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 for yourself. Now let's check out the results so far.
|Southern (NYS: SO)||$39.71||25.0818||4.2%||$1,124.67||12.9%|
|Exelon (NYS: EXC)||$41.82||23.818||5.4%||$1,127.36||(5.4%)|
|Philip Morris International (NYS: PM)||$68.49||14.5429||3.5%||$1,260.14||26.5%|
|Annaly Capital (NYS: NLY)||$18.24||65.5||14.6%||$1,030.97||(12.2%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||10%||$515.81||(48.2%)|
|Plum Creek Timber||$38.42||26||4%||$1,079.52||8.1%|
|Brookfield Infrastructure Partners||$26.12||38.2825||4.9%||$1,190.59||19.1%|
|Investment in SPY|
Source: S&P Capital IQ.
Our total portfolio performance since inception is 7.4%, up about 40 basis points since last week, and underperforming the dividend-adjusted S&P by about 3.3 percentage points. We have seven of 10 stocks in positive territory. Despite the underperformance, we're still achieving a much larger yield than the S&P, which should help ballast the portfolio when times get tough. With all the talk of Europe, slowing Chinese growth, and a six-month rally in equities, a dividend-heavy portfolio should be one of the safer ports in a storm.
We'll soon have more than $100 in the portfolio, and I'll be adding that to one of the stocks. And as I've mentioned before, I'm considering how to construct the portfolio for its second year. I'm thinking about adding some cash to help reflect the idea that we add to our portfolios over time, and I may expand the portfolio by a few stocks. You all have given me some good ideas already. What else is on your mind?
I'm cautious on Annaly Capital now, as I've explained in previous columns. It's experienced a declining spread in recent quarters and just cut its dividend sequentially. But fellow Fool Dan Caplinger thinks the company, as a large owner of mortgage debt, could benefit if the Federal Reserve begins to buy mortgage bonds.
For you dividend fiends, I've just written an article on a new high-yield IPO. It offers a double-digit yield but is not for the faint of heart.
Dividends and other announcements
We're through earnings season, and we have limited dividend news for the moment.
- The fight goes on against Australia's plain -packaging law, which bans logos on cigarette packages. Philip Morris, Imperial Tobacco, and British American Tobacco are challenging the law, saying it has taken control of their property. The organizations say they will seek billions in damages if they lose the rights to their trademarks.
- The Obama administration has proposed the first rules to cut carbon dioxide emissions from newly constructed power plants. The rules would basically eliminate the construction of new coal plants, although existing coal plants would not be subject to the regulation. Any new plants would have to cut carbon dioxide in two to meet the emissions of gas plants. Southern Company produces most of its power from coal, while our other major generating company, Exelon, is focused on less carbon-intensive energy, such as nuclear.
- Frontier has nearly 18% of its shares short, making it one of the market's most shorted stocks. But one fund has recently been buying shares in the beleaguered telecom. Avenir loaded up on Frontier, according to its latest 13-F filing. The investment manager has beaten the S&P by more than 20 percentage points since mid-2007.
- Brookfield Infrastructure went ex-dividend on Feb. 27 and pays out $0.375 per share today, March 30.
- Frontier went ex-dividend on March 9 and also pays out $0.10 per share today.
- Annaly went ex-dividend on March 28 and pays out $0.55 per share on April 26.
All that, of course, means more money coming into our pockets.
It's fun to sit back and get paid, and with all 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.
If you like dividends, consider these 10 tickers with the nine names from a brand-new free report from The Motley Fool's expert analysts, called "Secure Your Future With 9 Rock-Solid Dividend Stocks." Today I invite you to download it at no cost to you. Get instant access to the names of these nine 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 Annaly, Seaspan, Plum Creek, and Brookfield Infrastructure and has created a covered strangle position in Plum Creek.Motley Fool newsletter serviceshave recommended buying shares of Exelon, Philip Morris, Annaly, Southern, National Grid, Vodafone, and Brookfield Infrastructure, as well as writing a covered strangle position in Exelon and a covered straddle position in Seaspan. 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.
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