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, and then more again in 2013. Those names offer triple the yield of the average S&P 500 stock. You can read all the details here. Now let's check out the results so far.
Company | Cost Basis | Shares | Yield | Total Value | Return |
|---|---|---|---|---|---|
Exelon | $41.36 | 28.818 | 3.9% | $917.28 | (23%) |
National Grid | $48.90 | 20.3693 | 5.5% | $1,188.34 | 19.3% |
Philip Morris International | $78.05 | 25.5429 | 3.8% | $2,279.70 | 14.3% |
Ryman Hospitality | $40.96 | 39.3 | 5.4% | $1,460.39 | (9.3%) |
Plum Creek Timber | $38.42 | 26 | 3.6% | $1,293.24 | 29.5% |
Brookfield Infrastructure Partners | $26.12 | 38.2825 | 4.7% | $1,393.48 | 39.4% |
Vodafone | $27.26 | 74 | 5.5% | $2,154.88 | 6.8% |
Seaspan | $15.24 | 95 | 6% | $2,083.35 | 43.9% |
Retail Opportunity Investments | $12.20 | 81.95 | 4.3% | $1,166.15 | 16.6% |
Annaly Preferred D | $25.50 | 38.9 | 7.8% | $939.44 | (5.3%) |
Gramercy Property Trust | $4.48 | 223 | 0% | $1,065.94 | 6.7% |
Sprott Resource | $3.51 | 285 | 11.6% | $949.05 | (5.1%) |
Cash | $586.12 | ||||
Dividends Receivable | $120.38 | ||||
Original Investment | $13,983.01 | ||||
Total Portfolio | $16,568.14 | 11.1% | |||
Investment in SPY (Including Dividends) | 19.3% | ||||
Relative Performance (Percentage Points) | 8.2 |
Source: Capital IQ, a division of Standard & Poor's.
The total portfolio is now up 11.1%. Investors have taken to kindly to dividend stocks recently, but the S&P hasn't seemed to suffer too much. We gained just 0.1 points on the S&P from last wee, and now lag the index by 8.2 points. The blended yield jumps to 5.4% on the addition of the high-yielding Sprott.
If dividend stocks remain at these levels for a while, I'll be tempted to deploy some of the nearly $600 in accumulated dividends, and there are still more than $100 in accrued payouts. All that will be reinvested in what I think is the best idea in the portfolio.
Fellow Fool John Maxfield has a few choice words for Annaly's plan to become an externally managed REIT, and it looks like a compelling case. One major problem, he explains, is that the plan for managers to own Annaly stock to align their interest requires just a pittance of their compensation. In short, they'll make much more money from their employment contracts than they will from their stock ownership, and that's bad for common stock owners, he argues. You can read the full article here.
Ryman Hospitality's Washington, D.C., property -- one of its four -- came in for some unexpected stress this week. A water emergency declared by local authorities had forced the hotel to relocate guests. But that crisis has been averted, and the hotel is again accepting travelers. The company is as yet unable to assess the financial impact.
What is National Grid doing to avert the effects of climate change? At a recent conference, representatives explained that the company researched the flood risks to its Rhode Island substations and decided to invest $23 million to rebuild or elevate substations in flood-prone locations. Fellow Fool Sara Murphy has more on what National Grid and other utilities are doing in the face of climate change. You can read her article here.
While I typically think of the core Vodafone business (which excludes the stake in Verizon Wireless) as all European, the U.K. telecom has significant presence in emerging markets as well. Vodafone is looking to expand in Africa, planning to add two new hubs to double its coverage on that continent. "Vodafone has also been growing strongly in other emerging markets, notably India, where group service revenues rose 10.7% in 2012, and Turkey, up 17.7%," Fool Harvey Jones recently explained.
The low implied valuation on Vodafone's 45% stake in Verizon Wireless encouraged me to pick up call options in my Special Situations portfolio. If Verizon buys out Vodafone, as I think will happen, those calls could rapidly appreciate.
Dividends and earnings announcements
Here is the recent news on earnings and dividends.
Earnings news:
Philip Morris' second-quarter report was less than sterling. Sales were hurt by lower shipments in every geography, and the company lowered its annual earnings guidance. The market didn't seem to care too much, with shares down very modestly. Philip Morris now expects to earn between $5.43 and $5.53 per share, compared with $5.17 in 2012 -- growth of 6% at the midpoint. That's due in large part to buybacks. It plans to spend $6 billion in buybacks this year, and it bought $1.5 billion in the quarter at an average price around $90. I love the company's policy of continual buybacks.
Dividend news:
Annaly Series D went ex-dividend on May 30 and paid out almost $0.48 per share on June 30.
Brookfield went ex-dividend on May 29 and paid out $0.43 per share on June 28.
Ryman went ex-dividend on June 26 and paid out $0.50 per share on July 14.
Philip Morris went ex-dividend on June 25 and paid out $0.85 per share on July 11.
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 these 12 tickers above along with the nine names from a 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.
Jim Royal, Ph.D., owns shares of the 12 portfolio stocks mentioned in the table. The Motley Fool recommends Brookfield Infrastructure, Exelon, National Grid, Retail Opportunity Investments, Seaspan, Southern, and Vodafone and owns shares of Gramercy Property, Brookfield Infrastructure, Philip Morris, Retail Opportunity Investments, Ryman Hospitality, Sprott, and Seaspan. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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