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||$45.75||$1,147.49||15.2%|
|Exelon (NYS: EXC)||$41.82||23.818||$43.35||$1,032.51||3.7%|
|National Grid (NYS: NGG)||$48.90||20.3693||$47.82||$974.06||(2.2%)|
|Philip Morris International (NYS: PM)||$68.49||14.5429||$77.85||$1,132.16||13.7%|
|Annaly Capital (NYS: NLY)||$18.24||65.5||$16.89||$1,106.30||(5.7%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||$5.10||$644.76||(35.3%)|
|Plum Creek Timber||$38.42||26||$36.51||$949.26||(5%)|
|Brookfield Infrastructure Partners (NYS: BIP)||$26.12||38.2825||$26.58||$1,017.55||1.8%|
|Seaspan (NYS: SSW)||$14.61||69||$13.56||$935.64||(7.2%)|
|Investment in SPY|
Source: S&P Capital IQ.
Our total portfolio performance moved from -3% last week to -0.6% this week, and we're still outperforming the S&P, by 0.9 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 have five stocks outperforming the index.
As I mentioned last week, I added to my Annaly position at a cost of $16.24, for a yield of about 14.5%. 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? Thanks for your suggestions last week.
If you're looking for other dividend ideas, I wrote an article earlier this month 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 (though not the World's Best Portfolio yet).
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. And there's already some hint from the Federal Reserve that low rates may extend into 2014, making Annaly a likely good hold through 2013.
Dividends and other announcements
Going into the holiday season, the news has been pretty light. We have an interesting development from Seaspan and Exelon and these bits of dividend news:
- Last week, 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. In addition, the company said it will spend $54 million in stock to buy its management company, helping to eliminate conflicts of interests. That tender probably means that another dividend raise is off the table for a few quarters yet.
- Exelon received approval on Wednesday from the U.S. Justice Department for its acquisition of Constellation on the condition that it divest three Maryland electricity plants. The $7.9 billion deal should close early next year.
- 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 went ex-div on Dec. 20 and pays out $0.77 a share on Jan. 10.
- Annaly goes ex-dividend on Dec. 27 and pays out $0.57 per share on Jan. 26.
All that, of course, means more money coming into our pockets shortly and more money to reinvest.
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 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, as well as having 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.