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%

$1,084.04

8.8%

Exelon (NYSE: EXC  )

$41.36

28.818

7.2%

$843.21

(29.2%)

National Grid

$48.90

20.3693

5.7%

$1,134.37

13.9%

Philip Morris International (NYSE: PM  )

$68.49

14.5429

4.0%

$1,269.45

27.4%

Annaly Capital (NYSE: NLY  )

$17.79

72.5

12.3%

$1,067.93

(17.2%)

Frontier Communications (Nasdaq: FTR  )

$7.88

126.4243

9.2%

$548.68

(44.9%)

Plum Creek Timber

$38.42

26

3.6%

$1,211.60

21.3%

Brookfield Infrastructure Partners

$26.12

38.2825

4.1%

$1,404.97

40.5%

Vodafone (Nasdaq: VOD  )

$26.52

37.5566

6.0%

$1,000.88

0.5%

Seaspan

$15.24

95

5.6%

$1,682.45

16.2%

AT&T

$35.20

28.4

5.1%

$976.11

(2.4%)

Retail Opportunity Investments

$12.20

81.95

4.3%

$1,075.18

7.5%

Annaly Preferred C

$25.98

38.5

7.6%

$964.04

(3.6%)

Cash

     

$45.10

 

Dividends Receivable

     

$133.66

 

Original Investment

     

$12,983.97

 

Total Portfolio

     

$14,455.91

11.3%

Investment in SPY

(including dividends)

       

12.8%

Relative Performance

(percentage points)

       

(1.5)

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

Welcome back to the World’s Best Dividend Portfolio for 2013. After a lackluster end to the year, stocks have performed reasonably well in the first week of the year, and that holds for our portfolio, too. Since I reported a couple of weeks ago, this portfolio is up 11.3%, up from 7.5%. Not bad, but the S&P did us better, and we moved down relatively, from 1.1 percentage points back to 1.5. That’s not big in the scheme of things, but I’d rather be ahead. Now that the dividend tax issue has been worked out by the government, let’s hope that dividend stocks can return to their former glory.

The portfolio is now yielding 5.8% -- about three times the S&P's – and we have $45 in cash in the account and nearly $134 more on the way within three weeks.

Fellow Fool Taylor Muckerman discusses the one thing you should be watching at Exelon -- natural gas. When gas goes up, Exelon profits could come rolling back. Watch his video for more.

Fool analyst Matt Koppenheffer gives his perspective on one of our holdings, Annaly, and doesn’t like what he sees too much. In this video, he outlines what you should watch at Annaly in 2013. I have to agree with him: The near future isn’t going to look as cheery as the recent past. I’m looking to sell Annaly at the right price, though I do like the hedge it provides the portfolio as a whole, should the market tank.

Fool Dan Caplinger gives us four things to watch at Frontier Communications in 2013. In his article, Dan highlights competition and Frontier’s need to cross-sell high-margin service bundles as a way to help defuse the threat. So pay particular attention to how many new services Frontier can add to already-existing accounts. Dan’s article has more to look for, so check it out.

Dan also shows why Philip Morris’ leadership is up to the task in the year ahead -- namely a well-aligned and highly experienced CEO. Read Dan’s article here, and then check out his premium report on this blue-chip tobacco stock.

There’s been some speculation that Verizon could buy out Vodafone’s  45% stake in their joint wireless unit. That joint venture is a cash machine, and shares of Vodafone perked up on the news. A sale could leave Vodafone flush with cash, but I find it somewhat difficult to believe that Vodafone would give up such a cash cow. It’s also hard to believe that Verizon could stomach the whole deal, which some estimate at more than $100 billion. Verizon appears to need this deal more than Vodafone, putting the latter in a much better negotiating position.

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

Dividend news: 

  • Vodafone went ex-dividend on Nov. 20 and pays out $0.519 per share on Feb. 6.
  • National Grid went ex-dividend on Nov. 28 and pays out nearly $1.15 per share on Jan. 16.
  • Frontier went ex-dividend on Dec. 5 and pays out $0.10 per share on Dec. 31.
  • Philip Morris went ex-dividend on Dec. 24 and paid out $0.85 per share on Jan. 11.
  • Annaly went ex-dividend on Dec. 26 and pays out $0.45 per share on Jan. 29.
  • AT&T went ex-dividend on Jan. 8 and pays out $0.45 per share on Feb. 1.

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 more 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.

If you like dividends, consider the 13 tickers above along with the nine names from a brand-new free report from 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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