

Frontier Communications (NYSE: FTR  )

$8.95

137

$6.37

$872.69

(28.83%)

Southern Co. (NYSE: SO  )

$37.87

26

$42.42

$1,102.92

12.01%

France Telecom (NYSE: FTE  )

$22.23

45

$15.98

$719.10

(28.12%)

Vodafone Group (NYSE: VOD  )

$28.69

38

$25.41

$965.58

(11.43%)

Eli Lilly (NYSE: LLY  )

$34.48

29

$36.64

$1,062.56

6.26%

Bristol-Myers Squibb (NYSE: BMY  )

$25.37

39

$30.94

$1,206.66

21.96%

Cash

 

34

 

$34.00

 

Dividends receivable

 

86.92

 

$86.92

 

Total Portfolio

     

$10,195.00

1.95%

Investment in SPY

       

(10.54%)

Return vs. SPY (percentage points)

       

+12.49

 Source: Capital IQ, a division of Standards & Poor's. Data as of Sept. 19.

Over the past week, the S&P 500 fell 3.38%. As the market fell, our portfolio outperformance improved, moving from beating the market by 11.86 percentage points to beating the market by 12.49 points. 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 seven 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 Frontier Communications, which fell 9%. The market is worried about Frontier's large debt load, but those worries ignore the fact that large quantities of debt are not due until January 2013 and that the amount involved is manageable. The firm's game-changing integration of Verizon's rural assets is going ahead of schedule, and I continue to believe the stock is undervalued.

Money!
There are six upcoming dividends for the portfolio:

  1. France Telecom will pay a dividend of $0.85 per share on Thursday. The ex-dividend date was Aug. 30.
  2. Frontier Communications will pay a dividend of $0.1875 per share on Friday. The ex-dividend date was Sept. 7.
  3. Altria will pay a dividend of $0.41 per share on Oct. 11. The ex-dividend date was Sept. 13.
  4. Philip Morris International will pay a dividend of $0.77 per share on Oct. 11. The ex-dividend date was Friday.
  5. Annaly Capital Management will pay a dividend of $0.60 per share on Oct. 27. The ex-dividend date is tomorrow.
  6. Bristol-Myers Squibb will pay a dividend of $0.33 per share on Nov. 1. The ex-dividend date is Oct. 6.

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 The 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 September 27, 2011, at 11:57 AM, Eerkes wrote:

    Pretty amazing how much dead weight telecoms have been, especially FTR, so unloved, so misunderstood.

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