The World's Best Dividend Portfolio

In June 2011, 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 (NYSE: SO  ) $39.71 25.0818 4.2% $1,186.37 19.1%
Exelon (NYSE: EXC  ) $41.36 23.818 5.6% $1,122.17 (5.8%)
National Grid (NYSE: NGG  ) $48.90 20.3693 5.7% $1,041.28 4.5%
Philip Morris International $68.49 14.5429 3.7% $1,215.79 22.1%
Annaly Capital $17.92 65.5 13.1% $1,087.96 (7.3%)
Frontier Communications (NYSE: FTR  ) $7.88 126.4243 12% $420.99 (57.7%)
Plum Creek Timber $38.42 26 4.5% $960.96 (3.8%)
Brookfield Infrastructure Partners (NYSE: BIP  ) $26.12 38.2825 4.7% $1,243.80 24.4%
Vodafone $26.52 37.5566 5% $986.24 (1%)
Seaspan $14.90 76 6.3% $1,214.48 7.3%
Cash       $61.11  
Dividends Receivable       $106.20  
Original Investment       $9,986.58  
Total Portfolio       $10,647.35 6.6%
Investment in SPY (Including Dividends)         4.3%
Relative Performance (Percentage Points)         2.3

Source: S&P Capital IQ.

Our portfolio outperformed again this week and saw performance grow to a 6.6% cumulative return with the help of some dividend payouts. Meanwhile, the S&P index climbed less, to 4.3%, meaning we're up by 2.3 percentage points on our benchmark. So after nearly a year, we're beating the index and have a substantially better blended yield -- 6.1% -- than the index, at 1.9%. If markets continue to be stagnant or down, we should probably outperform. And I don't see a whole lot that is positive in the next few months. Growth is slowing in various places around the globe, and Europe is a mess that isn't being fixed yet.

There's little to excite shareholders of Frontier, but misery does love company. So it's nice to see institutional investor Avenir add to its stake in the beleaguered telecom. But the market has punished this stock mercilessly, such that its yield still looks high despite the recent cut from $0.1875 per share quarterly to $0.10.

With several utility stocks in our portfolio, including Southern, Exelon, and National Grid, the second quarter might prove rough. A slowing economy is a threat to electricity demand, and analysts expect utilities' earnings as a whole to drop by 8% in Q2. That might hurt utilities in the short term, although we're holding these proven cash generators for the long term.

Within the next couple of weeks, I'll publish an article that details how the portfolio will operate for Year 2. I anticipate adding a few more stocks, eliminating at least one, and adding more cash (to help simulate an investor who keeps adding to the portfolio). Again, I'll detail all that in an upcoming Fool.com article. It's been a really fun year with this portfolio, and I look forward to more.

Dividends and other announcements
Earnings season is pretty much over, and we have mainly dividend news for the moment.

Dividend news:

  • Southern went ex-dividend on May 7 and paid out $0.49 per share on June 6.
  • Exelon went ex-dividend on May 11 and paid out $0.37925 per share on June 8. Previously, Exelon paid out a $0.14575 dividend in early April, to keep its total quarterly dividend at $0.525, as part of its recent acquisition of Constellation.
  • National Grid went ex-dividend on May 30 and pays out $2.017 per share on Aug. 15.
  • Vodafone went ex-dividend on June 6 and pays out $1.015 per share on Aug. 1.
  • Frontier went ex-dividend on June 6 and pays out $0.10 per share on June 28.
  • Brookfield Infrastructure went ex-dividend on May 31 and pays out $0.375 per share on June 29.

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

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 probably 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 hold these stocks for at least a year (and have now done so) and will continue to track the portfolio, including news on these companies.

If you're craving more dividend payers, I invite you to read the free report from the Motley Fool titled "3 American Companies Set to Dominate the World." Today I invite you to download it at no cost to you. Get instant access to the names of these dominant dividend stocks -- it's free.

Jim Royal, Ph.D., owns shares of the 10 portfolio stocks mentioned in the table. The Motley Fool owns shares of Annaly, Seaspan, Plum Creek, and Brookfield Infrastructure, as well as having created a covered strangle position in Plum Creek. Motley Fool newsletter services have recommended buying shares of Exelon, Philip Morris, Annaly, Southern, National Grid, Vodafone, and Brookfield Infrastructure, along with writing a covered strangle position in Exelon and a covered straddle position in Seaspan. 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 (2) | Recommend This Article (6)

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 June 11, 2012, at 2:14 PM, sheldonross wrote:

    I would assume you're gonna lose FTR. Maybe it's exactly the wrong time as the VZ assets have just recently gotten completely integrated. Or it could more of the same, they don't seem to be as robust as other landline telcos such as CTL.

    Curious what you're thinking of adding? What is the yield threshold? PM is 3.7 and there are quite a few great stocks right around that range. Of course they'd bring your blended yield down.Heck JNJ yield 3.9 right now.

  • Report this Comment On June 11, 2012, at 3:33 PM, emptorski wrote:

    In order to provide a better assessment of the portfolio's performance, perhaps you should also list all the dividends you received since June 2011. If you add them (esp. the hefty ones from NLY) your portfolio would look a look better.

    It would be great to see how the portfolio would perform if the dividends were reinvested.

    If possible, could you create an additional column that tells us what the investments would be worth if the dividends were reinvested? That would give us a true, head-to-head comparison of dividend growth investing vs "dividend cash harvesting (Copyrighted). ".

    Thank you for the insight.

    Fool on.

Add your comment.

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: 1907811, ~/Articles/ArticleHandler.aspx, 8/30/2014 8:27:39 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