This High-Yield Dividend Portfolio Will Beat the Market
Thirty-nine weeks ago, I invested my cold hard cash into 10 high-yield dividend stocks I believe will beat the market. Let's see the results so far:
|Company||Average Cost||Shares||Recent Price||Total Value||Return|
|Altria (NYS: MO)||$24.86||40||$27.62||$1,104.80||11.10%|
|Philip Morris (NYS: PM)||$61.83||17||$71.21||$1,210.57||14.28%|
|National Grid (NYS: NGG)||$45.63||22||$49.68||$1,092.96||8.88%|
|Annaly Capital Management (NYS: NLY)||$17.55||57||$16.32||$930.24||(7.01%)|
|Frontier Communications (NYS: FTR)||$8.71||149||$5.56||$828.44||(36.17%)|
|Southern Co (NYS: SO)||$37.87||26||$43.55||$1,132.30||15.00%|
|Vodafone Group (NYS: VOD)||$28.69||38||$29.07||$1,104.66||1.32%|
|Investment In SPY||(3.45%)|
|Return vs SPY (percentage points)||+8.85|
Source: S&P Capital IQ, as of Nov 14.
Since my last report, the SPDR S&P 500 rose 2.77%. Our portfolio did not rise as much, with our outperformance moving from beating the market by 11.74 percentage points to an 8.85 point advantage. While outperformance is always good, it should be taken with a grain of salt. We're investing for the long term, and it's only been nine months.
Movers and shakers
Of our stocks, the biggest mover in the portfolio was Frontier Communications, which fell nearly 8%. The company reported earnings that missed analyst expectations by $0.01, while revenue also fell a tiny amount short. Frontier's integration of its game-changing acquisition is still moving along as expected. Maintaining its dividend, the company has a free cash flow payout ratio of 71%.
On the brighter side, Vodafone also reported earnings. Due to better-than-expected results in its emerging markets, the company raised its profit guidance for the year. It also announced it will pay a 3.05 pence interim dividend in February, a 7% increase from last year's interim dividend. Vodafone also announced the size of the special dividend from its previously announced Verizon Wireless dividend. The Verizon Wireless special dividend will be 4 pence! Translated into American Depository Receipts (10 shares to 1 ADR) and dollars, this means each ADR holder will receive roughly $1.12 for the combined interim and special dividend! As dividends from Verizon Wireless keep coming, you can expect more special dividends will follow along.
There are four upcoming dividends for the portfolio:
- Eli-Lilly will pay a dividend of $0.49 per share on Dec. 9. The ex-dividend date was Nov. 10.
- Southern will pay a dividend of $0.4725 per share on Dec. 6. The ex-dividend date was Nov. 3.
- Frontier will pay a dividend of $0.1875 on Dec. 30. The ex-dividend date is Dec. 7.
- Vodafone will pay a dividend of 0.705 pence (roughly $1.12) on Feb. 3, 2012. The ex-dividend date is Nov. 16.
My Foolish bottom line
I'm highly confident in this portfolio's ability to crush the market over the next decade, and that's why I put $10,000 of my personal cash into these stocks. My strategy is simple. I'm buying strong companies with outsized dividends, reinvesting those dividends, and holding them for the long run. Over the coming year, I'll track my performance, update you on when I'm going to reinvest all my dividends, and keep you abreast of news affecting these companies.
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At the time this article was published Dan Dzombak can be found on his Twitter account: @DanDzombak. He owns shares of Altria, Philip Morris, National Grid, Annaly Capital, Frontier, Southern Co., France Telecom, Vodafone, Eli Lilly, and Bristol-Myers Squibb.The Motley Fool owns shares of Altria Group, Chimera Investment, Philip Morris International, and Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Southern, France Telecom, Philip Morris International, Vodafone Group, and National Grid. 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.