The World's Best Dividend Portfolio
In June 2011, 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||4.2%||$1,186.37||19.1%|
|Exelon (NYS: EXC)||$41.36||23.818||5.6%||$1,122.17||(5.8%)|
|National Grid (NYS: NGG)||$48.90||20.3693||5.7%||$1,041.28||4.5%|
|Philip Morris International||$68.49||14.5429||3.7%||$1,215.79||22.1%|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||12%||$420.99||(57.7%)|
|Plum Creek Timber||$38.42||26||4.5%||$960.96||(3.8%)|
|Brookfield Infrastructure Partners (NYS: BIP)||$26.12||38.2825||4.7%||$1,243.80||24.4%|
|Investment in SPY (Including Dividends)||4.3%|
|Relative Performance (Percentage Points)||2.3|
Source: S&P Capital IQ.
Our portfolio outperformed again this week and saw performance grow to a 6.6% cumulative return with the help of some dividend payouts. Meanwhile, the S&P index climbed less, to 4.3%, meaning we're up by 2.3 percentage points on our benchmark. So after nearly a year, we're beating the index and have a substantially better blended yield -- 6.1% -- than the index, at 1.9%. If markets continue to be stagnant or down, we should probably outperform. And I don't see a whole lot that is positive in the next few months. Growth is slowing in various places around the globe, and Europe is a mess that isn't being fixed yet.
There's little to excite shareholders of Frontier, but misery does love company. So it's nice to see institutional investor Avenir add to its stake in the beleaguered telecom. But the market has punished this stock mercilessly, such that its yield still looks high despite the recent cut from $0.1875 per share quarterly to $0.10.
With several utility stocks in our portfolio, including Southern, Exelon, and National Grid, the second quarter might prove rough. A slowing economy is a threat to electricity demand, and analysts expect utilities' earnings as a whole to drop by 8% in Q2. That might hurt utilities in the short term, although we're holding these proven cash generators for the long term.
Within the next couple of weeks, I'll publish an article that details how the portfolio will operate for Year 2. I anticipate adding a few more stocks, eliminating at least one, and adding more cash (to help simulate an investor who keeps adding to the portfolio). Again, I'll detail all that in an upcoming Fool.com article. It's been a really fun year with this portfolio, and I look forward to more.
Dividends and other announcements
Earnings season is pretty much over, and we have mainly dividend news for the moment.
- Southern went ex-dividend on May 7 and paid out $0.49 per share on June 6.
- Exelon went ex-dividend on May 11 and paid out $0.37925 per share on June 8. Previously, Exelon paid out a $0.14575 dividend in early April, to keep its total quarterly dividend at $0.525, as part of its recent acquisition of Constellation.
- National Grid went ex-dividend on May 30 and pays out $2.017 per share on Aug. 15.
- Vodafone went ex-dividend on June 6 and pays out $1.015 per share on Aug. 1.
- Frontier went ex-dividend on June 6 and pays out $0.10 per share on June 28.
- Brookfield Infrastructure went ex-dividend on May 31 and pays out $0.375 per share on June 29.
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 hold these stocks for at least a year (and have now done so) and will continue to track the portfolio, 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." Today I invite you to download it at no cost to you. Get instant access to the names of these dominant dividend stocks -- 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, as well as having 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, along with 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.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.