The World's Best Dividend Portfolio
|Southern (NYS: SO)||$39.71||25.0818||$43.64||$1,094.57||9.9%|
|Exelon (NYS: EXC)||$41.82||23.818||$44.22||$1,053.23||5.7%|
|National Grid (NYS: NGG)||$48.90||20.3693||$50.66||$1,031.91||3.6%|
|Philip Morris International (NYS: PM)||$68.49||14.5429||$72.00||$1,047.09||5.1%|
|Annaly Capital (NYS: NLY)||$18.24||55||$16.91||$930.05||(7.3%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||$6.21||$785.09||(21.2%)|
|Plum Creek Timber||$38.42||26||$38.28||$995.28||(0.4%)|
|Brookfield Infrastructure Partners (NYS: BIP)||$26.12||38.2825||$25.14||$962.42||(3.8%)|
|Investment in SPY (including dividends)||0.5%|
|Relative Performance (percentage points)||1.2|
Source: S&P Capital IQ.
The portfolio burst into positive territory this week and is now up by 1.7% since inception. But the S&P provided an even stronger showing, and our relative outperformance is just 1.2 percentage points. But that fits what I've been saying all along: We'll have good downside protection and continued income but also less upside volatility, meaning we're likely to underperform any big market rallies. And while the market decides which way it's going, we're still pumping out those dividends, while the dividend-less investors have to hope for capital gains!
Because of the market's strong move, we have just five stocks outperforming the S&P. In aggregate, of course, we're still outperforming.
As I mentioned last week, because of the Fool's trading restrictions, I have yet to add to my Annaly position. (And I've missed out on a nice run, too.) But since I've received more cash from the Philip Morris and Annaly dividends, I've decided to up my reinvestment in Annaly to $170, all of the portfolio's available cash. The stock has been hurt hard recently, but I still think it's a great place to be, as I explain here. And we've seen good signs for the sector from another mortgage REIT. Because of upcoming articles about Annaly, I may not be able to make this trade until early November.
Dividends and earnings announcements
We're moving out of dividend season, and we have a few bits of earnings news:
- Annaly is due to report earnings shortly, but there's at least some prospective good news in the sector from one rival.
- Plum Creek reported earnings that beat Street estimates by a penny. That translated to net income of $50 million, compared to $32 million in the year-ago period. Revenue was up 13%. But the company said it is not expecting any "meaningful improvement" in its markets in the coming quarter.
- Exelon reported adjusted earnings of $1.12 per share, beating analysts' estimates by $0.03 and even topping the company's own guidance of $1 to $1.10. But the performance was just a penny greater than last year's adjusted earnings. Revenue was off 0.6%. Management reiterated its annual adjusted earnings guidance of $4.05 to $4.25 per share.
- And one other utility reported this past week, Southern, notching a profit of $916 million for the latest quarter, compared to $817 million in the year-ago period. Revenue was up 2%.
And some dividend news:
- Southern goes ex-div on Nov. 7 and distributes $0.4725 per share on Dec. 6.
- And everyone's favorite dividend play, Annaly, went ex-div on Sept. 28 and paid its dividend of $0.60 on Oct. 27.
Following this dividend news, there will be little in the way of money coming into the portfolio for a few weeks. But we should have a few more companies announcing dividends in early November.
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.
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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 Philip Morris, Brookfield Infrastructure, Annaly, Plum Creek Timber, and Seaspan.Motley Fool newsletter serviceshave recommended buying shares of Vodafone, Brookfield Infrastructure, Philip Morris, Exelon, National Grid, and Southern; as well as 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.