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, I added even more money to the portfolio in July 2012. 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

4.6%

$1,070.49

7.5%

Exelon

$41.36

28.818

7.1%

$848.40

(28.8%)

National Grid (NYSE: NGG  )

$48.90

20.3693

5.7%

$1,157.59

16.2%

Philip Morris International (NYSE: PM  )

$68.49

14.5429

4.1%

$1,218.26

22.3%

Annaly Capital (NYSE: NLY  )

$17.79

72.5

12.6%

$1,022.98

(20.7%)

Frontier Communications (Nasdaq: FTR  )

$7.88

126.4243

9.6%

$529.72

(46.8%)

Plum Creek Timber

$38.42

26

3.8%

$1,154.14

15.5%

Brookfield Infrastructure Partners

$26.12

38.2825

4.3%

$1,325.34

32.5%

Vodafone (Nasdaq: VOD  )

$26.52

37.5566

6.3%

$946.80

(4.9%)

Seaspan

$15.24

95

6.1%

$1,543.75

6.7%

AT&T

$35.20

28.4

5.2%

$955.94

(4.4%)

Retail Opportunity Investments

$12.20

81.95

4.4%

$1,057.16

5.7%

Annaly Preferred C

$25.98

38.5

7.6%

$964.04

(3.6%)

Cash

     

$32.74

 

Dividends Receivable

     

$133.24

 

Original Investment

     

$12,983.97

 

Total Portfolio

     

$13,960.59

7.5%

Investment in SPY (including dividends)

       

8.6%

Relative Performance (percentage points)

       

(1.1)

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

Our portfolio was down for the week, moving from 8.8% to 7.5%. But the S&P fell even more -- down 2.4% -- leaving us down 1.1 percentage points. We've lagged the market for the last couple of months as investors seem to be skittish of future tax treatment of dividends. But we'll have more than $160 in cash in the portfolio soon, and we may be able to put it to work, especially if the market sells off in the new year.

Our portfolio is yielding 6%, much higher than the S&P, while we wait for our gains. Annaly announced its dividend for the quarter at $0.45 per share. That's down from $0.50 in the sequentially prior quarter, and continues the slow decline in its dividend. The dividend was larger than I had anticipated, but I expect the decline in Annaly's dividend to continue. Still, I think it's among the safest mortgage REITs out there. If you're looking for reasons to sell, however, Fool John Maxfield will give you three in this article, including Annaly's changing risk profile, something investors should be aware of.

In this article, Fool blogger Ryan Guenette shows where Philip Morris has been over the last few years and offers plenty of reasons to own this stock, including its solid dividend, high profit margin, and reasonable valuation. If we see the stock fall into the mid-70s, I'll be very interested in acquiring more.

For you dividend investors, fellow Fool Selena Maranjian highlights National Grid and Seaspan, as well as three other names that have promising dividend growth. You can read the article here. I like both these names, and we should expect a significant dividend increase from Seaspan in late February.

Vodafone shares have been hurt recently by ongoing Euro malaise, but they still offer the prospect for gain, not only from that sizable dividend but also from the benefit of a buyback at a modest valuation of just 10 times earnings. Fellow Fool G.A. Chester examines what to watch out for in 2013 in this article.

Fellow Fool Dan Caplinger examines whether Frontier will help you retire rich. Dan notes, "Revenue continued to drop sequentially, with continuing falls in residential customer counts and free cash flow." As I've mentioned before, Frontier is on my shortlist to sell if it reaches the right price. It won't be much longer until the next earnings report, and I'll reassess the situation at that time. On Monday, the 31st, we'll get the latest of Frontier's dividends, $0.10 per share.

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

Dividend news: 

  • 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.
  • Philip Morris went ex-dividend on Dec. 24 and pays out $0.85 per share on Jan. 11.
  • Annaly went ex-dividend on Dec. 26 and pays out $0.45 per share on Jan. 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 likely have stocks plunging again. And 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 above along with the nine names from a brand-new, free report from 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 9 high yielders, simply click here -- it's free.

 

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