The World's Best Dividend Portfolio

Before you go, we thought you'd like these...
Before you go close icon

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

Yield

Total Value

Return

Southern$39.7125.08184.3%$1,114.1311.9%
Exelon$41.8223.8185.4%$940.81(5.5%)
National Grid$48.9020.36935.8%$1,039.854.4%
Philip Morris International$68.4914.54293.8%$1,191.6519.6%
Annaly Capital$18.2465.513.8%$1,085.34(7.5%)
Frontier Communications$7.88126.424317.4%$563.85(43.4%)
Plum Creek Timber$38.42264.4%$1,010.101.1%
Brookfield Infrastructure Partners$26.1238.28254.8%$1,130.4813.1%
Vodafone$26.5237.55664.9%$1,035.253.9%
Seaspan$14.61694.9%$1,070.196.2%
Cash   $201.34 
Dividends Receivable   $48.21 
Total Portfolio   $10,431.202.7%

Investment in SPY

(including dividends)

    7.0%

Relative Performance

(percentage points)

    (4.7)

Source: S&P Capital IQ.

Our total portfolio performance improved overall from the previous week, moving from 2.1% to 2.7% this week. Still, we ended up losing some on the S&P, as it moved head, leaving our portfolio underperforming by 4.7%. We have three stocks outperforming the index. I'm still confident in the long-run nature of this portfolio, and I fully expect it to outperform. Lately we're seeing a lot of overconfidence and bullish sentiment in the market. If we see a downward move in the S&P, we'll quickly gain the upper hand again, I think. Stocks have been rallying furiously for months, and I don't think that type of performance can go on for much longer.

With $200 in the account, I'll look to deploy the cash in the next week, subject to the Fool's trading restrictions.

Dividends and other announcements
We had one company reporting this week, and we'll have a bunch of companies going ex-dividend in the next couple weeks:

  • The Australian government and Philip Morris (NYS: PM) are still at each other's throats. The attorney general has accused the company of purposely transferring ownership of its Australian division to a Hong Kong subsidiary so that it could proceed legally -- and more favorably -- under a 1993 agreement between Hong Kong and Australia.
  • Frontier (NYS: FTR) reported earnings this week, and there was little good news for us dividend investors. The company reported $1.1 billion in free cash flow for 2011, but estimates that free cash flow will fall from $1 billion to $900 million for 2012. It also cut its quarterly dividend to $0.10 per share, giving shares an annualized forward yield of about 9%. Color me unimpressed.
  • Annaly (NYS: NLY) reported a declining interest rate spread for its most recent quarter. Its spread moved from 2.08% to 1.71% in the fourth quarter, and that's my largest worry about the mortgage REIT. We also saw the rate spread at peer American Capital Agency (NAS: AGNC) slip from 2.14% to 1.9% sequentially, and I wouldn't be surprised to see a similar event at Chimera when that company reports shortly. But the tandem move in spreads between Annaly and American Capital suggests this is sector-wide, and that's something to be very concerned about. I still need to dig in further.

Dividend news:

  • Southern went ex-dividend on Feb. 2 and pays out a dividend of $0.4725 per share on Mar. 5.
  • Seaspan went ex-dividend on Feb. 9 and pays out a dividend of $0.1875 per share on Feb. 21.
  • Exelon went ex-dividend on Feb. 13 and pays out $0.525 per share on Mar. 8.
  • Plum Creek (NYS: PCL) went ex-dividend on Feb. 15 and pays out $0.42 per share on Mar. 2.

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 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 11 names from a brand-new, free report from Motley Fool's expert analysts called "Secure Your Future With 11 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 11 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 Seaspan, Brookfield Infrastructure, Annaly, Plum Creek, Chimera, and Philip Morris, and has created a covered strangle position on Plum Creek.Motley Fool newsletter serviceshave recommended buying shares of Exelon, National Grid, Philip Morris, Vodafone, Southern, and Brookfield Infrastructure, along with writing a covered straddle position in Seaspan and a covered strangle position in 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.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners