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 (NYSE: SO  )

$39.71

25.0818

4.4%

$1,109.37

11.4%

Exelon

$41.36

28.818

6.7%

$906.04

(24%)

National Grid (NYSE: NGG  )

$48.90

20.3693

5.7%

$1,118.68

12.3%

Philip Morris International

$68.49

14.5429

3.9%

$1,282.10

28.7%

Annaly Capital (NYSE: NLY  )

$17.79

72.5

12%

$1,078.08

(16.4%)

Frontier Communications

$7.88

126.4243

8.9%

$577.76

(42%)

Plum Creek Timber (NYSE: PCL  )

$38.42

26

3.5%

$1,252.68

25.4%

Brookfield Infrastructure Partners

$26.12

38.2825

4%

$1,429.47

43%

Vodafone

$26.52

37.5566

6%

$1,026.05

3%

Seaspan

$15.24

95

5.4%

$1,780.30

23%

AT&T

$35.20

28.4

5.2%

$988.04

(1.2%)

Retail Opportunity Investments

$12.20

81.95

4.3%

$1,069.45

7%

Annaly Preferred C

$25.98

38.5

7.6%

$972.13

(2.8%)

Cash

     

$159.27

 

Dividends Receivable

     

$31.78

 

Original Investment

     

$12,983.97

 

Total Portfolio

     

$14,781.18

13.8%

Investment in SPY

(including dividends)

       

14.8%

Relative Performance

(percentage points)

       

(1.0)

Source: S&P Capital IQ.

The portfolio is up 13.8%, up a very solid 0.9 percentage points from last week. The S&P went up, too, but not quite as much, so we moved up relatively, from 1.7 percentage points back to 1.0. In a couple of weeks, we'll have the next wave of dividends rolling into the portfolio, which should help us do well.

The portfolio is now yielding 5.7% -- about three times the S&P – and we have nearly $160 in cash in the account and about $32 more on the way within the month. With more than $100 in cash, that means it's time to reinvest. I'll continue to ponder where those funds should go.

Annaly announced that it was buying the nearly 88% of Crexus Investment (UNKNOWN: CXS.DL.DL  ) that it doesn't own for $13 per share, or $872 million in total. The purchase marks Annaly's push to invest directly in commercial real estate, and is part of the company's broader move away from its traditional stronghold in agency-backed mortgages. Those mortgages are considered safe assets because they're backed by the U.S. government, but the narrowing interest rate spread there has hurt Annaly's profitability.

National Grid came out with a "positive outlook" for its business with expectations of "good operating and financial performance." Unfortunately, the company provided no direction on how much its dividend might grow, and none should be forthcoming until the company's full-year financials are revealed in May. Where the dividend goes depends on how negotiations with its regulator proceed, as fellow Fool Maynard Paton explains in this article.

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

Earnings news:

  • Plum Creek's earnings surprised investors, who pushed the stock up following its fourth-quarter results. The timber company saw earnings increase 30% year over year, to $0.49 per share, surpassing its own estimate of $0.25 to $0.30. Revenue was up 12%. The strong results were attributed to the recovering residential construction market. For 2013, it expects profits of $1.25 to $1.50 per share, and I think this is one of the more conservative ways to play the return of housing.
  • Southern reported quarterly earnings that grew 47% from last year, driven largely by cost-cutting. Fourth-quarter net income came to $0.44 per share, or $383 million, good enough to surprise analysts, who had expected $0.40. The driving force: Southern cut operating expenses by $218 million from the year-ago quarter. Here's how it performed in graphical format.

Dividend news: 

  • Vodafone went ex-dividend on Nov. 20 and pays out $0.519 per share on Feb. 6.
  • Annaly went ex-dividend on Dec. 26 and paid out $0.45 per share on Jan. 29.
  • AT&T went ex-dividend on Jan. 8 and paid out $0.45 per share on Feb. 1.
  • Southern went ex-dividend on Jan. 31 and pays out $0.49 per share on March 6.

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 up more shares.

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 9 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.


Read/Post Comments (4) | Recommend This Article (6)

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 February 02, 2013, at 3:44 AM, LLP4 wrote:

    Perhaps for relative risk statistics on your portfolio might be helpful. Beta perhaps?

    After all, you compare it to the S&P 500.

  • Report this Comment On February 09, 2013, at 1:29 PM, JPhillips81 wrote:

    What does "Investment in SPY (including dividends)" mean, at the bottom of your list?

    Does that mean if you had invested the money in SPY from the start, you would have had a 14.8% return at this point, as opposed to 13.8%?

  • Report this Comment On February 15, 2013, at 12:52 AM, samkon wrote:

    So at 100 you always invest even with the commission fee? I am trying to create a similar method but am trying to figure out the best number where the commission doesn't steal my earned money.

  • Report this Comment On March 03, 2013, at 1:58 PM, DividendsBoom wrote:

    Jim, keep doing update articles. It has been a month silly.

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