The World's Best Dividend Portfolio
Aug 3rd 2012 11:03PM
Updated Aug 3rd 2012 11:06PM
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. Now let's check out the results so far.
|Exelon (NYS: EXC)||$41.36||23.818||5.5%||$1,093.93||(8.2%)|
|Philip Morris International||$68.49||14.5429||3.4%||$1,309.88||31.5%|
|Annaly Capital (NYS: NLY)||$17.92||65.5||12.7%||$1,127.91||(3.9%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||9.2%||$557.53||(44%)|
|Plum Creek Timber||$38.42||26||4.2%||$1,046.50||4.8%|
|Brookfield Infrastructure Partners||$26.12||38.2825||4.4%||$1,299.31||29.9%|
|Seaspan (NYS: SSW)||$14.90||76||6.4%||$1,200.80||6%|
|Retail Opportunity Investments (NAS: ROIC)||$12.20||81.95||4.3%||$1,013.72||1.4%|
|Annaly Preferred C||$25.92||38.5||7.4%||$995.23||(0.3%)|
|Investment in SPY (Including Dividends)||6.9%|
|Relative Performance (Percentage Points)||3.0|
Source: S&P Capital IQ.
Our portfolio raised its outperformance since last week, moving from an 8.1% cumulative gain to 9.9%. And we opened our lead wider on the S&P, from 1.5 percentage points to a full 3 points. We're continuing to see investors chase yield as interest rates have continued to plummet. Our blended yield is 5.8%.
We just collected our dividend from Vodafone this week, and that's pushed us past $170 in cash. As I discussed last week, I'll be using some of the cash to reinvest in one of our dividend stocks. I've decided to buy more Annaly common stock because of its high yield, but more importantly because it's a counter-cyclical play that should do well if the global economy continues to worsen. And we know interest rates will continue to remain low, boding well for the company.
I'll save the next dividend reinvestment for Seaspan, which I think has the highest potential for near-term appreciation. I'll explain in a moment, when I discuss the shipping company's earnings.
Shares in Frontier made a hearty leap forward this past week, climbing 21% since last Thursday. That was due to an earnings beat -- keep reading for more.
Dividends and other announcements
We're in earnings season, and here's our latest dividend and earnings news.
- Seaspan came in with solid earnings news. The number to keep an eye on here is "cash available for distribution," which grew nearly 43% in the quarter, to $76.4 million. That's the amount that Seaspan can disburse to stockholders like us. With 62.9 million shares outstanding and a dollar annual dividend, the company is paying just 20% of that cash flow annualized. When the company reports in January, I expect a big dividend bump.
- ROIC came out with more of what we expected: more cash flow, more acquisitions, and more dividends! The company raised funds from operations by 112%, to $0.24 per share and announced that it had bought seven more shopping centers since the end of the first quarter. Great news for us dividend investors: ROIC raised its dividend 7.7% sequentially. I expect to see more of the same in coming quarters.
- Frontier's earnings news wasn't that spectacular, but it was enough to send investors to buy the stock. Revenue declined 1%, to $1.26 billion, while net income dropped from $32.3 million to $18 million, or $0.08 per share. But revenue and earnings beat estimates, with the latter easily beating analysts' estimates of $0.05. I'll be keeping a close eye on this stock, since I intend to sell it in the near future.
- Exelon also reported earnings this week, notching earnings of $0.61 per share, compared with $1.05 last year. That per-share number was affected by an increase in shares from its acquisition of Constellation Energy. Exelon reaffirmed its annual guidance of $2.55 to $2.85 in earnings per share, well above its annual dividend of $2.08 per share.
- National Grid went ex-dividend on May 30 and pays out $2.017 per share on Aug. 15.
- Vodafone went ex-dividend on June 6 and paid out $1.015 per share on Aug. 1.
- Southern went ex-dividend on August 2 and pays out $0.49 per share on Sept. 5.
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. I'll continue to track the portfolio over the course of the year, including news on these companies.
If you like dividends, consider these 10 tickers 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. Get instant access to the names of these nine high yielders.
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, creating a write covered straddle position in Exelon, and creating a covered straddle position in 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.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.