This High-Yield Dividend Portfolio Will Beat the Market

Forty-four 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 $29.82 $1,192.80 19.95%
Philip Morris (NYSE: PM  ) $61.83 17 $77.85 $1,323.45 24.94%
National Grid $45.63 22 $47.82 $1,052.04 4.80%
Annaly Capital Management (NYSE: NLY  ) $17.55 57 $16.89 $962.73 (3.76%)
Frontier Communications (NYSE: FTR  ) $8.71 149 $5.10 $759.90 (41.45%)
Southern Co (NYSE: SO  ) $37.87 26 $45.75 $1,189.50 20.81%
France Telecom (NYSE: FTE  ) $22.23 45 $15.57 $700.65 (29.96%)
Vodafone Group (Nasdaq: VOD  ) $28.69 38 $27.36 $1,039.68 (4.64%)
Eli Lilly $34.48 29 $41.46 $1,202.34 20.24%
Bristol-Myers Squibb $25.37 39 $35.09 $1,368.51 38.31%
Cash       $46.51 0%
Dividends Receivable       $81.55 0%
Total Portfolio       $10,919.66 9.20%
Investment In SPY         (2.98%)
Return vs SPY (percentage points)         +12.18

Source: S&P Capital IQ, as of Dec 22.

Since my last report, the SPDR S&P 500 rose 3.2%. Our portfolio rose more than the market, with our outperformance moving from beating the market by 11.82 percentage points to a 12.18 point advantage. 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 10 months.

Movers and shakers
Our largest riser the past week was Frontier Communications, which rose 4.7%.

Money!
There are six upcoming dividends for the portfolio:

  • Frontier will pay a dividend of $0.1875 on Dec. 30. The ex-dividend date was Dec. 7.
  • National Grid will pay a dividend of $1.09 on Jan. 18. The ex-dividend date was Nov. 30.
  • Altria will pay a dividend of $0.41 on Jan. 10. The ex-dividend date was Dec. 22.
  • Philip Morris International will pay a dividend of $0.77 on Jan. 10. The ex-dividend date was Dec. 20.
  • Vodafone will pay a dividend of 0.705 pence (roughly $1.12, not included in Dividends Receivable, as exchange rate won't be determined until Jan. 20) on Feb. 3. The ex-dividend date was Nov. 16.
  • Eli Lilly will pay a dividend of $0.49 on March 9. The ex-dividend date is Feb. 13.

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 ten tickers above along with the 11 names from a brand new free report from Motley Fool's expert analysts called "11 Rock-Solid Dividend Stocks." To get instant access to the names of these 11 dividend stocks, 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.


Read/Post Comments (1) | Recommend This Article (3)

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 December 23, 2011, at 5:13 PM, FoolTheRest wrote:

    Nice work, Dan. Even better is your follow through on reporting. It is important not only for transparency, but also as an ongoing document demonstrating how a dividend portfolio will crush the market.

    I never did care for your picks of FTR or FTE, but that is especially easy to say now in hindsight ;) Then again, I did not like SO either, and it performed admirably. I am pleasantly surprised by MO and PM. I have always appreciated them as companies, cash generators, and dividend payers, but I was not expecting such strong performance over such a short and volatile period.

    One question: can I assume this is not a completely static portfolio? To better phrase, do you plan to replace candidates if your investment thesis changes for the individual company (acquisitions, mergers, fundamental changes in management or prospects in industry, direction, business, dividend policy, or significant interest rate changes) or re-balance if one of your positions grows dramatically out-sized compared to the others?

    Thanks, and keep up the good work.

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