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

Company

Cost Basis

Shares

Yield

Total Value

Return

Southern $39.71 25.0818 4.3% $1,146.74 15.1%
Exelon $41.36 28.818 5.8% $1,051.57 (11.8%)
National Grid $48.90 20.3693 5.4% $1,126.83 13.1%
Philip Morris International (NYSE: PM  ) $68.49 14.5429 3.7% $1,321.08 32.6%
Annaly Capital (NYSE: NLY  ) $17.79 72.5 12.4% $1,167.98 (9.4%)
Frontier Communications $7.88 126.4243 8.2% $614.42 (38.3%)
Plum Creek Timber $38.42 26 4% $1,103.96 10.5%
Brookfield Infrastructure Partners $26.12 38.2825 4.3% $1,312.71 31.3%
Vodafone $26.52 37.5566 5.4% $1,071.87 7.6%
Seaspan (NYSE: SSW  ) $15.14 89 6.2% $1,437.35 6.6%
AT&T (NYSE: T  ) $35.20 28.4 4.8% $1,029.78 3%
Retail Opportunity Investments $12.20 81.95 4.4% $1,048.96 4.9%
Annaly Preferred C $25.98 38.5 7.4% $993.30 (0.7%)
Cash       $11.59  
Dividends Receivable       $48.75  
Original Investment       $12,983.97  
Total Portfolio       $14,486.88 11.6%
Investment in SPY (Including Dividends)         10%
Relative Performance (Percentage Points)         1.6

Source: S&P Capital IQ.

Our portfolio was down for the week, moving from 12.8% to 11.6%. But the S&P moved down even more, widening our lead from 0.7 percentage points to 1.6. Our blended yield increased to 5.8%. We have two cash dividends coming into the portfolio in the next month. I'm confident in the long-run performance of this dividend portfolio, and I expect time will bear us out. With the global economy on the brink of another recession, dividends should outperform.

As I said last week, I added seven shares of Seaspan to the portfolio at a price of $16.21. Seaspan offers a strong chance for capital appreciation as the company rapidly escalates its dividend in the coming years. We should see earnings news from the company in the next few weeks, and I'm eager to see how it's doing.

Philip Morris and other tobacco producers such as British American Tobacco (NYSE: BTI  ) are rushing to convince the Russian government to alter its proposed new law that would eliminate smoking in public places, curb sales in kiosks, and limit sponsorships. As planned, the bill would go into effect on Jan. 1, 2015. Some 39% of Russia's 143 million citizens smoke, making it the world's second largest smoking market behind China.

Also problematic for international tobacco players is Russia's proposed increase in cigarette taxes, which could move nearly eight times higher. But already under current law, excise taxes are scheduled to increase 40% annually until the end of 2014.

Annaly announced that Chairman and co-founder Wellington Denahan-Norris has been appointed co-CEO while CEO Michael Farrell undergoes cancer treatment. Management transitions are always a dicey time for companies, and we'll keep an eye on this one.

Dividends and other announcements
We're in earnings season, but we have only dividend news for the moment.

Dividend news:

  • Philip Morris went ex-dividend on Sept. 25 and pays outs $0.85 per share on Oct. 11.
  • Annaly went ex-dividend on Sept. 27 and pays out $0.50 per share on Oct. 29.
  • AT&T went ex-dividend on Oct. 5 and pays out $0.44 per share on Nov. 1.

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 continue to track and report on the portfolio's progress, including news on these companies.

If you like dividends, consider the 13 tickers in this article along with the nine names from a brand-new, free report from The Motley Fool's expert analysts called "Secure Your Future With 9 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 nine high yielders, simply click here -- it's free.

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 creating a write 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 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.


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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 October 14, 2012, at 7:12 PM, lanceim59 wrote:

    This portfilio is a joke.

  • Report this Comment On October 15, 2012, at 1:35 PM, sheldonross wrote:

    Thanks, for the update. I wish more articles put their money where their mouth is and showed the consequences of their choices. By far one of the best series on MF.

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