The World's Best Dividend Portfolio

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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.

Company

Cost Basis

Shares

Recent Price

Total Value

Return

Southern (NYS: SO)

$39.71

25.0818

$42.49

$1,065.73

7.0%

Exelon (NYS: EXC)

$41.82

23.818

$42.76

$1,018.46

2.2%

National Grid (NYS: NGG)

$48.90

20.3693

$50.01

$1,018.67

2.3%

Philip Morris International (NYS: PM)

$68.49

14.5429

$66.45

$966.38

(3.0%)

Annaly Capital (NYS: NLY)

$18.24

55

$15.79

$868.45

(13.4%)

Frontier Communications (NYS: FTR)

$7.88

126.4243

$6.00

$758.55

(23.9%)

Plum Creek Timber

$38.42

26

$35.03

$910.78

(8.8%)

Brookfield Infrastructure Partners (NYS: BIP)

$26.12

38.2825

$24.86

$951.70

(4.8%)

Vodafone

$26.52

37.5566

$27.48

$1,032.06

3.6%

Seaspan

$14.61

69

$12.94

$892.86

(11.4%)

Cash

$141.57

$141.57

Dividends Receivable

$33.00

$33.00

Total Portfolio

$9,658.19

(3.3%)

Investment in SPY

(6.8%)

Relative Performance (percentage points)

3.5

Source: S&P Capital IQ.

The portfolio remains in negative territory, dropping sharply from a quick break into positive territory four weeks ago. Also, our outperformance narrowed again in the last week, as markets climbed broadly higher. We're solidly outperforming the S&P, by 3.5 percentage points, and six of our 10 picks are still beating the S&P. 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. And we're still pumping out those dividends, while the dividend-less investors have to hope for capital gains!

Because of the Fool's trading restrictions, I have yet to add to my Annaly position. But since I've received more cash from the Philip Morris dividend, I've decided to up my reinvestment in Annaly to $140. The stock has been hit hard recently, but I still think it's a great place to be, as I explain here. Fellow Fool Dan Dzombak also argues that mortgage REITs are oversold.

Dividends and earnings announcements We're moving out of dividend season, and we have a few bits of news:

  • Philip Morris paid out its newly raised dividend of $0.77 per share on Oct. 11.
  • And everyone's favorite dividend play, Annaly, went ex-div on Sept. 28 and pays its dividend of $0.60 per share on Oct. 27.

Following this dividend news, there will be little in the way of money coming into the portfolio for a few weeks.

And in other news...

  • Exelon is hitting back at EDF, which is attempting to stymie Exelon's merger with Constellation Energy. EDF, which has a nuclear joint venture with Constellation, told Maryland's public service commission that the proposed merger would be bad for EDF and Maryland. But Exelon hit back, stating, "EDF's approval is not required for the merger to proceed." Maryland's energy regulator intends to publish its decision on the merger by Jan. 5. The merger would place Exelon in a virtual tie with Southern Co., another portfolio holding, for largest U.S. utility by market cap.

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 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 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 the 10 portfolio stocks mentioned in the table. The Motley Fool owns shares of Annaly, Seaspan, Philip Morris, and Brookfield Infrastructure. The Fool owns shares of and has written puts on Plum Creek. Motley Fool newsletter services have recommended buying shares of Vodafone, National Grid, Brookfield Infrastructure, Philip Morris, Exelon, and Southern, as well as writing a covered strangle position in Exelon and a covered straddle position in Seaspan. 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.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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