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 here.  Now let’s check out the results so far.
 

Company

Cost Basis

Shares

Yield

Total Value

Return

Southern $39.71 25.0818 4.2% $1,165.05 17.0%
Exelon $41.36 23.818 5.6% $1,075.78 (9.7%)
National Grid $48.90 20.3693 5.7% $1,080.80 8.5%
Philip Morris International $68.49 14.5429 3.4% $1,294.03 29.9%
Annaly Capital $17.92 65.5 13.0% $1,108.92 (5.5%)
Frontier Communications $7.88 126.4243 10.0% $506.96 (49.1%)
Plum Creek Timber $38.42 26 4.2% $1,034.80 3.6%
Brookfield Infrastructure Partners $26.12 38.2825 4.4% $1,300.84 30.1%
Vodafone $26.52 37.5566 5.0% $1,063.23 6.7%
Seaspan $14.90 76 5.7% $1,308.72 15.6%
Cash       $88.11  
Dividends Receivable       $126.43  
Original Investment       $9,986.58  
Total Portfolio       $11,153.65 11.7%

Investment in SPY

(including dividends)

        8.6%

Relative Performance

(percentage points)

        3.1
Source: S&P Capital IQ.

In what’s becoming a trend, our portfolio gained again this week, with cumulative gains climbing to 11.7%, up from 10.5% last week.  But the S&P did even better, moving from 5.5% to 8.6%, shrinking our outperformance to 3.1 percentage points. As we’ve seen all year long, we go up when the S&P goes up, but not as much. We still offer a much better yield, at 5.8%. The news out of Europe seems to have provided the market with some confidence, but I suspect that will be short-lived.

The heat and storms that have shaken up the Midwestern and Eastern U.S. have also had some effect on a few of our companies, including Exelon (NYSE: EXC  ) , Southern (NYSE: SO  ) , and Frontier (Nasdaq: FTR  ) . Already a week after the first of the storms, some 500,000 residents are still without power.  By Thursday, Exelon said it still had about 53,000 Maryland customers without power at its Baltimore Gas & Electric unit.

The slowness of returning power to residents has some elected officials questioning why more lines aren’t underground. The answer? Underground lines can cost up to $15 million per mile to lay. Any push to move more of them underground would increase costs (and customer ill will) at our utilities.  Frontier, too, is out restoring service to customers following the storms.

Philip Morris (NYSE: PM  ) has provided our portfolio some excellent returns in just a year. Can that continue? Fellow Fool Dan Caplinger sums up the company’s 2012, and shows what to look for moving ahead in this article. Check it out.

Dividends and other announcements
We’re in between earnings seasons, and we have mainly dividend news for the moment.  

Dividend news:

  • National Grid (NYSE: NGG  ) went ex-dividend on May 30 and pays out $2.017 per share on August 15.
  • Philip Morris went ex-dividend on June 25 and pays out $0.77 per share on July 12.
  • Vodafone went ex-dividend on June 6 and pays out $1.015 per share on August 1.
  • Annaly went ex-dividend on June 27 and pays out $0.55 per share on July 26.

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 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'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. To get instant access to the names of these dominant dividend stocks, 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 Seaspan, Brookfield Infrastructure, and Annaly. Motley Fool newsletter services have recommended buying shares of Vodafone, National Grid, Brookfield Infrastructure, Exelon, Annaly, and Southern, as well as writing a covered straddle position in Exelon and a covered straddle position in 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.


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