The World's Best Dividend Portfolio
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. Now let's check out the results so far.
|Southern (NYS: SO)||$39.71||25.0818||$44.72||$1,121.66||12.6%|
|Exelon (NYS: EXC)||$41.82||23.818||$43.25||$1,030.13||3.4%|
|National Grid (NYS: NGG)||$48.90||20.3693||$47.55||$968.56||(2.8%)|
|Philip Morris International (NYS: PM)||$68.49||14.5429||$75.92||$1,104.10||10.8%|
|Annaly Capital (NYS: NLY)||$18.24||65.5||$16.25||$1,064.38||(9.3%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||$4.86||$614.42||(38.3%)|
|Plum Creek Timber||$38.42||26||$35.35||$919.10||(8%)|
|Brookfield Infrastructure Partners (NYS: BIP)||$26.12||38.2825||$26.00||$995.35||(0.5%)|
|Seaspan (NYS: SSW)||$14.61||69||$12.91||$890.79||(11.6%)|
|Investment in SPY|
Source: S&P Capital IQ.
Our total portfolio performance moved from -3.2% last week to -3% this week, and now we're outperforming the S&P again, by 1.5 percentage points, but with much less volatility. I'm confident in the long-run nature of this portfolio, and I fully expect it to outperform. Even if our capital goes down in the interim, we'll still see dividends while we wait. We continue to have six stocks outperforming the index.
At long last, I added to my Annaly position, reinvesting just over $170 into 10.5 shares. At my buy price of $16.24, those shares should yield about 14.5%, though Annaly's payout will fluctuate somewhat from quarter to quarter. I'm happy to finally add to my position.
With more than $50 in cash already on the balance sheet and more than $60 more on the way by Feb. 3, I could reinvest another slug of cash shortly. So, Fools, what should I buy? The seriously beaten-down Frontier? More of the consistently high dividends of Annaly? The solid and stable blue chip Philip Morris? Let me know in the comments section below.
If you're looking for other dividend ideas, I just wrote another article on a great one called "The Dividend-Paying 2-Bagger."It has a meaty dividend and could be a double besides. You can read all the details, including why I decided to buy it for my own portfolio (not the World's Best Portfolio yet).
The European situation continues to fester, with Eurocrats failing to do anything much yet to fix their morass. I'm not very optimistic about the situation at all, and if we should see a general market downturn, I'll be glad to be in dividend stocks, which should see lower downside volatility. We should still see good performance from names such as Annaly, which thrives in a low-rate environment.
Dividends and other announcements
Going into the holiday season, the news has been pretty light. We have an interesting development from Seaspan and these bits of dividend news:
- Seaspan announced a big repurchase authorization, up to 10 million shares, or 15% of shares outstanding, in a tender offer. The shocker was the 43% premium the company was willing to pay over Monday's closing price. Shareholders can tender their shares for $15 by Jan. 11. The company also said it would spend $54 million in stock to buy its management company, helping to eliminate conflicts of interest. That tender probably means that another dividend raise is off the table for a few quarters yet.
- 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.
- Frontier went ex-div on Dec. 7 and pays out $0.1875 cents per share on Dec. 29.
- Philip Morris trades ex-div on Dec. 20 and pays out $0.77 a share on Jan. 10.
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 probably have stocks plunging again. 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 that year, including news on these companies.
If you like dividends, consider these 10 tickers along with the 11 names from a brand new free report from The 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. Get instant access to the names of these 11 high yielders -- 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, 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, 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 don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.