The World's Best Dividend Portfolio
Aug 18th 2012 10:07AM
Updated Aug 18th 2012 10:08AM
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.
|National Grid (NYS: NGG)||$48.90||20.3693||5.4%||$1,123.77||12.8%|
|Philip Morris International (NYS: PM)||$68.49||14.5429||3.3%||$1,356.71||36.2%|
|Annaly Capital (NYS: NLY)||$17.79||72.5||12.8%||$1,224.53||(5.1%)|
|Frontier Communications (NAS: FTR)||$7.88||126.4243||8.4%||$589.14||(40.9%)|
|Plum Creek Timber||$38.42||26||4.2%||$1,050.40||5.2%|
|Brookfield Infrastructure Partners||$26.12||38.2825||4.1%||$1,396.55||39.7%|
|Seaspan (NYS: SSW)||$14.90||76||5.8%||$1,400.56||13.5%|
|Retail Opportunity Investments||$12.20||81.95||4.5%||$1,032.57||3.3%|
|Annaly Preferred C||$25.92||38.5||7.4%||$997.15||(0.3%)|
|Investment in SPY (Including Dividends)||11.2%|
|Relative Performance (Percentage Points)||1.5|
Source: S&P Capital IQ.
Our portfolio gained again in the past week, moving from an 11.6% cumulative gain to 12.7%. Despite the move up, we lost 0.1 percentage points on the S&P. Investors have really been hunting for yield, and our portfolio has been the beneficiary. But if panic breaks out, we could see all stocks take a hit. However, I still expect our stocks to outperform our benchmark. Our blended yield is 5.7%.
As I mentioned last week, I invested about $116 in Annaly Capital, because I see it as a way to hedge our portfolio if the market does poorly. But I continue to watch it closely, as its net interest margin continues to steadily decline. As I suggested last week, I also bought shares in Seaspan, which I think will be a huge performer over the next few years. It currently pays a 5.8% yield that I expect to grow mightily in the near term.
We have a slew of dividends coming in the next couple of weeks, and it won't be long before we have another $100 to reinvest in our picks. That's the minimum I want to use to reinvest.
Australia's high court approved the nation's plan to require cigarette packages to have plain packaging and most of their surface covered with graphic warning labels. Philip Morris is pursuing a suit against the government for the loss of its trademarks. Also worrisome for the tobacco company is that the U.K., New Zealand, and others may copy Australia's no-trademark law.
Frontier has made a nice run in the past few weeks, moving from the low $3s to the high $4s. Of course, that's after a huge downturn from the high single digits in the last few years. The move back up seems to have been presaged by acquisitions from top management, including Executive Vice President Cecilia McKenney, who snapped up $116,000 in Frontier over the preceding six months. As I said last month, I expect to unload shares of Frontier when it reaches what I think is a fair price. To learn more about Frontier's prospects, be sure to take a look at the Fool's latest premium report on the company.
National Grid is discussing with U.K. regulators potential increased investment in infrastructure. The pair is at odds over how much National Grid should receive for its investment (no bonus points for guessing that National Grid wants more than regulators are offering). I'll be keeping an eye on this development, since the company may need to raise more capital.
Dividends and other announcements
- National Grid went ex-dividend on May 30 and paid out $2.017 per share on Aug. 15.
- Seaspan went ex-dividend on Aug. 10 and pays out $0.25 per share on Aug. 22.
- Southern went ex-dividend on Aug. 2 and pays out $0.49 per share on Sept. 5.
- Plum Creek went ex-dividend on Aug. 15 and pays out $0.42 per share on Aug. 31.
- Exelon went ex-dividend on Aug. 13 and pays out $0.525 per share on Sept. 10.
- ROIC went ex-dividend on Aug. 14 and pays out $0.14 per share on Aug. 31.
- Annaly's Class C preferred shares go ex-dividend on Aug. 31 and pay $0.47 per share on Oct. 1.
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.
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The article The World's Best Dividend Portfolio originally appeared on Fool.com.Jim Royal, Ph.D ., owns shares of the 13 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 in Exelon 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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