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 | 4.2% | $857.05 | (28.1%) |
National Grid | $48.90 | 20.3693 | 5.2% | $1,383.28 | 38.9% |
Philip Morris International | $78.05 | 25.5429 | 4.7% | $2,053.39 | 3% |
Extendicare | $6.51 | 548 | 6.5% | $3,699.00 | 3.7% |
Ryman Hospitality | $40.96 | 39.3 | 4.9% | $1,612.48 | 0.2% |
Plum Creek Timber | $38.42 | 26 | 4.1% | $1,116.96 | 11.8% |
Brookfield Infrastructure Partners | $26.12 | 38.2825 | 5.1% | $1,451.67 | 45.2% |
Seaspan | $17.17 | 136.5 | 5.5% | $3,095.82 | 32.1% |
Retail Opportunity Investments | $12.20 | 81.95 | 4.1% | $1,197.29 | 19.8% |
Annaly Preferred D | $25.50 | 38.9 | 8% | $912.98 | (8%) |
Gramercy Property Trust | $4.48 | 223 | 0% | $1,286.71 | 28.8% |
Cash | $107.04 | ||||
Dividends Receivable | $63.03 | ||||
Original Investment | $14,983.36 | ||||
Total Portfolio | $18,836.70 | 25.7% | |||
Investment in SPDR S&P 500(including dividends) | 37.4% | ||||
Relative Performance (percentage points) | (11.7) |
Source: Capital IQ, a division of Standard & Poor's.
The total portfolio is now up 25.7% after climbing 3.4 percentage points from the last report. Nevertheless, we lost to the index by a full percentage point to lag by 11.7 points. The blended yield ticked down to 5%. Dividends and dividends receivable continued to flow into the account, and there's plenty more on the way.
I expect the yield to rise in the near future as two of my favorite stocks, Seaspan and Gramercy, announce dividend increases.
We own the high-yield Annaly preferred in this portfolio, so why not the high-yield Seaspan preferred? The switch to Annaly's preferred was motivated by the desire for a high-yield security while the common stock's dividend and price continued to wither. I think that's still the case for Annaly. I own Seaspan common for nearly the exact opposite reason: The dividend on the common should grow quickly.
The shipping company just came out with a new preferred-stock series that yields 8.25% at par. And obviously that's more than we're getting with the common stock, now at 5.5%. The reason is that the common stock dividend has the potential for significant growth over the next few years. Seaspan raised cash from that preferred stock in order to build out its fleet, a move that allows the company to continue to increase its dividend over the next four to five years. I think 20% a year over that period is still possible. So we'll end up with a much higher yield on cost by sticking to the common.
Like the appeal of stable dividends from a diversified utility? Then you might like National Grid and its hefty 5.2% yield. Fellow Fool Peter Stephens gives you more reasons to like the U.K. utility in this article. The company's modest but sustainable growth can make it attractive for income investors like us.
Philip Morris is an international giant in the tobacco industry, so why does it have a lousy P/E ratio of 15? Asia offers a huge growth opportunity for the company, and that should help dividends increase for years and years still. Fellow Fool Ted Cooper breaks down what Asia means for Philip Morris in this article.
Dividend announcements
Dividend news:
Plum Creek went ex-dividend on Feb. 12 and pays out $0.44 per share on Feb. 28.
Extendicare went ex-dividend on Jan. 29 and paid out $0.0362 per share on Feb. 18.
Exelon went ex-dividend on Feb. 12 and pays out $0.31 per share on March 10.
Seaspan went ex-dividend on Feb. 13 and pays out $0.3125 per share on Feb. 26.
Brookfield Infrastructure goes ex-dividend on Feb. 26 and pays out $0.48 per share on March 10.
All of that, of course, means more money coming into our pockets.
It's fun to sit back and get paid, and given 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 likely have stocks plunging again, and 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.
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The article The World's Best Dividend Portfolio originally appeared on Fool.com.
Jim Royal owns shares of all 11 companies listed in the table and Extendicare and has the following options: long May 2014 $22 calls on Seaspan and short May 2014 $30 calls on Seaspan.The Motley Fool owns shares of Extendicare, Gramercy Property Trust, Retail Opportunity Investments, Ryman Hospitality Properties, and Seaspan and has the following options: long May 2014 $22 calls on Seaspan and short May 2014 $25 calls on Seaspan. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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