The World's Best Dividend Portfolio
Last 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 here. Now it's time to check out the results so far.
Company | Cost Basis | Shares | Yield | Total Value | Return |
|---|---|---|---|---|---|
Southern | $39.71 | 25.0818 | 4.2% | $1,136.71 | 14.1% |
Exelon | $41.82 | 23.818 | 5.2% | $952.48 | (4.4%) |
National Grid | $48.90 | 20.3693 | 5.8% | $993.41 | (0.3%) |
Philip Morris International | $68.49 | 14.5429 | 4.0% | $1,110.79 | 11.5% |
Annaly Capital | $18.24 | 65.5 | 13.6% | $1,105.64 | (5.8%) |
Frontier Communications | $7.88 | 126.4243 | 15.8% | $565.12 | (43.3%) |
Plum Creek Timber | $38.42 | 26 | 4.2% | $1,049.36 | 5.0% |
Brookfield Infrastructure Partners | $26.12 | 38.2825 | 4.9% | $1,102.15 | 10.2% |
Vodafone | $26.52 | 37.5566 | 4.9% | $1,026.99 | 3.1% |
Seaspan | $14.61 | 69 | 4.7% | $1,093.65 | 8.5% |
Cash | $159.24 | ||||
Dividends Receivable | $42.10 | ||||
Total Portfolio | $10,337.63 | 1.8% | |||
Investment in SPY (including dividends) | 3.7% | ||||
Relative Performance (percentage points) | (1.9) |
Source: S&P Capital IQ.
Our total portfolio performance improved overall, moving from 1.1% the previous week to 1.8% this week. That's another solid gain in a week, and we even gained some on the S&P, leaving our portfolio underperforming by 1.9%. We have five stocks outperforming the index. But I'm confident in the long-run nature of this portfolio, and I fully expect it to outperform. If we see a downward move in the S&P, we'll quickly gain the upper hand again, I think.
Given the massive move down in shares of Frontier (NYS: FTR) on Thursday, I'm strongly considering reinvesting the money there. Frontier's down day came on reports that it had been downgraded by S&P from stable to negative, but the rating agency maintained its BB rating on Frontier's bonds. Without its truly horrific underperformance, the portfolio would be doing clearly better than the market (in other words, about 4% better than now).
Investors in Annaly (NYS: NLY) also got some good news, as the Federal Reserve promised to keep rates low through 2014. That should keep the cost of funds low for mortgage REITs such as Annaly, and overall this benefits many capital-intensive companies in our portfolio, such as the utilities Exelon (NYS: EXC) and National Grid (NYS: NGG) as well as hard-asset plays such as Brookfield Infrastructure (NYS: BIP) .
Dividends and other announcements
Going into the new year the news has been pretty light. But there have been a few developments and some year-end recaps:
Exelon reported fourth quarter results that fell below Street estimates. Adjusted earnings came in at $0.82 per share, compared to $0.96 per share in the year-ago period. For the year, the company put up adjusted earnings of $4.16. That means the company is trading for less than 10 times earnings, and that's a cheap price I can live with until things look brighter for this energy provider.
Annaly announced that CEO Michael Farrell has cancer and is being treated with chemotherapy. The disease was caught early and the prognosis is good, according to a company statement.
Southern Company also reported earnings earlier this week, with net income increasing 70%, with substantial help from increased electricity rates at its Georgia Power unit. Profit for the quarter was $0.30 per share. Revenue for the quarter was down 2%. For the full year, Southern earned $2.57 per share, compared to $2.37 in 2010. But 2012 earnings guidance fell below Wall Street's expectations.
And in dividend news:
Vodafone announced a special dividend of 4p on top of its 3.05p 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.
Annaly went ex-dividend on Dec. 27 and paid out $0.57 per share on Jan. 26.
All that, of course, means more money coming into our pockets shortly and more money to re-invest.
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, with continued bad news likely to send 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.
If you like dividends, consider the 10 tickers above along with the 11 names from a brand new free report from 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. To get instant access to the names of these 11 high yielders, simply click here - again, it's free.
At the time thisarticle 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.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
