The World's Best Dividend Portfolio

The latest news on these dividend dynamos.

Jan 15, 2014 at 4:06PM

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, and then more again in 2013. 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

Exelon

$41.36

28.818

4.6%

$778.73

(34.7%)

National Grid

$48.90

20.3693

5.5%

$1,304.25

30.9%

Philip Morris International

$78.05

25.5429

4.6%

$2,109.33

5.8%

Extendicare (NASDAQOTH:EXETF)

$6.51

548

6.8%

$3,534.60

(0.9%)

Ryman Hospitality

$40.96

39.3

4.6%

$1,707.19

6.1%

Plum Creek Timber

$38.42

26

4%

$1,154.09

15.5%

Brookfield Infrastructure Partners

$26.12

38.2825

4.6%

$1,444.40

44.4%

Seaspan (NYSE:SSW)

$17.17

136.5

5.5%

$3,104.01

32.4%

Retail Opportunity Investments

$12.20

81.95

4.1%

$1,205.48

20.6%

Annaly Preferred D

$25.50

38.9

8.4%

$872.14

(12.1%)

Gramercy Property Trust (NYSE:GPT)

$4.48

223

0%

$1,295.63

29.7%

Cash

     

$21.80

 

Dividends Receivable

     

$65.41

 

Original Investment

     

$14,983.36

 

Total Portfolio

     

$18,597.06

24.1%

Investment in SPDR S&P 500

(including dividends)

       

37.9%

Relative Performance

(percentage points)

       

(13.8)

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

The total portfolio is now up 24.1%. We lost ground to the index since the last report, moving down 2.7 percentage points, to lag by 13.8 points overall. But this is a dividend portfolio, and we expect to underperform the market in flush times and outperform when the market goes lower. The blended yield rose to 5%.

That yield's up from 4.5% last week, due almost entirely to the addition of Extendicare, as I announced then. The Canadian/American health-care company pays out nearly 7%, but I've purchased because it also has significant upside as it divests its American unit, either as a sale or a spinoff. How much could that be worth to the company? Think triple-digit gain. That's why I've called Extendicare my stock of 2014. I go into more specifics here.

The blended yield will increase shortly, too, with the dividend initiation at Gramercy Property Trust. The position is already up 30%, and a new dividend should help attract more investors to the company. Currently, Gramercy's 0% yield brings the portfolio average down. The management team has done an excellent job of keeping investors informed of their plans and then sticking to those plans and even overdelivering. I wouldn't be surprised to see the stock continue to rise significantly this year.

And I continue to like Seaspan common stock. Seaspan has been one of my best-performing stocks thus far, and I think the good times will continue. I expect the company to increase the dividend at the end of Feb. or the start of March, and I think it'll bump it by 20%, helping to move the stock to $25 per share. That would put its free-cash payout ratio around 50% as it continues to build out its fleet. This is still a great pick, and I fully expect this stock to drive our blended yield higher.

So there you have three great stocks that are helping to propel this portfolio forward.

Dividends and earnings announcements
Dividend news:

  • Vodafone went ex-dividend on Nov. 20 and pays out $0.562 per share on Feb. 5.
  • Ryman went ex-dividend on Dec. 24 and paid out $0.50 per share on Jan. 15.
  • Philip Morris went ex-dividend on Dec. 23 and paid out $0.94 per share on Jan. 10.
  • National Grid went ex-dividend on Dec. 6 and pays out about $1.17 per share on Jan. 22.

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 11 tickers above, along with the nine names from a 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 nine high-yielders, simply click here -- it's free.

Jim Royal owns shares of all 11 companies listed in the table and Extendicare and has the following options: long May 2014 $22 calls on Seaspan and short May 2014 $30 calls on Seaspan.The Motley Fool owns shares of Extendicare, Gramercy Property Trust, Retail Opportunity Investments, Ryman Hospitality Properties, and Seaspan and has the following options: long May 2014 $22 calls on Seaspan and short May 2014 $25 calls on Seaspan. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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