The World's Best Dividend Portfolio
|Southern (NYS: SO)||$39.71||25.0818||$43.04||$1,079.52||8.4%|
|Exelon (NYS: EXC)||$41.82||23.818||$43.40||$1,033.70||3.8%|
|National Grid (NYS: NGG)||$48.90||20.3693||$50.23||$1,023.15||2.7%|
|Philip Morris International (NYS: PM)||$68.49||14.5429||$72.08||$1,048.25||5.2%|
|Annaly Capital (NYS: NLY)||$18.24||55||$16.31||$897.05||(10.6%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||$5.32||$672.58||(32.5%)|
|Plum Creek Timber||$38.42||26||$35.93||$934.18||(6.5%)|
|Brookfield Infrastructure Partners (NYS: BIP)||$26.12||38.2825||$25.67||$982.71||(1.7%)|
|Investment in SPY (including dividends)||(4.6%)|
|Relative Performance (percentage points)||2.2|
Source: Capital IQ, a division of Standard & Poor's.
The portfolio moved slightly further into the red this past week, but our overall outperformance moved from 1.1 percentage points to 2.2 -- exactly what we should expect in the turbulent markets of the past week, as the euro debacle spirals. We were assisted by two stocks that went ex-dividend in the past week. As of now, six of our stocks are outperforming the index.
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. But we're still pumping out those dividends whichever way the market goes.
Seaspan and Frontier continue to vastly underperform the other members of this portfolio, but that hasn't stopped the overall portfolio from beating the market.
As I mentioned last week, because of the Fool's trading restrictions, I have yet to add to my Annaly position. And I've decided to up my reinvestment in Annaly to $170, all the portfolio's available cash. The stock has been hurt recently, but I still think it's a great place to be, as I explain here. While not all the news has been good from the mortgage REIT sector, Annaly still looks poised to pump out solid dividends.
Dividends and other announcements
We're moving into dividend season, and we have a few bits of other news:
- Exelon reported that its shareholders and those of intended acquisition target Constellation Energy have agreed to the merger. Only regulatory approvals remain outstanding. The deal would make the combined entity the largest generator of competitively priced electricity in the U.S.
- A headwind for Philip Morris: The Russian Health Ministry will submit a draft law that would eliminate smoking in public places and ban tobacco advertising. A government representative said that the no-smoking law would be a total ban, as in the U.S. and Europe. Russia is also aiming to raise tobacco excise taxes to reach European levels by 2015.
- But in the short term at least, the news is positive for Philip Morris. The company raised its annual earnings target to at least $4.85 per share, from a range of $4.75 to $4.80. Just last quarter the company bumped its dividend by a hefty 20%.
- Vodafone announced a special dividend of 4 pence on top of its 3.05 pence interim payout. The stock traded ex-div on Nov. 16 and the money will be paid out on Feb. 3. In dollars, the total payout comes to about $1.12 per U.S. share at current exchange rates.
- Southern Co. went ex-div on Nov. 7 and distributes $0.4725 per share on Dec. 6.
- Exelon goes ex-div on Nov. 15 and pays out $0.525 per share on Dec. 9.
- Plum Creek went ex-div on Nov. 10 and yields $0.42 per share on Nov. 30.
- Seaspan went ex-div on Nov. 9 and distributes $0.1875 per share on Nov. 23 -- just in time for Thanksgiving and Black Friday.
All that, of course, means more money coming into our pockets shortly.
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 up more shares.
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 Seaspan, Brookfield Infrastructure, Annaly, Plum Creek, and Philip Morris. The Fool owns shares of 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, 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.
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