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

4.6%

$1,078.52

8.3%

Exelon

$41.36

28.818

7.1%

$866.27

(27.3%)

National Grid (NYSE: NGG  )

$48.90

20.3693

5.7%

$1,115.63

12%

Philip Morris International

$68.49

14.5429

3.8%

$1,296.35

30.2%

Annaly Capital (NYSE: NLY  )

$17.79

72.5

12.2%

$1,067.93

(17.2%)

Frontier Communications (NASDAQ: FTR  )

$7.88

126.4243

9.2%

$556.27

(44.2%)

Plum Creek Timber (NYSE: PCL  )

$38.42

26

3.6%

$1,223.04

22.4%

Brookfield Infrastructure Partners

$26.12

38.2825

4.2%

$1,375.11

37.5%

Vodafone

$26.52

37.5566

6%

$965.58

(3.1%)

Seaspan (NYSE: SSW  )

$15.24

95

5.7%

$1,690.05

16.8%

AT&T

$35.20

28.4

5.3%

$942.88

(5.7%)

Retail Opportunity Investments

$12.20

81.95

4.3%

$1,077.64

7.8%

Annaly Preferred C

$25.98

38.5

7.6%

$972.13

(2.8%)

Cash

     

$68.52

 

Dividends Receivable

     

$110.24

 

Original Investment

     

$12,983.97

 

Total Portfolio

     

$14,406.15

11%

Investment in SPY
(Including Dividends)

       

13.5%

Relative Performance (Percentage Points)

       

(2.5)

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

The portfolio is up 11%, down 0.3 percentage points from last week. The S&P, however, went up, and so we moved down relatively, from 1.5 percentage points back to 2.5. Now that the government has worked out the dividend tax issue, let's hope that dividend stocks can return to their former glory. Since the election, the S&P has had all the fun, but I'd like to be ahead.

The portfolio is now yielding 5.8% -- about three times the S&P -- and we have nearly $70 in cash in the account and about $110 more on the way within two weeks.

What's going to happen to the dividend of National Grid, one of the largest in the portfolio? The company already offers around a 6% yield, but U.K. regulators may not be so generous when the company signs its next set of contracts, which will run from this April 1 to March 31, 2021. And that could determine what type of dividend increases investors could see in future years. Fellow Fool Roland Head says to expect something less heady than the 8% that investors have gotten used to recently -- maybe something around half of that. You can read the rest of his analysis here.

Plum Creek agreed to a deal that sees the timber company acquire a 25-year royalty interest in crushed stone quarries in South Carolina. The deal seems a bit unusual, but let's see where it goes. I continue to like Plum Creek for its exposure to the rebounding U.S. housing market, and shares could see a substantial increase in coming years if housing normalizes.

Speaking of somewhat unusual tie-ups, Frontier announced this week that it's offering natural gas and electricity in Ohio through FTR Energy Services. In addition, FTR will offer 100% green energy to consumers where available. Fellow Fool Dan Caplinger looked at Frontier's leadership, namely CEO Maggie Wilderotter, and found one area particularly lacking -- her alignment with shareholders. You can read his full analysis here.

Perhaps my favorite stock in the portfolio, Seaspan has signed an agreement to purchase five new 14,000 20-foot-equivalent unit (TEU) ships, which are scheduled for delivery in 2015. The company has already signed 10-year fixed-rate charters on the vessels with Yang Ming Marine Transport. Seaspan will pay for the ships with proceeds from its recent preferred stock offerings and future debt issuance. That's all good for holders of the common stock, since it should allow for increasing dividends over time.

Fool analyst Matt Koppenheffer isn't too sanguine on the prospects for Annaly in 2013. In this video, he tells you to watch out this year for the consistently declining interest rate spread, which is being helped along by the Federal Reserve's purchase of securities. As I've mentioned before, I'm interested in selling Annaly at the right price, but it helps protect the portfolio as a whole against a marketwide fall.

Dividends and earnings announcements
Here's 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.
  • National Grid went ex-dividend on Nov. 28 and paid out nearly $1.15 per share on Jan. 16.
  • Philip Morris went ex-dividend on Dec. 24 and paid 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.
  • AT&T went ex-dividend on Jan. 8 and pays out $0.45 per share on Feb. 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 these 13 tickers above 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 (3) | Recommend This Article (16)

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 January 21, 2013, at 2:00 PM, martcoop wrote:

    Thanks for the article, good information. Plum Creek hasn't raised their dividend since 2007, I'm not too impressed with that.

  • Report this Comment On January 22, 2013, at 7:39 PM, donlefkowitz wrote:

    what do consider "the right price" for Annaly?

  • Report this Comment On February 03, 2013, at 9:36 PM, chris293 wrote:

    This is a dangerous game buying stocks for a big dividend. I have my doubts about some of these stocks being able to maintain their dividends as well as keeping their stock prices up.

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