Last Tuesday, I invested my cold, hard cash into 10 high-yield dividend stocks that I believe will beat the market. After one week, let's look at the news from these companies, and see the results:
|Philip Morris |
|National Grid |
|Annaly Capital Management |
|Frontier Communications |
|Southern Co |
|France Telecom |
|Vodafone Group |
|Eli Lilly |
|Bristol-Myers Squibb |
|Investment In SPY|
|Return vs SPY|
Source: Capital IQ, a division of Standard & Poor's.
Last week, the market had its biggest weekly drop since November, with the Dow down 2.1% and the S&P 500 down 1.7%. Unless you've been living under a rock, you know that the market has been spooked by rising oil prices and the situation in Libya and the Middle East. Our portfolio underperformed the market by 0.3%, and since it's only been a week, I'm not worried at all. We're investing for the long term, and the results will bear it out.
Mover & shaker
Of our stocks, the biggest mover in the portfolio the past week was Frontier Communications, which dropped 10%. Frontier's revenue of $1.36 billion missed analyst expectations of $1.39 billion, and its earnings per share of $0.05 missed expectations of $0.10 per share. Investors shouldn't be hugely alarmed. Any company that makes the kind of large merger that Frontier did last year will run into headwinds. While net income suffered, Frontier generated ample cash to pay its dividend and cover the interest payments on its debt. The company's now-8.8% dividend looks more enticing than it did before.
Annaly Capital Management: Annaly announced a large share offering of 75 million new shares at $17.30 per share. No need to worry, though -- Annaly is a REIT, andit has to pay out 90% of its income as dividends. If Annaly wants to expand, it either has to take on more debt, or issue shares. By issuing shares now, the company is keeping its options open to deal with any monetary changes, and setting itself up to continue to profit from the lowest interest rates in years. For more on what the news means for investors in Annaly Capital, click here.
France Telecom: Last week, the company announced full-year earnings of $6.5 billion in 2010, a 62% rise from 2009's profit, helped along by a $1.2 billion cost reduction in its U.K. operations. In France, which accounts for the majority of revenue, the company faces pressure as the government raises the value-added tax on telecom services and competitors decide to eat the increased cost instead of passing it on to consumers. This could affect earnings moving forward, but it will not affect the company's dividend. Earlier in the year, the company announced that it will pay a dividend of 1.40euros ($1.92) in 2011 and 2012, and the company is sticking by its plans.
Altria: Myself and others have highlighted the potentially dire situation for Altria's competition, should the FDA ban menthol cigarettes. While Altria believes "evidence-based information would not support a recommendation to ban menthol or otherwise impose additional restrictions that would deprive adult smokers of menthol cigarettes," if the ban does go through, Altria will benefit hugely, and rival Lorillard will be crushed.
Adding credence to this view, last week Lorillard and Reynolds American sued the FDA to stop it from receiving or relying on recommendations from its tobacco-products advisory committee. The firms believe that the committee fails to meet fair-balance requirements, and that certain members have conflicts of interest.
There are two upcoming dividends for the portfolio:
- Frontier Communications will pay a dividend of $0.1875 per share on March 31, 2011. The ex-dividend date is March 7, 2011.
- Altria will pay a dividend of $0.38 per share on April 11. The ex-dividend date is March 11, 2011.
My Foolish bottom line
I will keep tracking my performance and updating you on the portfolio. To follow the news on all these companies, I recommend that you sign up for the Fool's free My Watchlist tool. Consider the 10 tickers above along with the six names from a new, free report from the Motley Fool's Founders called 6 Stocks David and Tom Gardner Think You Should Be Watching. Tens of thousands have requested access to this report, and today I invite you to download it at no cost to you. To get instant access to the names of these six stocks, simply click here -- it's free.
Dan Dzombak can be found on his Twitter account: @DanDzombak. He owns shares of Altria, Philip Morris, National Grid, Annaly Capital Management, Frontier, Southern Co, France Telecom, Vodafone Group, Eli Lilly, and Bristol-Myers Squibb.
Vodafone is a Motley Fool Inside Value recommendation. Philip Morris is a Motley Fool Global Gains pick. France Telecom, National Grid, and Southern are Motley Fool Income Investor picks. The Fool owns shares of Altria, Annaly, and Philip Morris. 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.