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

4.5%

$1,096.83

10.1%

Exelon (NYSE: EXC  )

$41.36

28.818

7.1%

$849.27

(28.7%)

National Grid

$48.90

20.3693

5.7%

$1,154.74

15.9%

Philip Morris International

$68.49

14.5429

3.8%

$1,289.52

29.5%

Annaly Capital (NYSE: NLY  )

$17.79

72.5

13.9%

$1,043.28

(19.1%)

Frontier Communications (NASDAQ: FTR  )

$7.88

126.4243

8.5%

$591.67

(40.6%)

Plum Creek Timber

$38.42

26

4%

$1,106.82

10.8%

Brookfield Infrastructure Partners (NYSE: BIP  )

$26.12

38.2825

4.5%

$1,286.67

28.7%

Vodafone

$26.52

37.5566

5.9%

$973.90

(2.2%)

Seaspan (NYSE: SSW  )

$15.24

95

6%

$1,576.05

8.9%

AT&T

$35.20

28.4

5.2%

$955.66

(4.4%)

Retail Opportunity Investments

$12.20

81.95

4.4%

$1,049.78

5%

Annaly Preferred C

$25.98

38.5

7.6%

$964.43

(3.6%)

Cash

     

$17.61

 

Dividends Receivable

     

$90.74

 

Original Investment

     

$12,983.97

 

Total Portfolio

     

$14,046.96

8.2%

Investment in SPY (Including Dividends)

       

8.9%

Relative Performance (Percentage Points)

       

(0.7)

Source: Capital IQ, a division of Standard & Poor's.

Our portfolio was up a bit for the week, moving from 7.8% to 8.2%. The S&P did slightly worse, so we moved from down 1.2 percentage points to down 0.7. Given the ongoing uncertainty over how the U.S. tax code will treat dividends next year, it's not too hard to fathom. It would be nice to have some certainty, but the long-term track record of dividend stock outperformance speaks for itself.

Our portfolio is now yielding 6.1% -- much higher than the S&P while we wait for our gains. We expect this figure to come down, as Annaly will probably cut its dividend this quarter. We should find out officially in a few weeks, with an announcement and then the ex-dividend at the end of the month. Exelon could cut its payout, too, and I've already said earlier this year that I would sell Frontier at the right price, because of its ongoing fundamental weakness. Frontier just went ex-dividend on Wednesday, and we should see that money hit the account by the 31st -- maybe just escaping the clutches of the 2013 taxman.

One stock that shouldn't be pulling down our average yield is Seaspan. I added six more shares from our cash stash at $16.61 per share. The company announced that it's selling  more preferred shares as it expands its fleet of container ships. We'll have another $100 in cash in the account by the start of February, so it's not too soon to start thinking of what to buy.

Fellow Fool Doug Ehrman discusses what the fiscal cliff means for Annaly in this article.

For a beautiful breakdown of Exelon's business in graphics, take a look at Fool Justin Loiseau's article on the nation's largest power generator.

Dividends and earnings announcements
Here is the recent news on earnings and dividends:

Dividend news: 

  • Southern went ex-dividend on Nov. 1 and paid out $0.49 per share on Dec. 6.
  • Retail Opportunity Investments went ex-dividend Nov. 9 and paid out $0.14 per share on Nov. 30.
  • Exelon went ex-dividend Nov. 13 and pays out $0.525 per share on Dec. 10.
  • Vodafone went ex-dividend on Nov. 20 and pays out $0.519 per share on Feb. 6.
  • Brookfield Infrastructure went ex-dividend on Nov. 28 and pays out $0.375 per share on Dec. 31.
  • National Grid went ex-dividend on Nov. 28 and pays out nearly $1.15 per share on Jan. 16.
  • Annaly Series C went ex-dividend on Nov. 29 and pays out almost $0.48 per share on Dec. 31.
  • Frontier went ex-dividend on Dec. 5 and pays out $0.10 per share on Dec. 31.

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 these 13 tickers 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.


Read/Post Comments (1) | 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 December 13, 2012, at 5:44 PM, easyavenue wrote:

    Jim,

    Is it against the rules of this portfolio to use ETFs? If not, then perhaps a nice hedge against being beaten by SPY would be to buy shares in SPY.

    Also, what about buying sectors, like Energy, or Commodities or such?

    Finally, what's wrong with sitting on some cash for a while? It's what everybody else is doing!

    'Nuf said.

    Best of luck to you!

    EA

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