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 $43.60 $1,093.57 9.8%
Exelon (NYSE: EXC  ) $41.82 23.818 $44.41 $1,057.76 6.2%
National Grid (NYSE: NGG  ) $48.90 20.3693 $48.90 $996.06 0%
Philip Morris International (NYSE: PM  ) $68.49 14.5429 $71.00 $1,032.55 3.7%
Annaly Capital (NYSE: NLY  ) $18.24 55 $16.20 $891.00 (11.2%)
Frontier Communications (NYSE: FTR  ) $7.88 126.4243 $5.62 $710.50 (28.7%)
Plum Creek Timber $38.42 26 $36.15 $939.90 (5.9%)
Brookfield Infrastructure Partners (NYSE: BIP  ) $26.12 38.2825 $25.89 $991.13 (0.9%)
Vodafone (Nasdaq: VOD  ) $26.52 37.5566 $28.39 $1,066.23 7.1%
Seaspan $14.61 69 $11.87 $819.03 (18.8%)
Cash       $174.57  
Dividends Receivable       $35.71  
Total Portfolio       $9,808.01 (1.8%)
Investment in SPY (including dividends)         (2.9%)
Relative Performance (percentage points)         1.1

Source: S&P Capital IQ.

The portfolio burst into positive territory two weeks ago, but settled back into a small net loss last week and this week. We gained a bit on the S&P from last week, upping our outperformance from 0.3 percentage points to 1.1, with the help of three stocks that went ex-dividend. The market dislocations we've seen in the past week helped our relative performance, and should continue to help as the euro mess continues unabated. We have six stocks outperforming the index.

But that fits what I've been saying all along: We'll have good downside protection and continued income but also less upside volatility, meaning we're likely to underperform any big market rallies. But we're still pumping out those dividends whichever way the market goes.

Seaspan has been particularly volatile, and I expect that to continue as the euro crisis heats up.

As I've been mentioning for a long while now, because of the Fool's trading restrictions, I have yet to add to my Annaly position. And I've decided to up my reinvestment in Annaly to $170, almost all the portfolio's available cash. The stock has been hurt recently, but I still think it's a great place to be, as I explain here. While not all the news has been good from the mortgage REIT sector, Annaly still looks poised to pump out solid dividends. I'm hoping to make this trade next week.

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

  • Vodafone reported first-half earnings that declined 11% from the year-ago period, but last year's figures included gains from the sale of its stake in a Chinese mobile carrier. The company took charges on its Greek mobile operations, but Vodafone increased EBITDA by 2.3%, edging out analysts' estimates. Even better, the company upped its profit guidance for the year on stronger-than-expected European performance and solid emerging-markets growth. The company targets at least 7% annual dividend growth through March 2013.

Dividend news:

  • Vodafone announced a special dividend of 4 pence on top of its 3.05 pence interim payout. The stock will trade ex-div on Nov. 16 and the money will be paid out in February. In dollars, the total payout comes to about $1.12 per U.S. share at current exchange rates.
  • Southern Company went ex-div on Nov. 7 and distributes $0.4725 per share on Dec. 6.
  • Exelon goes ex-div on Nov. 15 and pays out $0.525 per share on Dec. 9.
  • Plum Creek went ex-div on Nov. 10 and distributes $0.42 per share on Nov. 30.
  • Seaspan went ex-div on Nov. 9 and distributes $0.1875 per share on Nov. 23 -- just in time for Thanksgiving and Black Friday.

All that, of course, means more money coming into our pockets shortly.

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 up more shares.

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 11 names from a brand-new free report from Motley Fool expert analysts, called "Secure Your Future With 11 Rock-Solid Dividend Stocks." Today I invite you to download it at no cost to you. To get instant access to the names of these 11 high yielders, simply click here -- it's free.

Jim Royal, Ph.D., owns shares of the 10 portfolio stocks mentioned in the table. The Motley Fool owns shares of Philip Morris, Brookfield Infrastructure, Seaspan, Annaly, and Plum Creek. The Fool owns shares of and has created a covered strangle position on Plum Creek. Motley Fool newsletter services have recommended buying shares of Brookfield Infrastructure, Philip Morris, National Grid, Vodafone, Southern, and Exelon, as well as writing a covered straddle position in Seaspan and a covered strangle position in 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.


Read/Post Comments (3) | Recommend This Article (17)

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 November 11, 2011, at 6:32 PM, Darwood11 wrote:

    Jim;

    I'm with you, I have a significant portion of my stock portfolio invested in dividend stocks. My portfolio includes a few of the companies on your list. I've tracked their performance as well as the mutual funds I have.

    The dividend payers have contributed to the gains in my portfolio, I own shares in 23 companies. About 90% are dividend payers.

    I think it's a great way to enhance my portfolio, and am very glad I've made that decision. To date, I reinvest all dividends in stock, and in the last three years, only closed out one position.

    Keep it up!

  • Report this Comment On November 11, 2011, at 6:33 PM, newageinvestor wrote:

    ED's value has grown more than NGG's and it still has a great dividend. I have both stocks and when I can buy more I'm going with ED. I think NGG has been overrated here.

  • Report this Comment On November 12, 2011, at 8:21 PM, goalie37 wrote:

    Jim, how long is your time horizon?

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