This Is the World’s Best Dividend Portfolio

The latest news on these dividend dynamos.

Jun 14, 2014 at 2:04PM

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

Awilco Drilling

$23.25

56

19.7%

$1,305.36

0.3%

CorEnergy Infrastructure

$6.93

144

7.2%

$1,023.84

2.6%

Philip Morris International

$78.05

25.5429

4.3%

$2,254.49

13.1%

Extendicare (TSX:EXE) (NASDAQOTH:EXETF)

$6.51

548

6.6%

$3,633.24

1.8%

Ryman Hospitality

$40.96

39.3

4.7%

$1,823.52

13.3%

Plum Creek Timber  

$38.42

26

4%

$1,144.91

14.6%

Brookfield Infrastructure Partners

$26.12

38.2825

4.7%

$1,566.14

56.6%

Seaspan

$17.17

136.5

6%

$3,113.57

32.8%

Retail Opportunity Investments

$12.20

81.95

4.2%

$1,258.75

25.9%

Gramercy Property Trust

$4.48

223

2.4%

$1,326.85

32.8%

Cash

     

$1,571.70

 

Dividends Receivable

     

$115.73

 

Original Investment

     

$14,983.36

 

Total Portfolio

     

$20,138.09

34.4%

Investment in SPY

(including dividends)

       

45.1%

Relative Performance

(percentage points)

       

(10.7)

Source: S&P Capital IQ.

The total portfolio is now up 34.4%, after dropping 1.6 percentage points since the last report. That was due largely to one stock, which I'll discuss later. We're now down on the index by 10.7 points cumulatively -- after slipping 1.4 percentage points relatively since the last report. The blended yield remains at 6.2%.

The largest determinant of the portfolio's performance since last week was the drop in the stock of Extendicare. The stock has had a nice run-up over the past month, but Mr. Market continues to severely discount the value of the American unit here, and is taking a wait-and-see approach to the divestiture of the American unit. And whether it's sold or spun off, the unit will be separated from the Canadian operations. On the last conference call management insisted that a resolution to an ongoing investigation -- what is holding up the sale -- will be resolved by the end of June.

So how severely discounted is the company? My estimates suggest that the stock could easily trade at $12 or more per share, if the real value of the American unit is factored in properly. This special situation stock is the largest holding by far in my Special Situations portfolio. In the following article, I go through my valuation of the company and show you why it's dramatically undervalued.

For now we have more than $1,500 in cash in the portfolio. I have a couple good ideas for the cash, and I'll reveal which one I've chosen in future weeks, so stay tuned.

Dividend news

  • Exelon went ex-dividend on May 14 and paid out $0.31 per share on June 10.
  • Brookfield Infrastructure went ex-dividend on May 28 and pays out $0.48 per share on June 30.
  • Extendicare went ex-dividend on May 28 and pays out $0.0362 per share on June 16.
  • Awilco went ex-dividend on May 19 and pays out $1.15 per share on June 20.

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.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That’s beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor’s portfolio. To see our free report on these stocks, just click here now.

Jim Royal owns shares of all 10 companies listed in the table. The Motley Fool recommends BIP, NGG, and ROIC. The Motley Fool owns shares of CORR, EXETF, GPT, RHP, ROIC, and SSW. 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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