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

4.6%

$1,085.79

9%

Exelon (NYSE: EXC  )

$41.36

28.818

7%

$863.39

(27.6%)

National Grid (NYSE: NGG  )

$48.90

20.3693

5.7%

$1,151.27

15.6%

Philip Morris International

$68.49

14.5429

3.8%

$1,313.66

31.9%

Annaly Capital (NYSE: NLY  )

$17.79

72.5

13.6%

$1,064.30

(17.5%)

Frontier Communications (Nasdaq: FTR  )

$7.88

126.4243

8.5%

$599.25

(39.8%)

Plum Creek Timber

$38.42

26

4%

$1,102.14

10.3%

Brookfield Infrastructure Partners

$26.12

38.2825

4.4%

$1,293.57

29.4%

Vodafone

$26.52

37.5566

5.9%

$965.20

(3.1%)

Seaspan (NYSE: SSW  )

$15.14

89

6.4%

$1,386.62

2.9%

AT&T

$35.20

28.4

5.2%

$963.61

(3.6%)

Retail Opportunity Investments

$12.20

81.95

4.5%

$1,031.75

3.2%

Annaly Preferred C

$25.98

38.5

7.6%

$964.43

(3.6%)

Cash

     

$104.98

 

Dividends Receivable

     

$103.03

 

Original Investment

     

$12,983.97

 

Total Portfolio

     

$13,992.99

7.8%

Investment in SPY
(Including Dividends)

       

9%

Relative Performance
(Percentage Points)

       

(1.2)

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

Our portfolio was up nicely for the week, moving from 5.9% to 7.8%. But the S&P did slightly better, so we moved from down 1.1 to down 1.2 percentage points. That's disappointing for a portfolio that's led the S&P for much of the past year. But given the uncertainty over how the U.S. tax code will treat dividends next year, it's not too hard to fathom. People are getting all hot and bothered about a rise in dividend taxes -- but dividend stocks have outperformed in the past when taxes were significantly higher, so I'm not concerned on that front.

Our portfolio is now yielding 6.1% -- much higher than the S&P while we wait for our gains. Of course, we should expect this average to come down a bit, as Annaly will probably cut its dividend and Exelon has indicated that it might cut as well. But while Annaly's common dividend will come down, the Series C preferred dividend will remain at the same rate, nearly $0.48 per quarter, until at least the call date in May 2017.

We have had tons of dividends entering the portfolio in the past few weeks, and we have quite a few more in the next few weeks. I love it! We've now built more than $100 in cash in the account, and we'll have more than $100 in a few more weeks when all those dividends reach the account. So it's time to reinvest.

As I did last time, I'm opting to buy more Seaspan. The near-term catalysts are simply too strong: a potential sizable dividend increase in late February and maybe even a stock buyback. Both boosted the stock markedly last year. The company is paying out around 20% of its distributable cash flow, so there's clearly room to move up that already-attractive 6.4% yield. I'll make that buy next week, Fool's Rules permitting.

Fellow Fool Kevin Godbold rates the dividend at National Grid and likes what he sees. He scores the U.K. utility's dividend fairly high and notes in particular its very good growth rate in recent years. You can read the article here.

Exelon is powering on with its expansions plans, according to Fool Sara Murphy. In her article she details how the utility is investing billion in the smart grid, including by installing smart meters in 4 million homes.

Dividends and earnings announcements
Here is the recent news on earnings and dividends:

Dividend news: 

  • Southern went ex-dividend on Nov. 1 and pays out $0.49 per share on Dec. 6.
  • Retail Opportunity Investments went ex-dividend Nov. 9 and paid out $0.14 per share on Nov. 30.
  • Exelon went ex-dividend Nov. 13 and pays out $0.525 per share on Dec. 9.
  • Plum Creek went ex-dividend Nov. 14 and paid out $0.42 per share on Nov. 30.
  • Vodafone went ex-dividend on Nov. 20 and pays out $0.519 per share on Feb. 6.
  • Brookfield Infrastructure went ex-dividend on Nov. 28 and pays out $0.375 per share on Dec. 31.
  • National Grid went ex-dividend on Nov. 28 and pays out nearly $1.15 per share on Jan. 16.
  • Annaly Series C went ex-dividend on Nov. 29 and pays out almost $0.48 per share on Dec. 31.
  • Frontier goes ex-dividend on Dec. 5 and pays out $0.10 per share on Dec. 31.

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 13 tickers along with the nine names from a brand-new 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.


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