The World's Best Dividend Portfolio
In June, I invested my money equally in a selection of 10 high-yield dividend stocks. 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.
|Southern (NYS: SO)||$39.71||25.0818||$41.12||$1,031.36||3.6%|
|Exelon (NYS: EXC)||$41.82||23.818||$43.09||$1,026.32||3.0%|
|National Grid (NYS: NGG)||$48.90||20.3693||$50.36||$1,025.80||3.0%|
|Philip Morris International (NYS: PM)||$68.49||14.5429||$69.30||$1,007.82||1.2%|
|Annaly Capital (NYS: NLY)||$18.24||55||$17.42||$958.10||(4.5%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||$7.32||$925.43||(7.1%)|
|Plum Creek Timber (NYS: PCL)||$38.42||26||$36.95||$960.70||(3.8%)|
|Brookfield Infrastructure Partners (NYS: BIP)||$26.12||38.2825||$26.17||$1,001.85||0.2%|
|Vodafone (NAS: VOD)||$26.52||37.5566||$26.44||$993.00||(0.3%)|
|Seaspan (NYS: SSW)||$14.61||69||$13.75||$948.75||(5.9%)|
|Investment in SPY||(6.4%)|
|Relative Performance (percentage points)||+6.4|
Source: Capital IQ, a division of Standard & Poor's.
The portfolio is now outperforming the S&P 500 by 6.4 percentage points in its first two months or so, and our portfolio is flat since inception. That's down from last week's outperformance of 7.6 points (and 9.2 from the week before that), and it's a good reminder that the numbers can change quickly. But that performance is also a reminder of the stability of dividend payers over time -- good downside protection and continued income but also less upside volatility.
Although we're ahead now, I'd prefer to see a positive real return. I'm not particularly concerned about short-term fluctuations, though. In the meantime, we'll cash our dividend checks and wait for an opportunity to reinvest those proceeds. Both Seaspan and Frontier are bringing the average return down, meaning they could be attractive places to add reinvested dividends.
Dividends and earnings announcements
We're moving into dividend season, and we have a few bits of news:
- Plum Creek went ex-dividend on Aug. 12 and paid out a dividend of $0.42 per share on Aug. 30. We've included that in the results above.
- Southern Company went ex-dividend on July 28, and pays out its dividend of $0.4725 per share on Sept. 5.
- Exelon went ex-dividend on Aug. 11 and will pay $0.525 per share on Sept. 8.
- Brookfield Infrastructure went ex-dividend on Aug. 29, with a payday on Sept. 29.
- Frontier goes ex-dividend on Sept. 7 and pays out $0.1875 per share on Sept. 29.
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. Naturally I'd prefer to have more cash in the portfolio so I can take advantage of lower prices, but I won't be surprised to see stocks move lower in the coming weeks, as fears about Europe continue to erupt.
Shares of Annaly and other mortgage REITs have been hit hard in the last few days. The SEC asked for comment on a proposal to limit the tax advantages of such REITs or limit their ability to use leverage, according to the Wall Street Journal. According to the paper, such a new rule could force them to choose either leverage or tax-advantaged status, significantly diminishing their value to investors.
I'll be keeping an eye on this development, since it certainly bears on the investability of mortgage REITs generally and Annaly specifically.
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 be holding these stocks for at least a year and will continue to track the portfolio over the course of the year, including news on these companies.
If you like dividends, consider the 10 tickers above along with the 13 names from a free report from Motley Fool's expert analysts called "13 High-Yielding Stocks to Buy Today." Hundreds 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 13 high yielders, simply click here -- it's free.
At the time this article was published Jim Royal, Ph.D., owns shares of every company mentioned here. The Motley Fool owns shares of Philip Morris, Seaspan, Brookfield Infrastructure, and Annaly. The Fool owns shares of and has written puts on Plum Creek.Motley Fool newsletter serviceshave recommended buying shares of Southern, Brookfield Infrastructure, National Grid, Vodafone, Philip Morris, and Exelon, as well as writing covered straddle positions on Seaspan and Exelon. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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