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, earlier this month, I added even more money to the portfolio. These 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 $39.71 25.0818 4.1% $1,196.40 20.1%
Exelon $41.36 23.818 5.4% $1,126.21 (5.5%)
National Grid $48.90 20.3693 5.7% $1,070.61 7.5%
Philip Morris International $68.49 14.5429 3.4% $1,302.32 30.7%
Annaly Capital $17.92 65.5 12.9% $1,111.54 (5.3%)
Frontier Communications $7.88 126.4243 10.3% $470.30 (52.8%)
Plum Creek Timber $38.42 26 4.1% $1,051.96 5.3%
Brookfield Infrastructure Partners $26.12 38.2825 4.5% $1,287.06 28.7%
Vodafone $26.52 37.5566 5% $1,083.32 8.8%
Seaspan $14.90 76 6.5% $1,166.60 3%
AT&T $35.20 28.4 4.9% $1,007.63 0.8%
Retail Opportunity Investments $12.20 81.95 4.2% $1,014.54 1.5%
Annaly Preferred C $25.92 38.5 7.3% $1,005.24 0.7%
Cash       $99.31  
Dividends Receivable       $115.23  
Original Investment       $12,983.97  
Total Portfolio       $14,108.26 8.7%
Investment in SPY (including dividends)         7.8%
Relative Performance (percentage points)         0.9

Source: S&P Capital IQ.

Our portfolio gained again this week, moving from 8% last week to 8.7% this week. But we lost ground on the S&P, which moved up a screaming 3.3%. We're still outperforming by 0.9 percentage points, but up-days tend to do better for the S&P than our portfolio. On the other hand, we do better on down-days or weeks. Our blended yield remains at 5.8%.

It looks like Vodafone (Nasdaq: VOD  ) may be on the receiving end of another fat dividend from Verizon Wireless, its joint venture with Verizon Communications. The reports suggest that Vodafone will receive $4.5 billion in cash, which it would then pay out to shareholders as a special dividend. If that's the case, it will add several more percent to the stated yield. Earlier this year, the company paid out a similar special dividend that it had previously received from the venture.

Fellow Fool Brenton Flynn discusses three reasons Frontier (Nasdaq: FTR  ) is a buy in this video. He thinks the system integration from the Verizon assets purchased two years ago could finally be complete, leading to cost savings. He also think its price/free cash flow ratio looks cheap.

Fellow Fool Dan Caplinger surveys the prospects for Southern (NYSE: SO  ) in this article. He notes Southern's move into nuclear power as well as its decision to shift fuel to natural gas from coal, noting that the switch will cost a lot of money. As he notes, Southern's yield is one of its lowest on record, though that's somewhat compensated for by its strong capital gain in the recent past.

Fool Keith Speights digs deep into the industry, too, and says that lower fuel costs may not be the boon for Southern that they seem. He also notes that Exelon (NYSE: EXC  ) is aiming for 67% of its fossil power to come from natural gas in the next few years. You can read his article here.

Dividends and other announcements
We're at the start of earnings season, and we have little dividend news for the moment.

Earnings news:

  • Philip Morris (NYSE: PM  ) had a modest quarter. The company's earnings fell 3.8%, to $2.32 billion, ahead of analysts' estimates. But its per-share earnings actually grew, to $1.36, thanks to billions in buybacks. The company had a particularly good quarter in its Eastern Europe, Middle East, and Africa segment, where shipping volume rose 5.1%. But overall, volume fell 1.2%.

Dividend news:

  • National Grid went ex-dividend on May 30 and pays out $2.017 per share on Aug. 15.
  • Vodafone went ex-dividend on June 6 and pays out $1.015 per share on Aug. 1.
  • Annaly went ex-dividend on June 27 and pays out $0.55 per share on July 26.

All of 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 be holding these stocks for at least a year and will continue to track the portfolio over the course of the year, including news on these companies.

If you're craving more dividend payers, I invite you to read the free report from the Motley Fool titled "3 American Companies Set to Dominate the World." Today I invite you to download it at no cost to you. To get instant access to the names of these dominant dividend stocks, simply click here -- it's free.

Jim Royal, Ph.D., owns shares of the 10 portfolio stocks mentioned in the table. The Motley Fool owns shares of Seaspan, Brookfield Infrastructure, ROIC, and Annaly. Motley Fool newsletter services have recommended buying shares of Vodafone, ROIC, National Grid, Brookfield Infrastructure, Exelon, Annaly, and Southern, as well as writing covered straddle positions in Exelon and 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.


Read/Post Comments (0) | 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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1951430, ~/Articles/ArticleHandler.aspx, 11/28/2014 7:30:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement