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

Yield

Total Value

Return

Southern $39.71 25.0818 4.2% $1,131.44 13.6%
Exelon $41.82 23.818 5.2% $957.01 (3.9%)
National Grid $48.90 20.3693 5.8% $990.36 (0.6%)
Philip Morris International (NYSE: PM  ) $68.49 14.5429 4% $1,111.80 11.6%
Annaly Capital (NYSE: NLY  ) $18.24 65.5 14% $1,072.24 (8.6%)
Frontier Communications (NYSE: FTR  ) $7.88 126.4243 14.9% $635.91 (36.2%)
Plum Creek Timber $38.42 26 4.4% $1,008.54 1%
Brookfield Infrastructure Partners (NYSE: BIP  ) $26.12 38.2825 4.9% $1,094.11 9.4%
Vodafone $26.52 37.5566 4.9% $1,044.45 4.9%
Seaspan (NYSE: SSW  ) $14.61 69 5.3% $962.55 (4.5%)
Cash       $99.57  
Dividends Receivable       $101.77  
Total Portfolio       $10,209.75 0.5%
Investment in SPY
(Including Dividends)
        1.8%
Relative Performance
(Percentage Points)
        (1.3)

Source: S&P Capital IQ.

Our total portfolio performance improved overall from the previous week, moving from 0% to 0.5% this week. That's a solid gain, but it was outpaced by the even brisker move on the S&P, leaving our portfolio underperforming by 1.3 percentage points. We have four stocks outperforming the index. But I'm confident in the long-run nature of this portfolio, and I fully expect it to outperform. If we see a downward move in the S&P, we'll quickly gain the upper hand again, I think.

Thanks to a reader suggestion, I'm now including the yield on each stock in the portfolio. For reasons of space, I've eliminated the column on my original price paid, but that can be figured using the cost basis and number of shares.

Thanks also for your suggestions so far with what to do with some $200 that will reach the portfolio by early February. You've given me a lot of meat to chew on.

As we head into a tenuous and uncertain 2012, I'm glad to be in dividend stocks because of their lower downside volatility. Brookfield Infrastructure should provide us good stability, with its high level (80%) of contractually obligated cash flows. And even though mortgage REITs are suffering under some uncertainty, Annaly still looks like a good place to be for 2012, I think. But fellow Fool John Maxfield disagrees. What do you think, Fools? You can see a breakdown of how Annaly boosts its returns.

Dividends and other announcements
Going into the new year, the news has been pretty light. But there have been a few developments and some year-end recaps:

  • In news affecting Philip Morris, the Australian government has lashed out at rival cigarette maker British American Tobacco for using the nation's symbol, the kangaroo, on products sold in Europe. Australia is introducing a law that all cigarettes must be sold in plain olive-green packs, a law that the major tobacco powers are challenging in court. Some analysts are worried that the laws may spread to other high-growth international markets, hurting growth at Philip Morris.
  • Seaspan reported the results of its tender offer at $15 per share. The offer was oversubscribed by nearly double, but the company will purchase only 11.3 million shares, with priority going to holders of less than 100 shares. We continue to hold the shares here.
  • Frontier has plenty of work ahead of it in 2012. It's looking to expand its business Ethernet coverage and is pushing into wireless broadband. Fellow Fool Dan Radovsky runs down what to look for during the rest of the year.

Dividend news:

  • National Grid went ex-dividend on Dec. 2 and pays out $1.0967 per share on Jan. 18.
  • Frontier paid out $0.1875 per share on Dec. 29.
  • Vodafone announced a special dividend of 4 pence on top of its 3.05 pence interim payout. The stock traded ex-div on Nov. 16 and the money will be paid out on Feb. 3. In dollars, the total payout comes to about $1.12 per U.S. share at current exchange rates.
  • Philip Morris went ex-div on Dec. 20 and paid out $0.77 a share on Jan. 10.
  • Annaly went ex-dividend on Dec. 27 and pays out $0.57 per share on Jan. 26.

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

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. 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 these 10 tickers along with the 11 names from a brand-new free report from The Motley Fool's 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 for free.

Jim Royal, Ph.D., owns shares of the 10 portfolio stocks mentioned in the table. The Motley Fool owns shares of Seaspan, Brookfield Infrastructure, Annaly, Plum Creek, and Philip Morris, and has created a covered strangle position on Plum Creek. Motley Fool newsletter services have recommended buying shares of Exelon, National Grid, Philip Morris, Vodafone, Southern, and Brookfield Infrastructure, 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 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 (5) | Recommend This Article (13)

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 January 13, 2012, at 8:17 PM, vaderblue wrote:

    Great portfolio.

    I buy small caps with large market caps

    and high yields.

    Nly

    NYB

    NYMT

    PT

    VE

    PERI

    Auy

    I can accummulate more shares for the buck.

    Hopefully realizing some capital appreciation along the way.

    3 foreign stocks and 3 US Stocks.

    I believe Europe will eventually get their act together. If they don't then its academic for most of us and the world.

    I only buy on pullbacks in the market weekly.

    Today was good for acquiring NYMT, PT and Auy.

  • Report this Comment On January 13, 2012, at 11:38 PM, 3percenthero wrote:

    still scratching my head over why FTR is included in your portfolio. A payout ration of around 500% doesn't seem sustainable

  • Report this Comment On January 14, 2012, at 8:31 AM, webmind wrote:

    Anyone know why there is no call option premium in BIP? It's the only thing stopping me from buying it as I like to generate the extra cash flow.

  • Report this Comment On January 14, 2012, at 3:03 PM, burnaka wrote:

    "still scratching my head over why FTR is included in your portfolio. A payout ration of around 500% doesn't seem sustainable."

    Based on?

    If you are basing your thinking on eps., eps is not a thoroughly made up number, but a heavily manipulated one. Eps. is low at ftr because of a ton of paper charges, like accelerated depreciation, goodwill expense, etc.

    Ftr free cash flow is more than sufficient to pay the dividend, and fcf is expected to grow about 40% over the next year. FCF, is the money that pays the dividend and that they get to keep. Eps is a nice wall street number and is not necessarily related to bankable earnings or ability to pay a dividend.

  • Report this Comment On January 19, 2012, at 11:53 PM, emptorski wrote:

    Two Questions:

    1. Dost thou reinvesteth thy dividends?

    2. If reinvesteth, does the 'return' column factor in the

    additional shares acquired through reinvestment?

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