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 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

$42.05

$1,054.69

5.9%

Exelon

$41.82

23.818

$41.24

$982.25

(1.4%)

National Grid (NYSE: NGG  )

$48.90

20.3693

$49.71

$1,012.56

1.7%

Philip Morris International (NYSE: PM  )

$68.49

14.5429

$64.58

$939.18

(5.7%)

Annaly Capital (NYSE: NLY  )

$18.24

55

$16.06

$883.30

(12.0%)

Frontier Communications (NYSE: FTR  )

$7.88

126.4243

$5.92

$748.43

(24.9%)

Plum Creek Timber

$38.42

26

$35.60

$925.60

(7.3%)

Brookfield Infrastructure Partners (NYSE: BIP  )

$26.12

38.2825

$24.40

$934.09

(6.6%)

Vodafone (Nasdaq: VOD  )

$26.52

37.5566

$26.57

$997.88

0.2%

Seaspan

$14.61

69

$11.49

$792.88

(21.3%)

Cash

 

$130.37

 

$130.37

 

Dividends Receivable

 

$44.20

 

$44.20

 

Total Portfolio

     

$9,445.44

(5.4%)

Investment in SPY

       

(9.9%)

Relative Performance (percentage points)

       

4.5

Source: S&P Capital IQ.

The portfolio remains in negative territory, dropping sharply from a quick break into positive territory three weeks ago. But our outperformance narrowed in the past week, as markets climbed broadly higher. We're solidly outperforming the S&P by 4.5 percentage points, and seven of our 10 picks are still beating the S&P. 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. And we're still pumping out those dividends, while the dividend-less investors have to hope for capital gains!

With more than $100 cash in the account, it's time to think about reinvesting it. I've decided to add to my Annaly position, reinvesting the full $130 in dividends I've received so far. The stock has been hurt hard recently, but I still think it's a great place to be. That will be done as soon as practicable and within the constraints of the Fool's trading rules. We'll also have $44 more hitting the account soon, well on our way to the next $100 minimum that I've set for a reinvestment to minimize trading costs. Do you think one of the other stocks offers a better opportunity?

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

  • Philip Morris went ex-div on Sept. 27 and pays out its newly raised dividend of $0.77 per share on Oct. 11.
  • And everyone's favorite dividend play, Annaly, went ex-div on Sept. 28 and pays its dividend of $0.60 per share on Oct. 27.

And in other news...

  • Given the recent drop in Frontier's shares, management seemed to be compelled to provide a press release trumpeting the fact that it is reaffirming its annual dividend guidance. The company pointed out that it was aiming to pay out about 68% of its free cash flow for 2011. The company also sounded optimistic about converting its new lines.
  • Annaly and other mortgage REITs have come under pressure because of declining interest rates, a potential change in SEC regulations, and Operation Twist. Oh, and there's that little euro thing going on, too. I go into these topics in more detail here.

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 likely 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 that time, 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 Annaly, Seaspan, Philip Morris, Plum Creek, and Brookfield Infrastructure, 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 a covered strangle position on Exelon and a covered straddle position on Seaspan. 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 (0) | Recommend This Article (11)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1566057, ~/Articles/ArticleHandler.aspx, 10/21/2014 3:55:54 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement