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 moneyto 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

Awilco Drilling (NASDAQOTH: AWLCF  )

$23.25

56

20.8%

$1,236.48

(5%)

CorEnergy Infrastructure (NYSE: CORR  )

$6.93

144

7.4%

$997.92

0%

National Grid (NYSE: NGG  )

$48.90

20.3693

4.8%

$1,519.96

52.6%

Philip Morris International

$78.05

25.5429

4.4%

$2,190.05

9.9%

Extendicare (NASDAQOTH: EXETF  )

$6.51

548

7.1%

$3,408.56

(4.5%)

Ryman Hospitality

$40.96

39.3

4.9%

$1,776.36

10.4%

Plum Creek Timber

$38.42

26

4.1%

$1,116.96

11.8%

Brookfield Infrastructure Partners

$26.12

38.2825

4.8%

$1,548.14

54.8%

Seaspan (NYSE: SSW  )

$17.17

136.5

6.3%

$2,959.32

26.3%

Retail Opportunity Investments

$12.20

81.95

4%

$1,296.45

29.7%

Gramercy Property Trust 

$4.48

223

2.6%

$1,224.27

22.5%

Cash

     

$41.56

 

Dividends Receivable

     

$84.77

 

Original Investment

     

$14,983.36

 

Total Portfolio

     

$19,400.80

29.5%

Investment in SPY (Including Dividends)

       

41%

Relative Performance (Percentage Points)

       

(11.5)

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

The total portfolio is now up 29.5%, after climbing 0.1 percentage points from the last report. We lost a bit on the index -- 0.5 percentage points -- to lag by 11.5 points cumulatively. The blended yield slipped to 6.3%, as a consequence of recent buys, which I'll explain in a moment. May is a great month for the account, as a number of stocks go ex-dividend, soon followed by a flow of cash into the account.

I completed the transactions that I had announced earlier. I sold off the portfolio's stock in Exelon and rolled those proceeds into CorEnergy Infrastructure, a tiny REIT that owns cash-producing energy assets. Its small size should help it grow quickly, and the company is looking at quite a few deals that could quickly boost assets. With its much larger and still-safe dividend and the potential for substantial growth, I think we'll see much better returns here than we would for Exelon. (If you want to read my whole case for CorEnergy, take a 100% free trial to Motley Fool Income Investor.)

Second, I sold my stake in Annaly Series D preferred stock and took most of the cash in the portfolio that had built up from dividends, and plowed them all into Awilco Drilling. The drilling company operates two rigs in the North Sea and pays out nearly all of its free cash flow as a dividend, now at a meaty 20.8%. It's not particularly highly leveraged and has solid contracts for the next couple of years. A potential tax rate increase in the U.K. could ding profitability in the short term, but I still think Awilco is a great place to be now.

As I promised last week, in this week's column I'm detailing what I think are the top five stocks in the portfolio over the next year.

1. Extendicare -- could see upside of 100%. During the last earnings report, management noted that it had found a buyer for the American assets and was now waiting on legal issues with the government to be cleared up before it could proceed. We should know further details by the end of June.

2. Gramercy Property Trust -- could see upside of 50%. This REIT is rapidly building out its portfolio, and its assets are expected to double in size this year, leading to a 60% increase in FFO per share.

3. CorEnergy Infrastructure -- could see upside of 30%. The timing of deals (if any) is unknown, so the upside here is more uncertain, but you have that luscious dividend to help you wait patiently.

4. Seaspan -- could see upside of 25%. I expect the dividend to continue to grow in early March as it has for the past few years. This shipper keeps growing its fleet, and that means more money flowing into our pockets.

5. Awilco Drilling -- could see upside of 25%. In the return expectation here I'm factoring in the dividend as well. Investors may well take notice of the stock this year, and even a modest price rise to $30 would still leave this stock with around a 15% yield.

For exactly the reverse reason -- return expectations that are too low -- I've decided to sell my stock in National Grid and will probably do so before the stock trades ex-dividend in early June. With its current yield of 4.8% and future dividend growth of about 4% annually, I think investors will receive about a 9% total return from here. I think the portfolio and market have too many other great opportunities. I haven't decided where the cash will go yet. So as long as the stock remains about $74 per share, I'm selling it.

Dividend announcements
Dividend news:

  • Extendicare went ex-dividend on April 25 and paid out $0.0362 per share on May 15.
  • Plum Creek went ex-dividend on May 14 and pays out $0.44 per share on May 30.
  • Exelon went ex-dividend on May 14 and pays out $0.31 per share on June 10.
  • Brookfield Infrastructure goes ex-dividend on May 28 and pays out $0.48 per share on June 30.
  • Extendicare goes ex-dividend on May 28 and pays out $0.0362 per share on June 16.

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 11 tickers above along with the nine names in a 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.

Jim Royal owns shares of all 11 companies listed in the table. The Motley Fool owns shares of Extendicare, Gramercy Property Trust, Retail Opportunity Investments, Ryman Hospitality Properties, and Seaspan. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


Read/Post Comments (7) | Recommend This Article (8)

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 May 20, 2014, at 9:32 PM, gistanleyjr wrote:

    Try: Marine Harvest ASA ADR; Sea Drill SDRL; Sea Drill Partners SDRL; Ship Finance SFL; North Atlantic Drilling NADL; Cheniere Partners CQP.

  • Report this Comment On May 21, 2014, at 11:38 AM, SyDVooh wrote:

    Awilco Drilling, Plc (AWLCF) is a screaming buy. Huge dividend yield, and plenty of upside potential, with excellent management too. Trading on the Oslo Exchange, and in the USA OTC, has let this stock stay under most investor's radar, especially as its dividend yield is being under reported by most sources of the type of info.

  • Report this Comment On May 21, 2014, at 12:19 PM, Schellenger wrote:

    Awilco Drilling, Plc (AWLCF) just started paying a dividend 3 months ago... seems risky, not a long history of dividend payout.

  • Report this Comment On May 21, 2014, at 1:36 PM, SyDVooh wrote:

    @Schellenger: This will be Awilco's fifth consecutive quarterly dividend in a row. Your information is incorrect.

  • Report this Comment On May 23, 2014, at 10:18 PM, CamptownLady wrote:

    How did Vodaphone work out for you?

  • Report this Comment On May 26, 2014, at 6:51 PM, Schellenger wrote:

    @Sy - I stand corrected... I was using Yahoo Finance historical prices as my source. Per Awilco's website, their first dividend payout was in Q1FY2013. Still not a long history of dividends but I acquired a thousand shares - if it pays out at current rates for 5 years I will double my $.

  • Report this Comment On June 16, 2014, at 9:22 AM, dab007 wrote:

    i own seadrill i also own awlcf and untill friday i owned esv i sold esv for a 2 month profit of 6.5 % and also sold kog and tplm all at a profit and i put all the money in awlcf why not get 3 times the dividend of esv with 100 utilization and it being a possible takeout candidate also 53 % profit same as seadrill with 1/3 the debt

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