The World's Best Dividend Portfolio

In June 2011 I invested my money equally in a selection of 10 high-yield dividend stocks. With a year of success behind me, in July 2012, I added even more money to the portfolio. 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 4.3% $1,138.21 14.3%
Exelon $41.36 23.818 5.7% $1,054.45 (11.5%)
National Grid $48.90 20.3693 5.4% $1,114.61 11.9%
Philip Morris International $68.49 14.5429 3.4% $1,316.86 32.2%
Annaly Capital (NYSE: NLY  ) $17.79 72.5 12.7% $1,245.55 (3.4%)
Frontier Communications (NYSE: FTR  ) $7.88 126.4243 8.6% $599.25 (39.8%)
Plum Creek Timber $38.42 26 4.1% $1,058.20 5.9%
Brookfield Infrastructure Partners (NYSE: BIP  ) $26.12 38.2825 4.3% $1,321.89 32.2%
Vodafone $26.52 37.5566 5% $1,091.02 9.5%
Seaspan (NYSE: SSW  ) $14.90 76 6.2% $1,289.86 4.5%
AT&T $35.20 28.4 4.8% $1,042.00 4.2%
Retail Opportunity Investments $12.20 81.95 4.4% $1,028.47 2.9%
Annaly Preferred C $25.92 38.5 7.4% $990.61 (1%)
Cash       $39.82  
Dividends Receivable       $60.24  
Original Investment       $12,983.97  
Total Portfolio       $14,391.04 10.8%
Investment in SPY (Including Dividends)         10%
Relative Performance (Percentage Points)         0.8

Source: S&P Capital IQ.

Our portfolio was down slightly for the week, moving from 11% to 10.8% this week. We lost just a bit of ground on the S&P, moving from 0.9 points up to 0.8. Our blended yield remains at 5.8%, and we have quite a few dividends in the next couple weeks.

In fact, in about a month we'll have another $100, which I'd like to put to work immediately. I still really like the prospects for Seaspan, and it's currently the front-runner for more investment dollars, even though I just added some a few weeks ago. No matter. I think it has the brightest prospects of our portfolio stocks right now because of its low payout ratio and commitment to rapidly escalating its dividend.

Our portfolio's only preferred stock, Annaly's Series C Preferred, just went ex-dividend earlier this week. At the current price, it pays out an attractive 7.4% -- just don't expect much if any capital appreciation. As I mentioned when I bought the stock, I like it as a means to hedge the risk from Annaly common stock, as its dividend slowly declines, taking the stock price with it.

Are Annaly and our other holdings part of a dividend bubble? Fellow Fool Dan Caplinger discusses whether we're in a dividend bubble and what that means for us income investors.

Finally, one of the sharpest investors around, Gotham Capital, just recently sold its shares in Frontier. That follows recent insider purchases from Frontier's management in the mid- to low threes in recent months. Ultimately, I'm looking to unload Frontier as well and expect to do so in the coming weeks.

Dividends and other announcements
Dividend news:

  • Southern went ex-dividend on Aug. 2 and pays out $0.49 per share on Sept. 5.
  • Plum Creek went ex-dividend on Aug. 15 and paid out $0.42 per share on Aug. 31.
  • Exelon went ex-dividend on Aug. 13 and pays out $0.525 per share on Sept. 10.
  • ROIC went ex-dividend on Aug. 14 and paid out $0.14 per share on Aug. 31.
  • Annaly Preferred C went ex-dividend on Aug. 31 and pays $0.47 per share on Oct. 1.
  • Brookfield Infrastructure went ex-dividend on Aug. 29 and pays $0.375 per share on Sept. 27.

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. I'll continue to track the portfolio over the course of the year, including news on these companies.

Not everyone's convinced that Frontier Communications can't turn things around. Find out what Fool analysts believe in this premium report on Frontier that comes with exclusive access to real-time updates throughout the year. Get your copy today.

Jim Royal, Ph.D., owns shares of the 13 portfolio stocks mentioned in the table. The Motley Fool owns shares of Seaspan, Brookfield Infrastructure, ROIC, and Annaly. Motley Fool newsletter services have recommended buying shares of Vodafone, ROIC, National Grid, Brookfield Infrastructure, Exelon, Annaly, and Southern, as well as writing covered straddle positions on Exelon and 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 (3) | Recommend This Article (10)

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 September 04, 2012, at 4:01 PM, tommy2cat wrote:

    I do not believe that this portfolio is this the world's best dividend portfolio. FTR should never have been selected in the first place. I would have chosen CTL( Centurylink yielding close to 7% and up 13% YTD). I would not have put EXC on this list. I would have selected DUK or D(Dominion Res). I would not have chosen SSW. I would have looked at TGH ( up 21% YTD or TAL, ( up 19% YTD. I would have selected AGNC( up 24% yielding over 20% at the beginning of 2012) instead of NLY, which has had to cut their dividend. Altria(MO) should have been in their in the beginning as well when the price was around $28/share and up YTD 14.5%. I would not have added ROIC. I would have looked at O, REG, or DDR all of which are up 25% YTD.

    Of course, hind site is 20/20. However, I believe that with my suggestions, the portfolio would have done alot better.

  • Report this Comment On September 05, 2012, at 11:47 PM, xladiva wrote:

    Lots of good suggestions here. Thanks! I lost my shirt on SSW so am thrilled to see it coming back. Made a small fortune on CTL. Wish I'd invested more in that gem. Own both AGNC and NLY. AGNC's up, NLY's down, though overall am hoping with it's dividend it'll be a break-even proposition. Thankfully I passed on FTR many moons ago.

  • Report this Comment On September 07, 2012, at 12:00 AM, taubs1 wrote:

    why have two electric utilites? id get rid of one and add aqua america WTR. or seadrill SDRL. and remove seapsan and add ship finance international SFL.

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