The World's Best Dividend Portfolio
In June 2011, I invested my money equally in a selection of 10 high-yield dividend stocks. With a year of success behind me, in July 2012, I added even more money to the portfolio. 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||4.3%||$1,151.76||15.6%|
|Exelon (NYS: EXC)||$41.36||23.818||5.9%||$1,027.36||(13.8%)|
|National Grid (NYS: NGG)||$48.90||20.3693||5.4%||$1,146.59||15.1%|
|Philip Morris International||$68.49||14.5429||3.8%||$1,318.46||32.4%|
|Annaly Capital (NYS: NLY)||$17.79||72.5||11.5%||$1,221.63||(5.3%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||8.1%||$622.01||(37.6%)|
|Plum Creek Timber||$38.42||26||3.8%||$1,148.16||14.9%|
|Brookfield Infrastructure Partners||$26.12||38.2825||4.2%||$1,353.67||35.4%|
|Retail Opportunity Investments||$12.20||81.95||4.4%||$1,046.50||4.7%|
|Annaly Preferred C||$25.92||38.5||7.5%||$983.68||(1.7%)|
|Investment in SPY (Including Dividends)||11%|
|Relative Performance (Percentage Points)||1.8|
Source: S&P Capital IQ.
Our portfolio was down for the week, moving from 13.1% to 12.8%. But we put some decent ground between us and the S&P, moving from 0.7 up percentage points to 1.8 up. It was a rough week for the S&P, but our portfolio held up decently. Our blended yield slipped to 5.7%, and we have three cash dividends coming into the portfolio in the next month. I'm confident in the long-run performance of this dividend portfolio, and I expect time will bear us out.
Fellow Fool Dan Caplinger asks whether National Grid has become the perfect stock and suggests, despite the stock's 15% rise since last year, that it looks a bit worse than last year. He cites National Grid's declining profit margin and says the company needs to get revenue growing again.
Speaking of utilities, one Fool likes Exelon for its mighty yield (5.9%), relative to peers such as National Grid (5.4%) and our very own Southern (4.3%). You can see why Exelon is the one utility he's buying today. Others may be wary of the utility because its extensive hedges are due to run out this year, with the potential to lower the electric's profitability. In addition, Southern just announced that it's making the largest foray into solar in Georgia's history. The company would acquire 210 megawatts of additional solar capacity over the next three years under long-term deals.
Some positive news for Frontier: The telecom has been able to expand its recent debt offering, and it secured new bonds at lower rates than it had in the recent past. Frontier has raised $850 million since early August, with $250 million of that amount raised last week at 7.125%. That compares favorably with the 9.25% the company was forced to take in May when it raised $500 million in debt. The new proceeds will allow the company to retire upcoming indebtedness; the new bonds mature in 2023. That all looks like good news for us dividend investors.
Annaly just lowered its quarterly dividend to $0.50 per share from $0.55, continuing a slide in the mortgage REIT's payouts. Its interest-rate spread continues to decline, so we can expect those dividends to shrink, too, but what does it all mean for investors? My fellow Fool Anand Chokkavelu spells it out.
Dividends and other announcements
We have lots of dividend news.
- Frontier went ex-dividend on Sept. 5 and paid out $0.10 per share on Sept. 28.
- Annaly Preferred C went ex-dividend on Aug. 31 and pays $0.47 per share on Oct. 1.
- Brookfield Infrastructure went ex-dividend on Aug. 29 and paid $0.375 per share on Sept. 27.
- Philip Morris went ex-dividend on Sept. 25 and pays outs $0.85 per share on Oct. 11.
- Annaly went ex-dividend on Sept. 27 and pays out $0.50 per share on Oct. 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 continue to track and report on the portfolio's progress, including news on these companies.
If you like dividends, consider this article's 13 stocks along with the nine names from a brand-new, free report from 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. To get instant access to the names of these nine high-yielders, simply click here -- it's free.
The article The World's Best Dividend Portfolio originally appeared on Fool.com.Jim Royal, Ph.D., owns shares of the 13 portfolio stocks mentioned in the table. The Motley Fool owns shares of Seaspan, Brookfield Infrastructure, ROIC, and Annaly.Motley Fool newsletter serviceshave recommended buying shares of Vodafone, ROIC, National Grid, Brookfield Infrastructure, Exelon, Annaly, and Southern, as well as writing covered straddle positions on Exelon and 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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