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.
Company | Cost Basis | Shares | Yield | Total Value | Return |
|---|---|---|---|---|---|
Southern | $39.71 | 25.0818 | 4.2% | $1,122.66 | 12.7% |
Exelon (NYS: EXC) | $41.82 | 23.818 | 5.5% | $1,091.91 | (8.4%) |
National Grid (NYS: NGG) | $48.90 | 20.3693 | 5.8% | $1,048.41 | 5.3% |
Philip Morris International (NYS: PM) | $68.49 | 14.5429 | 3.5% | $1,269.01 | 27.4% |
Annaly Capital (NYS: NLY) | $18.24 | 65.5 | 14% | $1,034.25 | (11.9%) |
Frontier Communications | $7.88 | 126.4243 | 9.7% | $530.35 | (46.8%) |
Plum Creek Timber | $38.42 | 26 | 4.1% | $1,077.18 | 7.8% |
Brookfield Infrastructure Partners | $26.12 | 38.2825 | 5% | $1,181.02 | 18.1% |
Vodafone | $26.52 | 37.5566 | 4.9% | $1,021.35 | 2.5% |
Seaspan (NYS: SSW) | $14.61 | 69 | 4.6% | $1,159.20 | 15% |
Cash | $92.00 | ||||
Dividends Receivable | $36.03 | ||||
Original Investment | $9,986.58 | ||||
Total Portfolio | $10,663.36 | 6.8% | |||
Investment in SPY (Including Dividends) | 9.6% | ||||
Relative Performance (Percentage Points) | (2.8) |
Source: S&P Capital IQ.
In the past week, our total portfolio performance decreased, moving down 1.2 percentage points to 6.8%. We're still down on the dividend-adjusted S&P by about 2.8 percentage points, down 40 basis points from last week.
We have seven of 10 stocks in positive territory. 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, even if we had some underperformance over the past week.
We'll soon have more than $100 in the portfolio, and I'll be adding that to one of the existing stocks. Given its sluggish performance over the past nine months, I'm considering Exelon. The stock now yields 5.5% and is one of the largest utilities in the United States. A few other Fools also like the stock.
I'm cautious on Annaly Capital and other mortgage REITs now, as I explain in this video. It's experienced a declining spread in recent quarters and just cut its dividend sequentially. I'm looking to see what happens in the current quarter before I decide how to proceed. Annaly also came out with its first-quarter commentary this week, providing management's assessment of the macro picture. The note stated that at its March 13 meeting: "The Fed clarified that its commitment to near-zero rates is not ironclad, but is rather an expectation. While the Fed will maintain its enhanced balance sheet for the foreseeable future as well as its near-zero interest rate policy, the training wheels are off for the time being as it relates to continued easy policy action from the Fed."
Dividends and other announcements
My fellow Fool Jim Gillies penned a great article on why Seaspan would be a great pick for your IRA. In addition to its high dividend yield, the stock offers great potential for capital appreciation as it rapidly increases its dividend. Jim estimates that a $2-per-share dividend could lead to a $28 stock price. It's a great read if you haven't added Seaspan to your portfolio.
The fall in prices of carbon-emissions credits in the E.U. is leading to a greater use of coal rather than natural gas in Europe. At National Grid, coal amounted to 46% of power generated, against 26% for natural gas. That's a higher proportion for coal than in recent quarters. Because of the slowing European economy, consumers of such credits have had less need for them, causing credit prices to fall about 65% over the past year.
Dividend news:
Annaly went ex-dividend on March 28 and pays out $0.55 per share on April 26.
Philip Morris went ex-dividend on March 29 and paid out $0.77 per share on April 12.
All that, of course, means more money coming into our pockets.
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 year, including news on these companies.
If you're craving more dividend payers, I invite you to read the free report from The Motley Fool titled "3 American Companies Set to Dominate the World." Get instant access to the names of these dominant dividend stocks.
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 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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