The World's Best Dividend Portfolio
Jul 27th 2012 11:27AM
Updated Jul 27th 2012 11:32AM
|Philip Morris International||$68.49||14.5429||3.5%||$1,288.50||29.4%|
|Plum Creek Timber||$38.42||26||4.3%||$1,038.44||4%|
|Brookfield Infrastructure Partners||$26.12||38.2825||4.5%||$1,310.79||31.1%|
|Retail Opportunity Investments||$12.20||81.95||4.3%||$991.60||(0.8%)|
|Annaly Preferred C||$25.92||38.5||7.5%||$980.98||(1.7%)|
|Investment in SPY (including dividends)||6.6%|
|Relative performance (percentage points)||1.5|
Source: S&P Capital IQ.
Our portfolio was down this week, moving from 8.7% last week to 8.1% this week. But we gained on the S&P benchmark, increasing our outperformance from 0.9 percentage points to 1.5 -- exactly the type of widening we should expect to see in downward markets. The ongoing euro crisis continues to have markets on edge, and I can see why. Our blended yield is 5.9%.
With more than $100 in cash in the account, I'd like to reinvest these funds into one of our stocks. Fools, which one of the above stocks should it be? I'm leaning toward Annaly (NYS: NLY) because of its status as a counter-cyclical play that pushes out huge dividends. Annaly should do well when other stocks do poorly. With recession seeming to close in all around, I don't see interest rates going up any time soon, so Annaly's funding costs should remain low. I'm also interested in Seaspan (NYS: SSW) , whose dividend I expect to grow rapidly in the next few years as it implements a progressive dividend strategy. Currently it's paying out just 25% of distributable cash flow, and that should grow much higher.
Insiders at Frontier Communications (NAS: FTR) have really stepped up to the plate in the last couple months, buying shares of the beleaguered telecom in the $3 range. No fewer than nine insiders have acquired shares, including CEO Maggie Wilderotter, who put $50,000 where her mouth was in mid-May at $3.31 a stub. The smallest buy was about $25,000. It's nice to see execs and directors step up like this, especially after the intense pounding endured by the stock over the past year. Seth Jayson provides an earnings preview here.
The ongoing heat wave has sent nuclear-energy production to a nine-year low -- not good news for Exelon (NYS: EXC) , the nation's largest nuclear-energy producer. The total power output declined 2.6% from the five-year average. The plants are affected because they need water to cool off, and the heat has raised the temperature of available water sources, forcing the plants to lower output. Another heat wave is expected to arrive in early August as well.
Dividends and other announcements
We're at the start of earnings season, and we have only a little dividend news for the moment.
- Southern (NYS: SO) reported earnings this week that met analysts' expectations, but it underperformed on revenue. Adjusted EPS of $0.69 per share beat the experts' estimates of $0.68. Seth Jayson breaks down the numbers further and provides estimates for the next quarter in this article. The company noted that strong residential customer growth in the Southeast reflected a continuing economic recovery.
- National Grid went ex-dividend on May 30 and pays out $2.017 per share on August 15.
- Vodafone went ex-dividend on June 6 and pays out $1.015 per share on August 1.
- Annaly went ex-dividend on June 27 and paid out $0.55 per share on July 26.
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 likely see stocks plunge 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 be holding these stocks for at least a year and will continue to track the portfolio and news on these companies over the course of the year.
If you like dividends, consider the 10 tickers above, along with the nine names mentioned in a brand-new free report from Motley Fool's expert analysts: "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 10 portfolio stocks mentioned in the table. The Motley Fool owns shares of Seaspan, Brookfield Infrastructure, ROIC, and Annaly. Motley Fool newsletter services have 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 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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