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 money to the portfolio. 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

Southern $39.71 25.0818 4.3% $1,135.70 14%
Exelon (NYSE: EXC  ) $41.36 23.818 5.9% $1,019.47 (14.5%)
National Grid (NYSE: NGG  ) $48.90 20.3693 5.4% $1,140.17 14.5%
Philip Morris International (NYSE: PM  ) $68.49 14.5429 3.7% $1,341.73 34.7%
Annaly Capital (NYSE: NLY  ) $17.79 72.5 12.7% $1,263.68 (2%)
Frontier Communications $7.88 126.4243 8.4% $611.89 (38.6%)
Plum Creek Timber $38.42 26 3.8% $1,157.26 15.9%
Brookfield Infrastructure Partners $26.12 38.2825 4.3% $1,334.53 33.5%
Vodafone (Nasdaq: VOD  ) $26.52 37.5566 5% $1,082.94 8.7%
Seaspan $14.90 76 6% $1,374.32 11.3%
AT&T $35.20 28.4 4.6% $1,086.02 8.6%
Retail Opportunity Investments $12.20 81.95 4.4% $1,040.77 4.1%
Annaly Preferred C $25.92 38.5 7.5% $986.76 (1.3%)
Cash       $67.24  
Dividends Receivable       $45.46  
Original Investment       $12,983.97  
Total Portfolio       $14,687.93 13.1%
Investment in SPY (including dividends)         12.4%
Relative Performance (percentage points)         0.7

Source: S&P Capital IQ.

Our portfolio was up nicely for the week, moving from 12.7% to 13.1% this week. And we gained ground on the S&P, moving from trailing the market by 2.1 percentage points to beating it by 0.7 percentage points. Our blended yield remains at 5.8%, and we have three cash dividends coming into the portfolio in the next 10 days. I'm confident in the long-run performance of this dividend portfolio, and I expect time will bear us out.

When is the next special dividend from Vodafone on the way? That depends on when its joint venture with Verizon Communications has the cash, and that's unclear, says Verizon CFO Francis Shammo. Shammo says that the JV has purchased spectrum assets that required $4 billion, leaving it with only about $4 billion in cash, and that the JV must maintain the cash on its balance sheet. According to Investor's Business Daily, some speculate that Vodafone could merge with Verizon.

How attractive is National Grid as a retirement investment? Fellow Fool Roland Head runs through the numbers on this U.K. utility and comes up with some very positive news. See the article here.

One Fool blogger thinks utility Exelon is just too cheap to ignore. With its 5.9% yield and lousy price performance over the past year, I'm inclined to agree. You can read his analysis here.

Annaly's dividend continues to slip. The company announced earlier this week that its upcoming dividend will be $0.50 per share. That's down from $0.55 in the last two quarters and from $0.65 in July 2011. The increased duration of near-zero interest rates, through 2015, means Annaly's funding costs should remain low, a positive for the company and the dividend.

Dividends and other announcements
We're through earnings season, and have lots of dividend news for the moment.

Dividend news:

  • Frontier went ex-dividend on Sept. 5 and pays out $0.10 per share on Sept. 28.
  • Annaly's Preferred C shares went ex-dividend on Aug. 31 and pays $0.47 per share on Oct. 1.
  • Brookfield Infrastructure went ex-dividend on Aug. 29 and pays $0.375 per share on Sept. 27.
  • Philip Morris goes ex-dividend on Sept. 25 and pays outs $0.85 per share on Oct. 11.
  • Annaly goes ex-dividend on Sept. 27 and pays out $0.50 per share on Oct. 29.

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.

Learn more about Annaly in the Fool's brand-new premium report on the mortgage REIT. You'll get a year's worth of free updates keeping you in the mix even as conditions change in the marketplace. Click here and get your look today.

Jim Royal, Ph.D., owns shares of the 13 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 on 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.


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