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The World’s Best Dividend Portfolio

By Jim Royal - Dec 18, 2012 at 3:58PM

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The latest news on these dividend dynamos.

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%

$1,077.26

8.2%

Exelon (EXC 2.51%)

$41.36

28.818

7.1%

$854.74

(28.3%)

National Grid (NGG 2.92%)

$48.90

20.3693

5.7%

$1,160.64

16.5%

Philip Morris International (PM 1.80%)

$68.49

14.5429

3.9%

$1,276.14

28.1%

Annaly Capital (NLY 3.60%)

$17.79

72.5

14%

$1,036.75

(19.6%)

Frontier Communications (FTR)

$7.88

126.4243

8.7%

$581.55

(41.6%)

Plum Creek Timber

$38.42

26

3.9%

$1,106.04

10.7%

Brookfield Infrastructure Partners

$26.12

38.2825

4.4%

$1,310.03

31%

Vodafone

$26.52

37.5566

5.9%

$970.09

(2.6%)

Seaspan

$15.24

95

6%

$1,595.05

10.2%

AT&T

$35.20

28.4

5.2%

$965.88

(3.4%)

Retail Opportunity Investments

$12.20

81.95

4.4%

$1,053.88

5.4%

Annaly Preferred C

$25.98

38.5

7.6%

$964.43

(3.6%)

Cash

     

$32.74

 

Dividends Receivable

     

$75.61

 

Original Investment

     

$12,983.97

 

Total Portfolio

     

$14,060.83

8.3%

Investment in SPY
(including dividends)

       

9%

Relative Performance
(percentage points)

       

(0.7)

Source: S&P Capital IQ.

Our portfolio was up a bit for the week, moving from 8.2% to 8.3%. The S&P did the same, leaving us down 0.7 percentage points. We're down a bit now, but the long-term track record of dividend stocks speaks for itself, and I expect that when the new year starts and the world hasn't ended with higher tax rates, we'll see dividend stocks do well again.

Our portfolio is now yielding 6.1% -- much higher than the S&P -- while we wait for our gains. We expect this to come down, as Annaly will probably cut its dividend this quarter. We should find out officially this week with an announcement, and then the stock will go ex-dividend at the end of the month.

Fellow Fool Dan Caplinger examines whether Frontier will help you retire rich. Dan notes, "Revenue continued to drop sequentially, with continuing falls in residential customer counts and free cash flow. With the company hoping to count on promotions to woo customers, Frontier may struggle to maintain the bottom-line rise it eked out during the third quarter." I agree, and Frontier is on my list to sell from this portfolio when I think the price is right.

One stock to keep an eye on in 2013 is Philip Morris. As Fool blogger John Macris notes, the company has billions left in its buyback authorization. I'll add that the company has been aggressively buying back shares since it was spun off in 2008. Oh, and then there's that 3.9% dividend. That has made for great returns for investors, and I expect them to continue over the years.

Exelon is on dividend watch now. The company announced that it might cut its payout in order to maintain its credit rating. The stock tumbled on the news. I'm waiting to buy to see what the carnage looks like. Often these situations still have downside until the company announces the actual cut, and only then can they move up, after other investors have sold and moved on.

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

  • Exelon went ex-dividend Nov. 13 and paid out $0.525 per share on Dec. 10.
  • 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 went 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 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 continue to track and report on the portfolio's progress, including news on these companies.

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Stocks Mentioned

Annaly Capital Management, Inc. Stock Quote
Annaly Capital Management, Inc.
NLY
$6.33 (3.60%) $0.22
Philip Morris International Inc. Stock Quote
Philip Morris International Inc.
PM
$103.40 (1.80%) $1.83
Frontier Communications Corporation Stock Quote
Frontier Communications Corporation
FTR
Exelon Corporation Stock Quote
Exelon Corporation
EXC
$43.29 (2.51%) $1.06
National Grid plc Stock Quote
National Grid plc
NGG
$65.28 (2.92%) $1.85

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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