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The World’s Best Dividend Portfolio

Tuesday - 4/2/2013, 5:38pm  ET

In June 2011, I invested my money equally in a selection of 10 high-yield dividend stocks. With a year of success behind me, I added even more money to the portfolio in July 2012. 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

Southern

$39.71

25.0818

4.2%

$1,172.32

17.7%

Exelon

$41.36

28.818

3.6%

$990.19

(16.9%)

National Grid

$48.90

20.3693

5.7%

$1,180.20

18.5%

Philip Morris International

$68.49

14.5429

3.7%

$1,349.29

35.5%

Ryman Hospitality

$44.93

24.7

4.4%

$1,135.95

2.4%

Plum Creek Timber

$38.42

26

3.2%

$1,346.28

34.8%

Brookfield Infrastructure Partners

$26.12

38.2825

4.5%

$1,448.99

44.9%

Vodafone

$26.75

56.7566

5.3%

$1,608.48

5.9%

Seaspan

$15.24

95

6.5%

$1,920.90

32.7%

AT&T

$35.20

28.4

4.9%

$1,057.90

5.8%

Retail Opportunity Investments

$12.20

81.95

4.3%

$1,144.84

14.5%

Annaly Preferred C

$25.98

38.5

7.4%

$989.07

(0.9%)

Cash

     

$291.53

 

Dividends Receivable

     

$24.71

 

Original Investment

     

$12,983.97

 

Total Portfolio

     

$15,660.65

20.6%

Investment in SPY

(including dividends)

       

19.7%

Relative Performance

(percentage points)

       

0.9

Source: Capital IQ, a division of Standard & Poor's.

The portfolio continued to perform strongly, up 2.5 percentage points from last report, even while the S&P fell. Since June 2011, we've been leading the index by 0.9 percentage points. So it looks like markets are searching for some safe havens in dividend stocks while the broader market suffers somewhat. If and when the market falls, we should outperform.

The yield is still a robust 4.9%, and we have nearly $300 in cash in the portfolio, with almost $25 more on the way in the next 10 days.

The big news for the portfolio this week concerns Vodafone and AT&T. The rumors are swirling that AT&T and Verizon are preparing a joint bid for Vodafone. Verizon would get Vodafone's 45% stake of their joint venture Verizon Wireless, while AT&T would acquire the remaining operations, providing it with global scale. The initial figures suggest a $245 billion deal, the largest takeover ever. That would value shares of Vodafone 40% higher than Monday's closing price. The prospect of a buyout is also why my Special Situations portfolio acquired options in Vodafone. You can read through my more detailed reasoning in the previous link.

Fellow Fool Alex Planes has an intriguing take on Southern and Exelon in the following article. And it should be of concern to investors who are in traditionally high-yield utilities for their dividends. Alex notes Southern's dividend well exceeds its free cash flow, though both Southern and Exelon have done well at reducing their debt-to-equity ratios over the last few years, even as peers' have increased.

Dividends and earnings announcements
Here is the recent news on earnings and dividends:

Dividend news: 

  • Frontier went ex-dividend on March 6 and paid out $0.10 per share on March 28.
  • Brookfield Infrastructure went ex-dividend on Feb. 26 and paid out $0.43 per share on March 29.
  • Annaly Series C went ex-dividend on Feb. 27 and paid out almost $0.48 per share on April 1.
  • ROIC went ex-dividend on March 13 and paid out almost $0.15 per share on March 29.
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