The World's Best Dividend Portfolio

The latest news on these dividend dynamos

Jun 23, 2014 at 10:04AM

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

19.1%

$1,346.80

3.4%

CorEnergy Infrastructure

$6.93

144

6.9%

$1,082.88

8.5%

Philip Morris International (NYSE:PM)

$78.05

25.5429

4.1%

$2,327.98

16.8%

Extendicare (TSX: EXE.TO) (NASDAQOTH:EXETF)

$6.51

548

6.4%

$3,764.76

5.5%

Ryman Hospitality

$40.96

39.3

4.6%

$1,864.39

15.8%

Plum Creek Timber  

$38.42

26

3.9%

$1,160.12

16.1%

Brookfield Infrastructure Partners

$26.12

38.2825

4.6%

$1,581.07

58.1%

Seaspan

$17.17

136.5

5.8%

$3,230.96

37.9%

Retail Opportunity Investments (NASDAQ:ROIC)

$12.20

81.95

4.1%

$1,289.89

29%

Gramercy Property Trust (NYSE:GPT)

$4.48

223

2.3%

$1,329.08

33%

Cash

     

$1,655.94

 

Dividends Receivable

     

$31.49

 

Original Investment

     

$14,983.36

 

Total Portfolio

     

$20,665.36

37.9%

Investment in SPY

(including dividends)

       

46.5%

Relative Performance

(percentage points)

       

(8.6)

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

The total portfolio is now up 37.9% after gaining a large 3.5 percentage points since the last report. That strong performance was anchored by Extendicare, which has run up in anticipation of the sale of its American unit. We're now down on the index by 8.6 percentage points cumulatively, after gaining 2.1 points on a relative basis. The blended yield fell to 6%.

The largest determinant of the portfolio's performance since last week was the gain 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 and is taking a wait-and-see approach to its divestiture. Whether it's sold or spun off, the unit will be separated from the Canadian operations. On the last conference call, management insisted that an ongoing investigation -- which is holding up the sale -- will be resolved by the end of June. The clock is ticking.

Philip Morris and three other stocks trade ex-dividend later this week, and then more money will flow into the portfolio a few weeks later. Philip Morris remains a top dividend pick, and I expect the company to boost its dividend in its next report, as it has done since becoming public. Since this portfolio bought the stock in mid-2011, the company has increased the dividend 47%. In September we should see what the company has in store.

Gramercy Property remains one of my favorite stocks, and I think it should continue to perform well and grow quickly over the coming year. While the dividend is smaller than some of our other stocks' payouts, Gramercy should grow capital gains much faster. Gramercy recently closed its acquisition of the half of a joint venture portfolio of Bank of America properties that it didn't already own. The move takes it much closer to achieving CEO Gordon DuGan's stated goal of $600 million in acquisitions this year, a move that I think could drive funds from operations per share about 60% higher.

We've had a nice run in Retail Opportunity Investments, but I think it may be time to invest the funds allocated there in another great opportunity. Growth in real estate investment trusts tends to be slow and steady, unless they're small and in high-growth mode, as Gramercy is. ROIC has really swollen in the last few years, and while it is ably run under CEO Stuart Tanz, I question whether it can achieve the kind of growth I want to see.

For now we have over $1,600 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 announcements
Dividend news:

  • 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 paid out $0.0362 per share on June 16.
  • Awilco went ex-dividend on May 19 and paid out $1.15 per share on June 20.
  • Extendicare goes ex-dividend on June 26 and pays out $0.0362 per share on July 15.
  • Gramercy goes ex-dividend on June 26 and pays out $0.035 per share on July 15.
  • Ryman goes ex-dividend on June 25 and pays out $0.55 per share on July 15.
  • Philip Morris goes ex-dividend on June 24 and pays out $0.94 per share on July 11.

All that, of course, means more money in our pockets.

It's fun to sit back and get paid, and thanks to 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; if they do, I'll be inclined to pick up more shares.

Foolish takeaway
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 Retail Opportunity Investments. The Motley Fool owns shares of Extendicare, Gramercy Property Trust, and Retail Opportunity Investments. 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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