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. Now let's check out the results so far.
|Philip Morris International (NYS: PM)||$68.49||14.5429||3.9%||$1,137.40||14.2%|
|Annaly Capital (NYS: NLY)||$18.24||65.5||14.2%||$1,044.73||(11%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||14.6%||$634.65||(36.3%)|
|Plum Creek Timber||$38.42||26||4.6%||$972.14||(2.7%)|
|Brookfield Infrastructure Partners (NYS: BIP)||$26.12||38.2825||4.9%||$1,090.67||9.1%|
|Seaspan (NYS: SSW)||$14.61||69||5.4%||$951.51||(5.6%)|
|Investment in SPY|
Source: S&P Capital IQ.
Our total portfolio performance slipped back to flat overall, moving from 0.5% last week to 0% this week. That's rough, but when combined with the solid move up in the S&P, it added up to underperformance, one of the few times since the portfolio began. We have four stocks outperforming the index. But I'm confident in the long-run nature of this portfolio, and I fully expect it to outperform.
With some $200 in cash that should be in the portfolio by the start of February, I'm trying to determine what my next dividend reinvestment should be. Given the massive decline in Frontier and its high yield, I'm strongly leaning toward reinvesting my capital there. But I may make two purchases. Thanks for all your suggestions so far. And remember, I'm reinvesting only in what's in the portfolio so far. So, Fools, what should I buy?
As we head into a tenuous and uncertain 2012, I'm glad to be in dividend stocks because of their lower downside volatility. We should still see good performance from mortgage REITs, including Annaly, which thrive in poor conditions. You can see my latest thoughts on Annaly and explore 2011's Top 10 Mortgage REITs. I like the steady all-weather performance from Philip Morris, which keeps massively outperforming because of the stickiness of its products. If we could only get a little cooperation from Frontier, we'd be thrashing the S&P, but investors seem very wary of a possible dividend cut, judging by the shares' performance of late. The stock just keeps getting pummeled.
Here's to a prosperous and even better new year!
Dividends and other announcements
Going into the new year, the news has been pretty light. But there have been a few developments and some year-end recaps:
- 2011 was a record year for fundraising for REITs, with the trusts raising $37.5 billion in equity -- the largest since the sector was founded more than a half-century ago. Annaly got its piece of the pie, too, issuing hundreds of millions of new shares for capital to deploy into the market. Now some investors are worried about the potential for a new mortgage-refinance program, which could hurt the profitability of REITs such as Annaly.
- Brookfield Infrastructure had a solid year, with a stock that climbed more than 30% for the year. Like Annaly, the company issued shares, in order to pick up new assets. In Brookfield's case, those were two Chilean toll roads. You can read more about Brookfield's appeal.
- Seaspan announced a big repurchase authorization, up to 10 million shares, or 15% of shares outstanding, in a tender offer. The shocker was the 43% premium the company was willing to pay over Monday's closing price. Shareholders can tender their shares for $15 by Jan. 11. The company also said it would spend $54 million in stock to buy its management company, helping to eliminate conflicts of interest. That tender probably means that another dividend raise is off the table for a few quarters yet.
- Brookfield Infrastructure paid out $0.35 a share on Dec. 30.
- National Grid went ex-dividend on Dec. 2 and pays out $1.0967 per share on Jan. 18.
- Frontier paid out $0.1875 per share on Dec. 29.
- Vodafone announced a special dividend of 4 pence on top of its 3.05 pence interim payout. The stock traded ex-div on Nov. 16, and the money will be paid out on Feb. 3. In dollars, the total payout comes to about $1.12 per U.S. share at current exchange rates.
- Philip Morris went ex-div on Dec. 20 and pays out $0.77 a share on Jan. 10.
- Annaly went ex-dividend on Dec. 27 and pays out $0.57 per share on Jan. 26.
All that, of course, means more money coming into our pockets shortly and more money to reinvest.
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 course of the year, including news on these companies.
If you like dividends, consider these 10 stocks along with the 11 names from a brand-new free report from The Motley Fool's expert analysts called "Secure Your Future With 11 Rock-Solid Dividend Stocks." Today I invite you to download it at no cost to you. Get instant access to the names of these 11 high yielders -- 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 Seaspan, Brookfield Infrastructure, Annaly, Plum Creek, and Philip Morris and has created a covered strangle position on Plum Creek.Motley Fool newsletter serviceshave recommended buying shares of Exelon, National Grid, Philip Morris, Vodafone, Southern, and Brookfield Infrastructure, as well as writing a covered straddle position in Seaspan and a covered strangle position in Exelon. 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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